Gordon Crovitz: Creative Destruction Obviates Antitrust Laws

by on August 3, 2009 · 10 comments

The recently proposed Microsoft-Yahoo deal has rekindled the debate over what role, if any, antitrust regulators should play in the high-tech sector. Adam and Berin have argued that decades-old (sometimes centuries-old) antitrust laws simply cannot keep pace with the relentlessly fast-moving digital economy. And Farhad Manjoo of Slate has concluded that antitrust action against tech companies does more harm than good — even when the facts favor government intervention.

For more on this, check out this excellent column on the future of antitrust enforcement by L. Gordon Crovitz in today’s The Wall Street Journal which quotes my colleague (and fellow TLFer) Wayne Crews:

Markets were so much simpler in the 1890s, when Sen. John Sherman got almost unanimous support in Congress to go after the Standard Oil Co. of Ohio. The Sherman Act and later antitrust laws were supposed to protect consumer interests. That’s not so easy when regulators have to deal with industries as different as oil, with its cartels and long product cycles, and technology, where fast change is a constant necessity for survival…

The bottom line is that by the time regulators can assess a technology market, the market has often moved on. Not long ago, Google was the upstart and the search leaders included names like AltaVista and Excite. “Regulatory intervention in the high-tech sector thwarts the natural evolution of the market,” argues Wayne Crews of the Competitive Enterprise Institute. “Worse, it distorts the response of competitors. Antitrust investigations steer the market in unnatural directions, creating instabilities in entire industry sectors.”

Read the rest here.

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