Proposed Antitrust Reforms in Big Tech: What Do They Imply for Competition and Innovation?

Abstract

There is widespread support for antitrust reform, fueled mainly by concerns about major platforms like Google, Facebook, and Amazon. Many believe that these companies have become too large and that they use their power in harmful ways. In the United States, some of the most aggressive reforms have recently been codified into two proposed bills, which focus largely on “self-preferencing” by online platforms and various restrictions imposed by mobile operating systems.

This short article evaluates the proposed Big Tech reforms based on everything we’ve learned from antitrust’s successes and failures over the last fifty years. In some situations, the reforms could help to curb anticompetitive unilateral conduct that is extremely difficult to challenge under current law. Overall, however, the proposals are an ill-conceived, knee-jerk reaction to a set of complex issues requiring a more careful response. They do a very poor job of limiting antitrust scrutiny to cases that plausibly involve anticompetitive behavior. The self-preferencing proposals in particular offer no secure way to avoid scrutiny other than to stop introducing new products. For these and other reasons, these proposed reforms would have significant adverse effects on competition and innovation—the two things they are supposed to protect.

Keywords: Antitrust, competition policy, Big Tech, innovation, platforms, self-preferencing, app store, walled garden, unilateral conduct, refusal to deal, essential facilities, vertical integration

JEL Classification: L40, L41, L42, L50, K21