All bust, no trust

Consumers of the world, unite! You have everything to lose, including lower prices, faster service, instant information, economic freedom, more products and the knowledge that the world is increasingly at your beck and iPhone call. All this is potentially at risk if the latest Big Government movements against the world’s tech companies continue to escalate.

The targets of these growing calls for government action — in Europe and North America — are leading technology companies whose names are household brands, including Amazon, Google, Apple, Facebook, Microsoft. In Washington this week, lawyers for the three dominant social media players — Google, Twitter and Facebook — will appear before a Senate committee looking into foreign intervention in the U.S. electoral process.

But election politics is just the latest red flag of interventionist convenience flapping over the major internet companies. For several years, politicians and ideological activists have been intensifying their claims that the tech giants are a threat to democracy, that too much economic and political power has been accumulating in the hands of a small group of executives who control corporations that are slowly coming to dominate economic activity.

The economic rumblings increased last week when Google’s parent (Alphabet Inc.), Amazon.com Inc., and Microsoft Corp. reported more big sales figures. All that income is said to be an indication of excessive market power and fresh evidence the companies are getting too big. It is time, say the crusaders, to bring in anti-trust laws to at least curb the growth of the Amazons and Googles of the world.

A typical handwringing came from the Financial Times editorial board: “We are a long way from having reason to break up the tech giants,” it said. “It is clear, though, that they are using acquisitions to head off competition and leverage their dominance in new markets.” Therefore, “it is time for antitrust regulators to start blocking deals,” like Amazon’s recent takeover of Whole Foods.

Others want full-on trust busting, with calls for action coming from political actors on the left and right. Increasing numbers of conservatives such as William Kristol and Democrats such as Senator Elizabeth Warren say the tech companies are engaging in “monopolistic behaviour” and need to be broken up. “Concentration of power is a problem even if there’s no immediate cost paid by consumers,” Kristol has said.

This is where consumers should begin rising up. There is zero evidence that these companies are hurting consumers or that they ever will. On the contrary, by the current standard measures of anti-trust theory, the tech giants are giving consumers more of what they want and at prices they are more than happy to pay. That’s why the companies are growing, contrary to the claims of alarmist anti-market critics and the contents of semi-populist books that portray the tech companies as manifestations of “monopoly capitalism.”

One such book, Move Fast and Break Things: How Facebook, Google and Amazon Cornered Culture and Undermined Democracy, captures the key threads of the argument. In it, author Jonathan Taplin blames the rise of these supposed tech monopolies on Ayn Rand, Milton Friedman and a wild cabal of free-market theorists — including former U.S. judge and legal scholar Robert Bork, who allegedly singlehandedly sold policy-makers the idea that consumer benefit is the main criteria for assessing whether companies are engaging in destructive anti-competitive activities.

Consumer benefit is certainly the main test proposed by Bork in his classic 1978 book, The Anti-Trust Paradox. If successful companies, no matter how large, produce lower prices, greater efficiency and more and better products for consumers, claims of destructive monopoly and oligopolistic behaviour are unsustainable.

Bork’s arguments, widely adopted over the years, were also a lot more complicated than merely positing consumer benefit as the sole test. He opposed price fixing and cartels, and insisted on evidence of the continued existence of competition, among other things.

What Taplin and many others want is to kill Bork’s first idea — putting consumer welfare first — and reinstating the old trust-busting beliefs and theories from the early half of the 20th century: If it’s big, it must be bad, even if it benefits consumers.

The economic arguments of the tech trust- busters are a regression to the idea that economic activity needs to be protected from the mauling aggression of big corporations. The route to competition is to protect smaller and existing companies. The claim is that the anti- trust focus on “consumer welfare” misses the problems created by the modern internet economy.

One anti-tech-trust activist — Lina M. Khan — wrote in the Yale Law Review last January that the full menace of Amazon cannot be grasped “if we measure competition primarily through price and output.” She said current doctrine that ignores the modern tech economy “underappreciates the risk of predatory pricing and how integration across distinct business lines may prove anticompetitive.”

Forget prices and output, forget consumer benefit, and concentrate instead on structure and bigness.

Not that Taplin and others of similar view think very much of consumers. Taplin ends Move Fast and Break Things with misty-eyed nostalgia for John Kenneth Galbraith’s takedown of the affluent society and E.F. Schumacher’s 1973 book, Small is Beautiful. Schumacher opposed raising the consumer’s “standard of living” and the pursuit of higher levels of individual consumption, none of which would make humans happy, he said. Taplin says he wondered “whether our smartphones were liberating us or just addicting us to more consumption.”

The tech giants, says Taplin, are “all built around the assumption that they hold the secret formula to continually arousing our desires. This may not be good for America, but it’s good for Google, Amazon, and Facebook.”

Anti-tech-trust warriors, like climate warriors, are just another gang of anti-consumer utopians. It’s the same old anticapitalist, anti- materialist, quasi- religious moralizing that dates back centuries. Consumers beware — and unite.