Make Big Tech Smaller and Big Government Bigger?

By Matthew Nicaud
March 18, 2022

Big Tech has had a wave of complaints leveled against it in recent years, and perhaps rightly so. From assertions of censorship, to excessive digital control, the companies have come under increasing scrutiny. In light of these tensions, some have called for Big Tech companies to be broken up all together, using a policy lever known as antitrust. But is this the best approach?

Many of the grievances against Big Tech carry a lot of weight. Yet, at the same time, Big Tech companies have achieved their large market shares by offering services that have benefitted consumers. Using the power of emerging technologies, consumers have been able to grow their businesses, connect with friends, and engage with society.

This brings in the question of whether or not antitrust is the best way to address the Big Tech challenges. Is an antitrust breakup of Big Tech companies the answer? Isn't there an ever-slight possibility that Big Government solutions could turn out to be worse than the problems with Big Tech itself?

What is antitrust?

In order to understand this debate, it is crucial to define antitrust. At the foundation, antitrust is a collection of laws that seek to ensure competition in the open market. How these laws are interpreted and applied has been a hinge point of the debate.

When antitrust was first instituted in the early 1900s, it was meant to break up the industrial monopolization practices that affected market competition, especially in the oil, rail, and steel sectors. Many of the companies engaged in practices that deliberately sought to corner the market, and then they would charge consumers higher prices for lower quality.

Initially, a company's size and market dominance were often key factors in whether it could be broken up. However, as antitrust law developed, the "Consumer Welfare Standard" became the key litmus test. Under this standard, antitrust action to break up a company can only occur if a company engages in monopolization practices that actually harm consumer welfare.

The danger of government not using the consumer welfare test for antitrust  

Contrasted with this consumer welfare test is when the government simply goes after "big" companies if they have a large market share. This carries the presumption that if a company outperforms most competitors, it must be engaging in anti-competitive behavior. Such actions go against the purpose of antitrust. After all, antitrust is meant to help consumers, not competitors.  

Thus, if antitrust is indiscriminately used as a cudgel to hit large technology companies without having a consumer-grounded reason, this sets a dangerous precedent. In a capitalistic society, companies exist to serve customers and generate capital. Companies growing to be large and serving millions of consumers is a trophy of free-market success. This should be celebrated, not punished.

The Big Tech issue is complex

Yet we return to the question of how to address bad actors within the companies collectively known by many as Big Tech. The issues are complex, and like most complex issues, a broad and heavy-handed government bureaucracy is not the answer.

Rather, specific issues within the Big Tech context should be addressed within the confines of that specific issue. This is critical. While blanket approaches to solving problems may carry political weight, a broad expansion of government power is dangerous. In the words of Ronald Reagan: "The nine most terrifying words in the English language are: I'm from the Government, and I'm here to help."

In most cases, companies that provide poor services will decline because consumers will not support them with their spending money. The forces of consumer choice have the ability to damage bad actors and poor-performing companies far more than a policymaker ever could. Whether it likes or not, every company is ultimately accountable to the market.

However, this is not to say that policymakers should abdicate their responsibility to address the public policy questions surrounding Big Tech. Rather, they should consider these issues with calculated precision.

If the issue is far-reaching social media censorship, then policymakers should carefully consider that specific issue. If the issue is algorithmic election interference, then policymakers should specifically consider that issue as well. Contrasted with addressing these specific questions, a broad application of antitrust just to "cut down tech companies to size" is not the solution.

Free market growth should not be jeopardized

An antitrust policy that seeks to break up a company because of its size and market share is tantamount to punishing the success it achieved through consumer choice. Rather than using the paradigm that "big is bad," antitrust policy should stick to the consumer welfare standard that takes this consumer choice into account.

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