The Economics of the Data-Driven Economy and the Demand for Antitrust

Abstract

Increasing returns to scale in the heyday of industrialization in the late 19th century and early 20th century concentrated wealth and power, triggering demand for antitrust activism. A similar dynamic is visible in today’s second Gilded Age, this time in the context of the data-driven economy based on the nexus of big data, machine learning and artificial intelligence. Ultimately, it was the scaling up of the global economy that resolved the issues created by scale economies in the first Gilded Age, not antitrust. In this note, I argue that technological change may be the answer to the social and political issues raised by the economies of scale and scope, network externalities and information asymmetry at the heart of the Second Gilded Age. Antitrust activism can’t create competitive markets when the economic and technological conditions are not suitable – but while we wait for technology to evolve, a little activism can’t hurt.

Keywords: Data-driven economy, big data, machine learning, artificial intelligence, antitrust, Gilded Age, machine knowledge capital

JEL Classification: K21, O32, O33, O38