Antitrust Dystopia and Antitrust Nostalgia: Alarmist Theories of Harm in Digital Markets and Their Origins

Abstract

The dystopian novel is a powerful literary genre. It has given us such masterpieces as Nineteen Eighty-Four, Brave New World, Fahrenheit 451, and Animal Farm. Though these novels often shed light on some of the risks that contemporary society faces and the zeitgeist of the time when they were written, they almost always systematically overshoot the mark (whether intentionally or not) and severely underestimate the radical improvements commensurate with the technology (or other causes) that they fear.

But dystopias are not just a literary phenomenon; they are also a powerful force in policy circles — this is epitomized by influential publications such as The Limits of Growth, whose dire predictions have largely failed to materialize. Antitrust law and policy is no exception.

This article argues that contemporary antitrust scholarship and commentary is afflicted by dystopian thinking. In that respect, today’s antitrust pessimists have set their sights predominantly on the digital economy — “big tech” and “big data” — alleging a vast array of potential harms. Scholars have notably argued that the data created and employed by the digital economy produces network effects that inevitably lead to tipping and more concentrated markets. In other words, firms will allegedly accumulate insurmountable data advantages and thus thwart competitors for extended periods of time. Some have gone so far as to argue that this threatens the very fabric of western democracy.

We argue that these fears are symptomatic of two different — but complementary — phenomena, which we refer to as “Antitrust Dystopia” and “Antitrust Nostalgia.” Antitrust Dystopia is the pessimistic tendency for competition scholars and enforcers to assert that novel business conduct will cause technological advances to have unprecedented, anticompetitive consequences. This is almost always grounded in the belief that “this time is different” — that, despite the benign or positive consequences of previous, similar technological advances, this time those advances will have dire, adverse consequences absent enforcement to stave off abuse. Antitrust Nostalgia is the biased assumption — often built into antitrust doctrine itself — that change is bad. Antitrust Nostalgia holds that because a business practice has seemingly benefited competition before, changing it will harm competition going forward. Thus, antitrust enforcement is often skeptical of, and triggered by, various deviations from status quo conduct and relationships (i.e., “non-standard” business arrangements) when, to a first approximation (and at the very least in digital marketplaces), change is the hallmark of competition itself.

However, as the article explains, these two worldviews are premised on particularly questionable assumptions about the way competition unfolds, in this case, in data-intensive markets.

Keywords: Antitrust; Digital markets; network effects; precautionary principle; regulation; big tech