Sweeping changes have disrupted society courtesy of the Information Revolution, presenting great opportunities in radically transformed economic markets, but also great challenges in adapting to new and different forms of organization. Antitrust laws and other elements of competition policy are being re-examined, scrutinizing the impacts of market power, where competitive forces—beneficial in discovering new efficiencies and promoting consumer welfare—may be thwarted. Specifically, the House Judiciary Committee conducted hearings in 2020 in which it asked key questions about the pattern of development in U.S. markets and options for policy reform.
The following questions are salient:
- How adequate are existing laws that prohibit monopolization and monopolistic conduct, including whether current statutes and case law are suitable to address any potentially anti-competitive conduct?
- How adequate are existing laws that prohibit anti-competitive transactions, including whether current statutes and case law are sufficient to address potentially anti-competitive vertical and conglomerate mergers, serial acquisitions, data acquisitions, or acquisitions of potential competitors?
- Is the institutional structure of antitrust enforcement—including the current levels of appropriations to the antitrust agencies, existing antitrust authorities, congressional oversight of enforcement, and current statutes and case law— adequate to promote the robust enforcement of the antitrust laws?
By examining industrial concentration in the information economy and its impact on U.S. market competition, vertical integration in digital platforms, forces driving innovation in business models and product markets, and the use of competition policy tools in high-tech markets, this study finds that:
- Relative to practical alternatives that include E.U.-style regulation, digital markets in the U.S. appear robust, generating considerable innovation that benefits consumers.
- The global internet is dominated by U.S.-developed technologies and business models, discovered and deployed in a process of competitive rivalry. The emergent markets in online services and e-commerce have created enormous efficiencies and valuable new services, rewarding consumers and reconfiguring numerous industries as users adopt preferred ways of working, shopping, learning, and enjoying entertainment media.
- Every innovation introduces complications as we adjust to change, potentially requiring policy reforms that improve welfare while continuing to facilitate new options.
- Communications networks and digital services have massively increased information flows and the opportunities for gains from trade. Even given imperfect rules and regulations, U.S. markets have contributed strongly to economic advances embraced around the world.
U.S. policies have managed to incentivize great progress in high-tech markets. Mass market access to the internet became popular first in the U.S., rapidly spreading by competitive forces allowed to flourish, as common carrier obligations for entrants such as AOL were abandoned. Residential broadband markets then emerged in rivalry between (unregulated) cable TV operators and telecommunications carriers.
Bringing high-speed data services to the home has opened whole new sectors of the new economy. Wireless mobile networks, first launched in the U.S., have rapidly replaced landline phones in affluent countries, and long ago did so in developing markets, where the vast majority of the population never gained access via the traditional PTTs—state-owned monopolies controlling postal, telegraph, and telephone services (infamous for their years-long phone install waiting lists). Americans consume more mobile data per capita than residents in any large European country.
This study finds that rejecting open markets in favor of more highly regulated systems or pushing antitrust law away from its current focus on consumer welfare will likely cause more harm than good.
Where adjustments in policy may be made to improve competitive outcomes, they ought surely to be implemented. But suppressing incentives for innovation by categorically ratcheting up antitrust enforcement risks errors that weigh decidedly against efficiency and consumer welfare.