03 Aug Are Google, Facebook, and Amazon So Good at What They Do That We Must Get Rid of Them?
Some years back, airlines offered an attractive in-flight menu of dining choices.
The much-pampered passenger faced some tempting options. Some items were so popular that a few passengers had to settle for second-best, which wasn’t all that bad. And sometimes, the favored item would simply disappear from the menu. On one such occasion, so the story goes, when asked what happened to the delicious salmon salad dish that used to be on the menu, a flight attendant supposedly replied, “It was just so popular that we had to get rid of it! We never had enough.”
So popular, we had to get rid of it!
Now, this may just be an apocryphal story, but let’s chew on it a bit more. If the popular salmon salad disappeared from the menu, chicken salad’s market share may have expanded. Consumers would still have choices, and competitive jockeying for menu space would continue. Who knows? Consumers may have learned that chicken salad is even better than they realized. So maybe the story could have a happy ending. Still, one is left with an uneasy feeling about overall human happiness. After all, the salmon salad lovers were denied a choice.
I thought about this story when reading about the current antitrust stance being taken by the Biden administration’s two enforcement agencies — the Federal Trade Commission and antitrust division of the Department of Justice. Leaders of both agencies, openly chosen because of their particular enforcement preferences, are in accord on at least one topic: Firms that have been so successful in providing what consumers will voluntarily buy — such as Google, Facebook, and Amazon — run the risk of being broken apart or severely regulated.
I know, there’s a lot to the story, and President Joe Biden’s executive order on the matter provides plenty to think about. But fundamentally, the three targeted firms are so good at satisfying consumers that our government guardians feel compelled to get rid of them or at least remove some items from their menus.
In a somewhat strange but undoubtedly accurate summary of the emerging new antitrust philosophy, the New York Times said, “Mr. Biden’s antitrust picks have argued that Facebook, Google and Amazon have monopoly power and have used their dominant positions … to squash competitors, leaving consumers with fewer options, even if that doesn’t result in higher costs.” The sentence captures the nub of a critical issue.
If a firm offers goods and services that consumers voluntarily consider to be superior, as based on their patronage, and if in so doing they provide the same consumers with lower or no higher costs, and if that means that the former suppliers now shunned by consumers are struggling and therefore the count of competitors is falling, how can one argue that consumers are being harmed?
One can surely argue that the number of competitors is smaller or that the products that were once offered on the physical or digital shelves of other vendors are now offered by the new giant suppliers, but how does that hurt the overall well-being of society? Theories to support the new antitrust theory will no doubt flourish, at least as long as the new antitrust team is in place, but the larger question about human well-being still remains to be answered.
Granted, the presence of massively successful firms and owners raises questions about political influence and power that may need to be addressed. But these are matters for Congress to debate, not for unelected antitrust officials to attempt to resolve. Nor for sitting presidents to manage through executive order actions.
It seems Google, Facebook, and Amazon may have become so popular that we will just have to get rid of them.
Bruce Yandle is a distinguished adjunct fellow with the Mercatus Center at George Mason University, dean emeritus of the Clemson College of Business and Behavioral Sciences, and a former executive director of the Federal Trade Commission.
Read the Full Article here: >Mercatus Center