Neo-Brandeisian
(NB) antitrust has caught on with many journalists and politicians. Its
backwards logic will harm consumers and American businesses if it plays out in
actual antitrust actions.

The NB logic
goes something like this: Big Tech is, well, big! And being big endows the
companies with enduring power over the economy and over politics. Such
influence stifles innovation and destroys democracy. So the only thing to do is
break up the companies. The second best option is for a specialized government
regulator to control their business practices.

The problem
with this logic is that each step is backwards.

The first
step puts emotion-based conclusions in front of facts and analysis. The claim
appeals to megalophobia (fear of big things), asthenophobia (fear of weakness),
neophobia (fear of anything new), soteriophobia (fear of dependence on others),
etc.

Luis
Brandeis — whom the NBs assert they follow — did the same thing. He attacked
bigness, but left the definition vague so that its orientation was primarily
emotional. This worked for Brandeis because big business was a new phenomenon
for his contemporaries. Just as is happening today, new technologies and
management practices had enabled businesses to grow to sizes larger than people
had experienced previously. This seemed frightening to many people, and
Brandeis capitalized on the fears.

The second
step assumes that a company’s size determines its performance. Actually,
performance determines size. Each Big Tech company achieved its scale from
customers continually choosing it over competitors. The superior products and
services attracted customers, which made each company big.

Another error is that proponents of NB antitrust assume that rival and political complaints are evidence of abuse of power. Actually, they are evidence of a lack of power. If the firms could truly control their markets, they would have no rivals of any note and startups would avoid the space. In reality, eBay and others compete with Amazon, YouTube and Snapchat compete with Facebook, Microsoft and Yelp compete with Google, etc. And venture capital is flowing into the tech sector in part because startups believe they can capture some or all of the leading companies’ profits.

The idea
that Big Tech is politically powerful is also contrary to evidence: How many
politically powerful people or institutions are under attack by Republicans,
Democrats, the media, Attorneys General, the EU, India, China, and more? The
list of critics and enemies of Big Tech is long. Politically powerful entities
generally have lots of friends. Big Tech seems to have none.

What happens if NBs have their way with Big Tech? My estimate is that US consumers would lose $700 billion in economic value annually. Powerful politicians and their allies would control or at least influence what people are allowed to share on social media. Online businesses would have to be neutral and bland rather than innovative and valuable. And regulation would likely stall competition and innovation.

So rather than return antitrust to the days when it was a weapon against companies that had fallen out of favor, scholars and practitioners should look for new approaches to antitrust that align with the dynamic nature of Big Tech.

(Disclosure statement: Mark Jamison provided consulting for Google in 2012 regarding whether Google should be considered a public utility.)

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