In a June 2019 Guest Blog titled Being Evil, I argued that the large tech firms had become too big. Each of the Big Three -- Facebook, Google and Amazon -- wielded such enormous market power that their primary purpose seemed to have become sheer domination. Google, which went public with the motto "Don't be Evil," gave it up in favor of "Do the Right Thing." It was an apt change. If anything defines evil, it is predation, the desire to subjugate, to prey on others. "The weak are meat," says a character in the movie Cloud Atlas, "and the strong do eat." "Don't be Evil" sounded of Sinai; "Do the Right Thing" is what we say when the moral calculus is too tough. It didn't take much to nudge Google and the others over to the Dark Side. See http://www.brokeandbroker.com/4628/aegis-frumento-facebook/.
This week, 48 states and the federal government filed antitrust cases against Facebook. The nub of the lawsuits is that by buying up its most threatening competitors -- Instagram and WhatsApp -- Facebook squelched the market competition that "naturally" would have yielded better products for consumers. See http://www.rrbdlaw.com/5578/securities-industry-commentator/#fbftc and http://www.rrbdlaw.com/5578/securities-industry-commentator/#fbstates
Maybe that's true, but it's the weakest reason for breaking up Facebook. To bottom those cases on what's best for the consumer is to buy into the worst impulses of modern anti-trust law. "When we acquired Instagram and WhatsApp," wrote Facebook in its defense, "we believed these companies would be a great benefit to our Facebook users and that we could help transform them into something even better. And we did." https://about.fb.com/news/2020/12/lawsuits-filed-by-the-ftc-and-state-attorneys-general-are-revisionist-history/. I think it will be hard to prove otherwise. How will the prosecutors prove that Instragram and WhatsApp would have been better consumer products had they been left independent? And how do you argue that a service that appears to be free is not in the consumer's benefit?It's the wrong tack. Since the 1980s, we've been brainwashed by Reagan-era economists and politicians -- all carrying big buckets for big business -- into thinking that what's good for individual consumers is good for society. They took the old canard, "what good for General Motors is good for America," and turned it on its head. In their telling, the anti-trust laws were ever only meant to make things cheap.
The trust-busting progressives who passed those laws at the turn of the last Century never thought so. They thought bigness itself was a curse, as Louis Brandeis put it. The sheer size of large enterprises made them a threat to democracy itself. And now that we've had our fill of things made cheap, we're stopping to remember that. See http://www.brokeandbroker.com/4450/aegis-frumento-bezos/. The Facebook lawsuits are the most visible part yet of that realignment.The modern-day prophet of the new anti-trust revival is an unlikely heroine. Lina Kahn was still a student at Yale Law School when, a scant 4 years ago, she published a law review article demonstrating how Amazon's market dominance injured competition in ways that simple "consumer welfare" could not capture. https://www.yalelawjournal.org/note/amazons-antitrust-paradox. That article began an academic reevaluation of what antitrust law meant to accomplish in the first place. Khan became a staff counsel to the House Judiciary Committee, whose subcommittee issued a scathing 450-page excoriation of Big Tech. https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf. Her fingerprints are all over it:
The antitrust laws that Congress enacted . . . reflected a recognition that unchecked monopoly power poses a threat to our economy as well as to our democracy. In the decades since . . . the courts have significantly weakened these laws . . . . By adopting a narrow construction of "consumer welfare" as the sole goal of the antitrust laws, the Supreme Court has limited the analysis of competitive harm to focus primarily on price and output rather than the competitive process -- contravening legislative history and legislative intent. Simultaneously, courts have adopted the view that underenforcement of the antitrust laws is preferable to overenforcement, a position at odds with the clear legislative intent of the antitrust laws, as well as the view of Congress that private monopolies are a "menace to republican institutions."
"[A] menace to republican institutions" sounds like congressional hyperbole, but we shouldn't lose the point. Size matters. Bigness connotes power, and power that is not fettered by institutional restraints threatens us all. The threat is insidious. It is not coercive, but seductive. We fall for it with our eyes wide open.
For example, last week liberal, progressive lawyer Neil Katyal, President Obama's Solicitor General, found himself in the Supreme Court arguing that Nestle and Cargill can't be sued for employing child slave labor in their overseas facilities. As commenter Alex Pareene noted in The New Republic, Katyal "was effectively asking the Supreme Court to make it impossible for any foreigner to sue any company for any harm done to them, up to and including kidnapping and enslavement."
https://newrepublic.com/article/160481/neal-katyal-depravity-big-law. The point here is not the Katyal condones child slave labor -- he surely doesn't -- but that even the best lawyers will put their morals to the side if the money is good enough. They're only human, so as Groucho Marx's old joke goes, now we're just talking price. I don't mean to pick on Neil, but if it were Rudy we would just dismiss him. Neil stands in for all the rest of us. A big business's money is always too good to resist, for all of us.
And that's the true curse of bigness. In the end, "consumer welfare" is akin to other kinds of welfare. It is the welfare of the gilded cage, of the benevolent despot, of the kind master. It is always something given, and it can be taken away. We should fear the dominance that comes with size, because we should fear our own inability to resist it. To heed a siren's song of cheap prices is in the end to make a deal with the Devil. Even when he poses as a man of peace, such bargains never end well.