AT&T and the case for digital innovation

A good way to guarantee you’ll be wrong about something is to predict the future of technology. As in, “One day, we’ll all ….” Experts can hazard guesses about artificial intelligence, driverless cars or the death of cable television, but technological innovation and societal change aren’t orderly. They disregard expectations. They’re dynamic. No one knows how trends will play out.

So how was it that the U.S. Department of Justice was certain AT&T’s $85 billion deal to acquire Time Warner would “greatly harm” consumers—even as the digital communications and entertainment industries are being blown apart and reinvented? No one could have anticipated the iPhone, Facebook or Netflix. No one knows what’s going to happen next on big or little screens, especially not antitrust lawyers in Washington. It would make more sense to give innovative companies room to compete and then let customers decide how to spend their time and where to spend their money.

That philosophy of encouraging—not stifling—competition and innovation is the big takeaway from a federal court decision that ruled AT&T could move ahead with its purchase of Time Warner—since completed. The Trump administration’s Justice Department sued to block or impose major conditions on the merger, which would bring together a content distributor (AT&T is a wireless, broadband and satellite TV provider) and a content creator (Time Warner owns HBO, CNN and a movie studio).

U.S. District Judge Richard Leon wisely slapped down the government’s arguments predicting customers would have to pay more for the combined company’s services.

The crucial point, whether you are a customer or the CEO of AT&T, is that the digital world continues to grow and evolve. Facebook and Google rose to dominate digital advertising. Netflix is now one of the most important Hollywood entertainment studios. The reason AT&T wants Time Warner is so it can compete against tech companies and expand its customer base: Imagine an AT&T wireless package that gives you HBO on your smartphone. Or imagine the next big entertainment innovation: virtual reality shows starring … robots? AT&T is more likely to get there first by controlling a movie studio.

It’s all exciting unknowable stuff, which the Justice Department shouldn’t be trying to anticipate and regulate. This is the reason we supported the Federal Communications Commission’s move to do away with net neutrality, the federal government’s regulatory controls on internet providers: Because increased competition is a greater spur to technological innovation than government fiat.

Regulators have a role to play in ensuring an open and fair marketplace. But they shouldn’t be in the business of picking winners, losers or the next big thing in tech.