Tech Giant Exclusion
53 Pages Posted: 6 Mar 2021 Last revised: 3 Aug 2021
Date Written: January 5, 2021
There is no topic in regulatory policy that is more pressing and more controversial than what to do about the tech giants – Google, Facebook, Amazon, and Apple. Critics claim that that these powerful platforms crush competitors, distort the political process, and elude antitrust law because it cares only about consumer prices. The only solution, they argue, is to break them up.
This diagnosis is mistaken. The tech giants have indeed engaged in anticompetitive conduct. They have excluded rivals selling products on their platforms by demoting them in search results, copying their products, or refusing to deal with them. While these tactics have harmed consumers, they have never been successfully challenged because they have rarely, if ever, created monopoly power or a dangerous probability of monopoly power, which the Sherman Act requires. This requirement should be eliminated.
The tech giants should not be broken up. Splitting them into smaller versions of themselves would result in higher prices or lower quality. Preventing them from selling their own products on their platforms would deprive consumers of choices they value. Nor should the goals of antitrust law be changed. The fundamental aim of antitrust law is to protect consumers and suppliers like workers from anticompetitive conduct. If courts also had to focus on preserving small business and limiting the political influence of large firms, the goals of antitrust would conflict. Courts would have no objective way of resolving the conflict, the rule of law would suffer, and consumers and workers would be hurt.
Congress should instead amend the Sherman Act to prohibit exclusionary conduct that significantly reduces competition, whether or not it results in actual or probable monopoly power. To avoid chilling procompetitive conduct, the change should apply only to the tech giants and should contain strict proof requirements. This careful expansion would make it much easier to deter tech giant exclusion that harms consumers or workers.
Keywords: antitrust, tech giants, digital platforms, exclusion, monopoly, market power
JEL Classification: K21, L12
Suggested Citation: Suggested Citation