Anything You Can Do, I Can Do Better - Except in Big Tech?: Antitrust's New Inhospitality Tradition
41 Pages Posted: 11 Feb 2021
Date Written: 2020
Today, the question of how competition is—or is not—functioning in the big tech space has become a particularly compelling topic. The last several years have seen an increasing popular interest in antitrust, and it appears that wave of interest may soon be cresting. Rhetoric has grown increasingly aggressive, and the list of alleged ills is long. Companies are simply too big, too influential, too powerful; they are destroying our democracy and undermining our social values. While allegations run the gambit, under particular attack are tech firms that operate in multiple, complementary markets.
This critical rhetoric is eerily similar to that of a bygone era of antitrust enforcement—namely, the time when the inhospitality tradition prevailed. By the middle of the 20th century, antitrust courts routinely—often summarily—condemned any contract or behavior they deemed to be nonstandard or unusual. This approach reflected an extreme hostility to firm behavior—a hostility that seems to be making a resurgence today— and led to the coining of the phrase “inhospitality tradition” to describe the prevailing antitrust regime. The inhospitality tradition often led to incoherent, nonsensical outcomes. Courts condemned conduct that made firms better competitors in the name of preserving competition. And they ignored the actual or likely competitive effects of conduct before them because they found the form of that conduct offensive. The courts eventually abandoned this approach. As economic learning advanced and court experience grew, the negatives of condemning as per se unlawful large swaths of firm conduct on the basis of its form—rather than its effects—crystalized and could no longer be ignored. From this new economic learning, economists and scholars came to realize that many procompetitive reasons can, and often do, underlie much of the conduct that had been summarily condemned. And they learned that judging the conduct on its face, much like judging a book by its cover, tended to yield inferior outcomes.
Part I of this Article delves into the history of the inhospitality tradition within antitrust law, tracing its rise and demise. Part II explicates the apparent resurgence of hostile sentiment, particularly as applied to the tech context. Part III then investigates whether there is evidence of a market failure in big tech. Part IV analyzes what may—or may not—be warranted given the current state of the empirical literature.
Keywords: big tech, antitrust, New Brandeis, consumer welfare, economics, platforms, vertical integration
JEL Classification: K21, L4, L5
Suggested Citation: Suggested Citation