Tech Giant Exclusion
52 Pages Posted: 6 Mar 2021 Last revised: 5 Apr 2021
Date Written: January 5, 2021
Critics claim that Amazon, Apple, Google, and Facebook are monopolies that crush smaller competitors. Antitrust has failed to control them because it asks only whether consumers have been hurt, not whether small firms have been devastated or the political system corrupted. The only solution, the critics assert, is to break up the tech giants. This diagnosis is mistaken. While the tech giants have excluded rivals, the proper approach is not to break them up but expand the law to reach their conduct.
The tech giants compete with third parties selling on their platforms and sometimes take steps to disadvantage them. They demote them in search results, use confidential information about specific sellers to copy their products, or expel them because they are rivals. But because these tactics rarely, if ever, lead to monopoly power, they do not violate the Sherman Act. This gap should be closed.
The tech giants should not be broken up. Splitting them into smaller versions of themselves would raise prices or reduce quality for consumers. Preventing them from selling their own products on their platforms would deprive consumers of products they value. Likewise, the goals of antitrust law should not be changed. Its fundamental aim is to protect consumers and small suppliers from anticompetitive conduct. If courts also had to preserve small business and curb the political influence of large firms, the goals of antitrust would conflict. Courts would have no objective way of balancing them, the deterrent effect of antitrust enforcement would be blunted, and consumers and workers would be hurt.
Congress should amend the Sherman Act to prohibit exclusionary conduct that significantly reduces competition, whether or not it results in monopoly power or a dangerous probability of monopoly power. To minimize the impact on procompetitive conduct, the change should apply only to the tech giants and should contain strict proof requirements. But by exposing the tech giants to an array of sanctions, it would substantially reduce the incidence of unwarranted exclusion.
Keywords: antitrust, tech giants, digital platforms, exclusion, monopoly, market power
JEL Classification: K21, L12
Suggested Citation: Suggested Citation