Reed’s view
Antitrust advocates on the left and the right are upset that, yet again, a big tech giant has avoided being broken up after an antitrust lawsuit.
This time, it’s Google — again — that gets to stay together despite being found guilty of flouting antitrust law with its advertising business. But here’s the problem with the “break up big tech” argument: If you break up one tech giant, you create or reinforce monopolistic power somewhere else.
The antitrust balloon-squeezing phenomenon is well documented. In 2012, the Department of Justice sued Apple and major book publishers for collusion. At the time, Amazon was undercutting book publishers by buying their e-books and then selling them at a loss. Apple wanted to compete against Amazon with its own e-book product, so it got publishers together to agree on pricing. Great idea, if it hadn’t been illegal.
Publishers settled, and Apple went to court and lost. So Amazon got to completely dominate book publishers, who now have less money to publish books. Consumer prices rose anyway, because without competition, Amazon could charge more in the long run. Bookstores were shuttered.
If you broke up Google, you’d supercharge other monopolies. For instance, if you spun off Android, which Google offers for free, low-cost smartphones would become more expensive. Apple, already too powerful, would dominate even more.
In many cases, it’s become too complex to even assess whether it’s good for consumers or for innovation to force Google to spin off Chrome, search, cloud, or its advertising business. And antitrust law can only operate with tunnel vision on individual cases. A judge can’t just break up all of big tech, clearing the way for a new competitive landscape to blossom.
The best solution to fostering competition in the industry is to prioritize disruptive new technology by pumping money into university research, which creates the raw material for new technology startups. Creating tax incentives and grants for startups and entrepreneurs, while increasing taxes on big, multinational corporations, would also help.
Breaking up a company might be satisfying in the short term. But forcing the tech industry to face a constantly changing landscape is better for everyone in the long run.
Notable
- In the Google search case, Judge Amit P. Mehta wrote that courts “must approach the task of crafting remedies with a healthy dose of humility,” The New York Times reported.