More restraint is in order when it comes to the Obama administrations intent to escalate “antitrust” enforcement against business and enterprise in America.
A skeptical interpretation of antitrust’s realities—up to and including recent campaigns targeting Intel, Google, XM-Sirius; and earlier campaigns against Microsoft and the AOL Time Warner merger, as well as rejected mergers like Echostar/DirecTV—is that antitrust often advances the well being of various species of political predators rather than consumers.
Antitrust is a form of economic regulation. And like all economic regulation, it transfers wealth from somebody to somebody else, often in response to special-interest urging. Partly in recognition of such shortcomings, many economic sectors like transportation and telecommunications were (partly) deregulated and liberalized during the last quarter of the 20th century. But antitrust regulation typically gets a pass. Even in the “new economy,” this century-old smokestack era concept is used to justify constraints and conditions imposed on vigorously competitive modern companies. Antitrust is wrongly seen as being in the public interest, as having a superior role to play in policing markets relative to the alternatives.
Continue reading →
Wired Magazine editor Chris Anderson has an important new book out, “Free: The Future of a Radical Price.” He focuses on the economics of free services, building on the excellent analysis of thinkers like Mike Masnick (whose 2007 essay, “The Grand Unified Theory on The Economics of Free,” succinctly sums up the concept).
Following up on his book, Anderson has a new op-ed up on CNN.com in which he explores how the emergence of free services in the digital age has raised new challenges for antitrust regulators:
Now Google has Microsoft-like dominance in search and search advertising. What should it not be allowed to do? That question may come to define this era of antitrust law. When [Christine] Varney was confirmed, she withdrew the Bush administration’s report setting relatively conservative standards of antitrust enforcement and declared, “The Antitrust Division will be aggressively pursuing cases where monopolists try to use their dominance in the marketplace to stifle competition and harm consumers…
Varney and her team of economists and lawyers are no doubt tangling with the question of how to enforce antitrust laws in a way that ensures an “even” playing field for competition without causing consumers to lose access to free services that are growing more abundant by the day.
But there’s a more important question that Varney should be asking: what actually constitutes market dominance in the age of free? Is the fact that a firm has a substantial share of a distinct marketplace a reliable indicator of dominance? And if the result of firms achieving high market share is an explosion of free goods and services, is it even in consumers’ interests for government to go after “dominant” firms?
Continue reading →
Comments 
Posted in: Antitrust & Competition Policy 
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.
