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Antitrust

6 min read

Part of Regulation and the administrative state.

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Every episode (3)

Who argued it

Ryan Young ×2 · Richard Epstein

Big Tech · Monopoly · COVID-19 · Monetary Policy · Inflation · Climate Change · Section 230 · Free Speech

Background

The statute and the Rule of Reason

Antitrust enforcement rests on what Bob Zadek calls a two-page statute with vague terms such as “monopoly,” which he says gives courts a blank slate to apply the accepted standard of “Rule of Reason.” Zadek argues that a trial judge can apply his or her own Rule of Reason to cause economic havoc in the marketplace, and that the concept is purely economic while its operation is 100% political. Antitrust 101 with Ryan Young (2019)

Ryan Young, described by Zadek as a senior fellow at the Competitive Enterprise Institute who researches regulatory policy, trade policy and antitrust regulation, says antitrust law does not have a single goal. Some want to use it to fight concentrated power; others view it as a way to protect the consumer, which he says is how antitrust law works today—big isn’t necessarily bad as long as it does what it does well and helps consumers. Republicans, he adds, have changed their stance to want to use antitrust to regulate political speech. Why Trustbusting Big Tech is a Bad Idea (2020)

Young says antitrust jurisprudence has long followed the consumer welfare standard, under which big isn’t necessarily bad but consumer harm is the trigger for regulators. He stresses that this has never been codified and there is no bright-line predictable standard, so it could turn back on a dime as soon as the next big antitrust case. Antitrust 101 with Ryan Young (2019)

Historical cases

Zadek asks whether the statute, when applied, ever improved the marketplace as opposed to destroying bigness per se and helping competitors but not consumers. Young answers that it is impossible to make that case. He describes Standard Oil as a company continually cutting prices and increasing supply, whose kerosene-lamp market was killed by Thomas Edison’s electric light and which then had to adapt to rising gasoline demand from the automobile; he calls that antitrust case a waste of time. He cites the IBM case of the 1960s, which lasted about 13 years before the government dropped it because the technology had become obsolete, and the Microsoft case of the late 1990s over the free Internet Explorer browser included in Windows, which ended in a settlement. Antitrust 101 with Ryan Young (2019)

Asked by Zadek about AT&T and Bell Labs, Young says Bell Labs and AT&T were a government-supported monopoly, the only kind that can endure, so the government was right to break it up but wrong to have protected it in the first place—righting a wrong rather than affirmatively protecting consumer welfare. Antitrust 101 with Ryan Young (2019)

Baptist and bootlegger

Young says 95% of all antitrust lawsuits are brought not by the Justice Department or the Federal Trade Commission but by competitors trying to take down other competitors, so one dynamic is antitrust as special interest legislation. The other dynamic, he says, is public sentiment: people fear the unknown and view big as bad. He calls the combination a “Baptist and Bootlegger” dynamic, comparing it to a moralizing preacher and a shady bootlegger both favoring a Sunday liquor prohibition—the preacher for the Lord’s Day, the bootlegger for a lucrative Sunday monopoly. Antitrust 101 with Ryan Young (2019)

Zadek frames the same theme politically, arguing that the fastest-growing monopoly is political power ceded from the states to Washington, and that people who fear bigness look to bigger government to save them from bigness. He notes Young’s point that the federal government was formed in 1788 because states were charging tariffs to move goods across state lines. Antitrust 101 with Ryan Young (2019)

Big Tech and Section 230

Zadek observes that Big Tech gives away its product for free with unlimited supply, and asks how antitrust and breaking up big tech coexist. Young says it is hard to undercut zero price, and describes one line of attack: that Google and Amazon dominate the ad-serving market and take advertising revenue from newspapers. He says he does not think that is necessarily relevant to consumer welfare. Antitrust 101 with Ryan Young (2019)

In the later episode, Young says there is no antitrust angle to the complaint against Twitter, citing the “dozen keystrokes” argument: Google pays Apple as much as $12 billion a year to make its search engine the default on iPhones, yet a co-worker switched in three taps. He says the free speech question hinges on politics, not merits, and that Republicans want to regulate political speech in their favor while Democrats will take up the same precedent. He calls freedom of speech one of his few absolutes. Why Trustbusting Big Tech is a Bad Idea (2020)

On Twitter’s muting of the Hunter Biden story published by the New York Post, Young says Twitter made a mistake, that other outlets including the Wall Street Journal thought the story was not adequately sourced, and that if he ran Twitter he would have let it through. He says it is a business decision and not a legal issue, and that the publicity produced a Streisand Effect that doubled the story’s reach. He explains the term through Barbra Streisand’s lawsuit over a tabloid photo of her beachfront mansion, which amplified the story instead of suppressing it. Why Trustbusting Big Tech is a Bad Idea (2020)

Zadek summarizes that dusting off antitrust against Google and social media is unsupportable on antitrust grounds, and that the government’s only possible interest is Section 230, under which platforms are free from an editorial standpoint but trigger a different body of law—and potential defamation liability—once they exercise editorial control. Why Trustbusting Big Tech is a Bad Idea (2020)

Across episodes

Both episodes feature Ryan Young and argue the same question—whether antitrust protects consumers or competitors—with no development between the earlier and later treatment: the 2019 episode supplies the history, the Rule of Reason and the Baptist and bootlegger dynamic, while the 2020 episode applies the same framework to Big Tech and Section 230. Antitrust 101 with Ryan Young (2019) Why Trustbusting Big Tech is a Bad Idea (2020)

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