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Competition Won’t Fix Big Tech
Antitrust regulators should block natural monopolies from acquiring their biggest threats: new potential monopolies
“All happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition.”
— Excerpt from Zero to One, by Peter Thiel
Against all odds, the companies that comprise Big Tech — Facebook, Google, Amazon, and the like — have become villains.
Most ideas about how to address the issues for which they’re being blamed — rampant online abuse, the mishandling of user data, radicalization of both individuals and groups along the political spectrum, and the erosion of democracy — have focused on reintroducing them to competition by breaking them up.
At first glance, this idea makes sense. Competition is the process by which the best companies win by maximizing consumer welfare, and sits at the core of our market economy.
Historically, American antitrust regulators have measured consumer welfare by the relative price of the goods they purchase. This is why companies like Facebook, Google, and Amazon have thus far avoided antitrust scrutiny. These companies are unlike monopolies of yesteryear, which used their market power to force consumers into paying high prices for subpar products. Instead, these new monopolies succeed because people like using their services more than any other one that does what they do, and pay little to nothing for the privilege.
This begs the question: If Big Tech’s ability to thrill consumers is even partially attributable to the companies that comprise it having achieved monopoly status, is breaking those companies up really the best way to go about solving the issues for which they’re being blamed?
The answer, perhaps appropriately, is that it depends. The better question, though, is this: What effect will forced competition have on companies whose business models rely on collecting user data and selling the ability to target users based on it, or companies operating in markets that naturally lend themselves to monopoly?
