The technology industry is reaching a critical juncture. Sen. Amy Klobuchar (D-Mn.), Chair of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, introduced legislation that would dramatically change antitrust laws. President Joe Biden has slated neo-Brandeisian technology critics Tim Wu and Lina Khan on the National Economic Council and the Federal Trade Commission, respectively. Sen. Josh Hawley (R-Mo.) has outflanked progressive Democrats, calling for a ban on all mergers and acquisitions for large American technology companies and increased government intervention into the free market. But the rehabilitation of an aggressive antitrust regime in Washington threatens to undermine the consumer welfare standard, which is the basis for how the United States became the leading technology incubator in the world.
In response to Washington’s aggressive posturing, opportunistic competitors are eager to seize on the building momentum. Rivals are coming out of the woodwork eyeing a chance to provide ammunition for technology critics on Capitol Hill. In the midst of this finger-pointing, protecting the consumer welfare standard has become even more critical. Lawmakers should be wary of businesses’ attempt to subvert the consumer welfare standard and seek congressional intervention to bolster their own bottom line.
The consumer welfare standard has long served as the bedrock of antitrust, and the political tug-of-war taking place demonstrates exactly why. The focus on consumer harm and protecting competition, not competitors, ensures a light-touch approach to antitrust enforcement. The technology sector is full of sharp elbows and is ruthlessly competitive. When SnapChat introduced story features, allowing for pictures to be shown for 24 hours before disappearing, Facebook, Twitter, and other companies quickly added similar features to their platforms. Now, with Clubhouse, a new audio-only social media app, other technology companies are looking to incorporate something similar.
Competitors and incumbents are forced to rapidly innovate or fall by the wayside. It’s understandable why some in the industry would look to utilize the fervor surrounding a few large technology companies to kneecap those with greater resources, capital, and experience. Roku and Google, Spotify and Apple, and even Apple and Facebook have aired their grievances publicly and some lawmakers have eagerly used these accusations to make their case against American technology companies. But what does the consumer welfare standard tell us?
Consumers are benefiting from the aggressive dog-eat-dog technology market. An innovative technology sector has made the last two years more bearable as Americans transition from in-person events to online communications. Similarly, polling shows consumers view many of these major technology companies positively. Amazon, Google, Youtube, Netflix, Microsoft, Apple, and Sonos all enjoy approval ratings of over 80 percent, according to a 2020 survey. Consumers choosing to use a service en masse should not be conflated with monopoly power.
This is the crux of the consumer welfare standard. The focus of lawmakers and regulators should be consumer harm. Of course, competitors big and small would like a leg up in a competitive market. That’s why using objective and measurable tools to measure consumer harm and the state of competition prevents frivolous or misguided intervention into the free market. Consumers are receiving benefits in the form of new technology, apps, and products. It’s important to note that competition is not equitable, and it shouldn’t be. An evenly distributed market share might sound like the desirable result for robust competition, but the reality is a model like this stifles innovation and does not serve consumers well.
The consumer welfare standard is our best tool to sort through accusations of anti-competitive harm. A focus, not on competitors, but consumer harm and competition ensure lawmakers and regulators can focus where real harm takes place. As Congress lights up the signal for competitors to testify side-by-side, it is important to take these claims with a grain of salt. Senator Mike Lee (R-Utah) concisely sums up the importance of this decades-long standard saying, “The consumer welfare standard—which ensures that the primary beneficiaries of the antitrust laws are the people, rather than big business—is essential to maintaining free markets.” As Congress conducts its oversight, it must look past the rhetoric and stay focused on doing what is best for consumers.
