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The following column is by The Goldwater Institute's Director of Strategic Engagement, Heather Curry.
Build a better mousetrap, and we’ll come tear it down. That’s the message the Biden administration’s Department of Justice is sending to all American innovators with a lawsuit that could have dire implications for consumers, small businesses, and the very principle of free-market competition itself.
The DOJ has begun its antitrust trial against Google in a federal lawsuit that alleges serious antitrust violations, including the monopolization of key digital advertising technologies. While Justice Department press releases tell a noble tale of government intervention on behalf of consumers, the details suggest that the feds are more concerned about the effect of Google’s actions on its competitors than on everyday Americans. By focusing on the purported harms to Google’s competitors, the DOJ’s case undermines a decades-old principle in antitrust policy known as the consumer welfare standard. This standard, developed in large part by eminent conservative legal scholar Robert Bork, provides guardrails on antitrust enforcement, reserving such serious actions for situations where consumers face real, demonstrable harm, such as increased prices. Using data-driven analyses to determine real harm, the consumer welfare standard fosters an environment where businesses succeed or fail based on the merits of their services and goods. This standard, however, only works so long as the federal government doesn’t put its thumb on the scale in favor of one business over another.
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The Biden administration’s effort to punish Google for providing innovative services that benefit both consumers and other businesses does just that, throwing the longstanding consumer welfare standard right out the window and onto Pennsylvania Avenue. By pursuing antitrust actions that discard the consumer welfare standard, the feds are effectively telling American innovators that they shouldn’t bother innovating at all, because the government will just tear down their work anyway.
Remember, just because one business succeeds does not mean it has caused another business to fail. Further, a business should not be required to make life easier for its competitors just because they exist in the same market. Ideas come and go, and businesses that fail to evolve are often left behind. Failure teaches important lessons about things like product quality and consumer needs, and competition breeds innovation and creativity. Put simply, failure and competition both play a vital role in a vibrant economy. This is the way markets can and should work, and it is the reason America dominates the world in numerous sectors, including technology.
Writing on the history of antitrust policy, Timothy Sandefur, Vice President for Legal Affairs at the Goldwater Institute (where I work), noted that, "For a generation now, the consumer welfare standard has helped foster a dynamic economy in which business innovations have reduced the cost of living and improved the variety of products and services available to buyers. Largely freed from the threat that wise business choices will incur prosecution, companies have found new ways to lower costs while continuing to innovate."
This is true for Google, as well: the company is successful because it has created a superior product that consumers like and choose to use over and over again. And even with Google’s success, its competitors have room to grow, as demonstrated by increased traffic for DuckDuckGo and other providers. That’s the case for other tech giants too: for instance, consumers often choose services like Amazon to research products to buy, or turn to Yelp for help finding quality restaurants.
Google’s products also create significant benefits for numerous other American businesses that utilize its ad services. A recent survey from the Connected Commerce Council found that 80% of small businesses say digital ads allow them to compete with larger businesses. Google’s ad services benefit small businesses and consumers by bringing more options to light in the marketplace. Consumers can find better products, and small businesses can advertise those products to a broader audience. So by targeting Google’s ad services, the Department of Justice is also inadvertently targeting small businesses and consumers.
Competition is as American as it gets. It leads to better quality goods, lower prices, and more options for American consumers. Rather than attacking value creators, the DOJ should change its default setting to protect American consumers from real harms.
Heather Curry is the director of strategic engagement at the Goldwater Institute, a public policy think tank located in Phoenix, Arizona.
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