The Dangers of the Populist Antitrust Movement

Driven by the recent rise in hostility toward Big Tech companies, discussions of antitrust have moved from the esoteric pages of academic articles to the speeches of prominent politicians—on both sides of the aisle.

While liberals and conservatives have different complaints about the business practices of Facebook, Apple, Google, Amazon, and others, they are trying to use the same tool to address them: aggressive antitrust enforcement. Just this week, Missouri Sen. Josh Hawley announced two antitrust reform bills that, if enacted, would be far more radical than anything we have seen from the left. 

Together, Hawley’s bills would completely prohibit mergers and acquisitions by large businesses and prevent companies like Amazon that offer a mix of third-party products and house brands from selling their own products on their own platforms. More important, his proposals would replace the consumer welfare standard—an approach designed to protect consumers based around price, quality, and innovation—-with one that focuses on the “protection of competition.” These proposals would discard decades of carefully considered antitrust policy in favor of a populist approach designed to harm large businesses regardless of their impact on consumers. This kind of “big is inherently bad” mentality is certainly dangerous, but unfortunately it is not new.

In the early 20th century, antitrust was an aggressive tool used for a variety of different and often conflicting goals. Unsubstantiated assumptions about market structure ruled the day, and clear-cut rules prohibited broad swaths of business practices that actually benefited consumers. Take pricing. During this era, pricing below a certain level was often viewed as anti-competitive, even though, as we now know, actual predatory pricing strategies are rare and vigorous price competition is what makes products more affordable and accessible for consumers.