Antitrust reasoning

The argument

The argument reasons from what antitrust law exists to do. 120 countries have antitrust laws, and a big reason for the adoption of most of these laws is the competitive markets that the laws create. The United States' Federal Trade Commission cites protecting the process of competition for the benefit of consumers as the main reason for U.S. antitrust laws. The FTC elaborates, stating that ensuring businesses operate efficiently, keep prices down, and keep quality up is also of primary concern. Those aims are the link to innovation: to achieve these three things and maintain profitability, a company must be innovative, because a firm facing rivals cannot hold its customers by standing still. In short, antitrust laws across the globe help ensure innovation is not stifled by monopolies. The point of that observation is what it implies about the alternative. If competition is the mechanism that forces improvement, then antitrust laws are the only way that the consumer can be certain that innovation is occuring, since enforcement is the only thing that keeps the mechanism in place. Where it is absent, nothing guarantees the outcome. That is precisely the condition of a tech monopoly. Tech monopolies allow companies to have a choice in innovating. If a company chooses not to innovate, they may do so, and nothing follows from that choice: they have control of the market, so customers have nowhere else to go, and there is nothing driving them to improve on a proven concept. Improvement becomes optional rather than necessary, and a proven concept that continues to earn is the safer course. The conclusion is not that such firms are incapable of innovating. Thus, a tech monopoly may have adequate funding to innovate — more than smaller rivals can raise — but it may lack the drive, because the discipline that would supply that drive has been removed.

Premises

Counter-arguments

Antitrust can slow down R&D: "Many U.S. companies that do business in Europe often face scrutiny from the European Union, under what it calls “competition policy.” For example, the European Union fined Google $5 billion in 2018, a significant amount of lost capital that could have created consumer value instead. Google’s parent company, Alphabet, spent $16.6 billion on research and development in 2017. If Google did not fear losing revenue to competitors, it would feel no need to spend such resources to improve its offerings."

Rejecting the premises

[Rejecting P1] This premise describes what antitrust law is for, which is a statement of purpose rather than evidence that monopolies fail to innovate. The authority cited also speaks to competition, prices and quality; innovation is appended to the chain by the argument rather than by the source. [Rejecting P2] "May have funding but lack the drive" is a possibility, not a finding, and no case is offered in which it happened. The claim is contested on its own terms — the sibling position points to the research budgets of the largest technology firms, and Schumpeter's argument that monopoly rents fund risky research competitive firms cannot afford is the standard reply, which the argument does not engage. Nor does it address the more specific charge usually made against these firms: that they acquire potential competitors, rather than that they stop developing products.