Washington D.C. is a city that runs on buzzwords and the political calculus of lemming-like conformity. Bearing this out is the emergence of all manner of odd bedfellows deciding that the cure for what ails us is using antitrust concerns as the impetus to break up Big Tech.
There is a reason technology companies haven’t had to face antitrust enforcement since the 1990s amid concerns about Microsoft’s dominance: It didn’t work. All that was accomplished was a lifeline delivered to a then-struggling Apple and a clearing of roadblocks that allowed Google to become an even more formidable “threat.” Microsoft was never a true menace to competition and the tech economy. Rather, it prospered because it was one of the few companies offering what consumers wanted, rather than blowing through venture capital dollars on amassing clicks and sock puppets.
Rather than go after the shadier spectrum of the dot-com boom, regulators went with the easy, more ubiquitous target. Ultimately, the effort achieved little: Microsoft now claims a frequent market cap that places it as the world’s most valuable company.
A common, but still underdiscussed, hazard of corporate enforcement is that the pound of flesh extracted often comes from the back of shareholders, not well-compensated and perk-loaded executives. Cut into profit margins of Facebook, Amazon, or Google, and investors, many struggling to save for retirement, are harmed the most.
One has to wonder if whether, deep inside their brain trust, tech companies secretly hope for a breakup. Could the sum of their parts be even more valuable, especially amid the profitability of a hot IPO marketplace? What difference would it make, anyway? Does Facebook minus Instagram equal a suddenly benevolent, consumer-friendly company? It seems little more than naïve thinking.
The solutions to anti-competitive behavior and abuses of consumer data are not that hard, even if federal officials and legislators feel the need to distract us with their sudden rediscovery of the Sherman Act. Unlike what it is doing now, the Federal Trade Commission (and other regulators) should start by walking the walk, not just talking the talk. Fine Facebook over its ignored consent decree. Install a corporate monitor. Repeat as needed with other companies and their enforceable trespasses. What cannot perpetuate is shirking statutory duties as a no-brainer investigation drags on and on and on unnecessarily.
Worst of all, a tech breakup penalizes innovation. What’s next? Sanctioning McDonalds because Burger King lacks a McRib? Making Coca-Cola underwrite Pepsi bottlers? Giving Fox the rights to “Star Wars?”
Antitrust enforcement has an important part to play in our business world. It can nevertheless be easily abused. Cry not for Facebook, Google, and Amazon. They may in fact get what they deserve. What we, as a nation, do not deserve is a simplistic response to a complex problem. That remedy could too easily backfire, stifle creativity and innovation, and concentrate way too much power in the hands of the government. Save trust-busting and monopoly-slaying for where and when it is truly necessary.
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