Should Antitrust Protect Competitors Or Competition?
from the rewriting-antitrust dept
While there is plenty of breaking news to go around, tech junkies will not have missed the Department of Justice?s long-awaited announcement of their antitrust lawsuit against Google. This is just the latest in a number of government moves aimed at applying more pressure to big tech. Congress is also reviewing potential reforms to antitrust law in order to make it easier to target online platforms. During recent hearings, the House Judiciary Committee examined how these companies compete and highlighted individual competitors?? that struggle to compete or work with dominant firms.
But in its rush to legislate market fairness into the tech world, Congress seems to be missing the point: we need to protect competition, not the competitors themselves.
The Supreme Court warned about this nearly two decades ago. As the Court explained of the Sherman Act, ?[t]he purpose of the Act is not to protect businesses from the working of the market; it is to protect the public from the failure of the market. The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself.?
In other words, competition law doesn?t care what happens to small competitors, it cares that these companies have a chance to compete.
This is where Congress is treading on dangerous ground. Earlier this month, the House Judiciary Committee released an extensive report detailing their investigation into online markets. In this report, Congress finds themselves worried about what happens to individual competitors, not competition writ large.
For example, at one point the report states that ?Google?s preferential treatment of its own verticals, as well as its direct listing of information in the ?OneBox? that appears at the top of Google search results, has the net effect of diverting traffic from competing verticals and jeopardizing the health and viability of their business.? Because of this, the report recommends Congress overturn judicial precedent on attempted monopolization, which currently requires that plaintiffs show that the company has a dangerous probability of monopolization.
But Google does not seem to be preventing vertical search engines from competing and as far as we can tell, it hasn?t monopolized this service. Their ?OneBox? gives users a quick answer to a question or a product they are looking for. True, a competing vertical search engine may lose traffic, but the consumers get more search results overall. If Google could monopolize vertical search markets, then that would effectively prohibit competitors from offering better, rival services. But so long as a firm like Google can?t actually achieve that monopoly in the new market, the competitive constraints on behavior still exist.
And even if a general search feature and anticompetitive conduct led to monopolization of vertical search, antitrust law would act as a check to protect competition. The Department of Justice?s long-predicted antitrust lawsuit against Google is evidence of this. If Google has illegally acquired, attempted to acquire or maintained a monopoly, then current antitrust law will ensure that any anticompetitive harms are corrected without hurting the consumers. But if they simply outcompeted rivals by offering a more efficient product, then competition policy should not, and currently does not, worry about the individual competitors who can?t keep up.
Competition protects consumers and is critical in the online marketplace. In the fast-moving technology sector, some companies will not keep up. But Congress cannot lose focus by worrying about individual competitors. Instead, they must keep an eye out for anticompetitive behavior that prohibits competitions because the firm controls the entire market. In the end, if we artificially prop up less efficient or innovative competitors, then it will be the consumers who end up suffering.
Jeffrey Westling is a technology and innovation resident fellow at the R Street Institute.