Anger at Big Tech no excuse to abandon free market

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No one is angrier at YouTube than I am. When I used that platform to educate the public on the potentially deadly consequences of relying on ineffective cloth masks to prevent transmission of COVID-19, YouTube took my down and suspended my ability to upload additional s for a week. Such was my punishment for the crime of daring to disagree with Chief Medical Advisor to the President Anthony Fauci, for which there was no appeal, even though the Centers for Disease Control now admits I was correct.  

I was appalled that YouTube rejected the principle of free speech and embraced the Orwellian tactic of disappearing messages that did not adhere to the official party line. In response, I simply used my power as a consumer to post my s to YouTube’s free-speech supporting competitor, Rumble.com.  

While many of my colleagues share my anger with big tech companies, they do not share my free-market principles. Instead, the bipartisan zeal for vengeance inspired an antitrust crusade against Amazon, Facebook, Google, and Twitter. But these proposals to ostensibly cut the tech giants down to size would, instead, perpetuate the dominant position of these companies and deprive consumers of the technological innovation that only free-market competition can provide.  

In other words, if my colleagues’ antitrust campaign had already been successful, they might have crushed any alternative to YouTube and my s would have gone unseen.  

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Anger at Big Tech no excuse to abandon free market

Amazon Fresh is part of the advantage big tech gives consumers through vertical integration. 

Competition is a win-win proposition. A company that continuously rewards its consumers with superior products and innovations will, in turn, be rewarded by consumers with a greater market share than its competitors. But no company can achieve a strong position in the market and rest on its laurels. Consumers are too demanding for that. Just ask the founders of America Online, Myspace, and Yahoo.   

One way to remain relevant in the competition for consumers’ dollars is through a concept known as vertical integration. Although you may not have heard of vertical integration before, you are almost certainly a beneficiary of it.  

Vertical integration is the term given to the process of a company obtaining ownership at several stages of production within the same industry. For example, McDonald’s doesn’t just sell Big Macs. The company processes much of its own beef as well as owns much of the land where its restaurants are located. By controlling access to its ingredients and avoiding reliance on landlords, McDonald’s can provide you with a consistent product at a low price.  

Vertical integration has proved instrumental to the benefits afforded by the tech world as well. Apple not only manufactures the iPhone, but also acquired AuthenTec, which developed the fingerprint ID sensor to unlock the device. Apple also sells its products through its own retail stores. Like McDonald’s, Apple’s use of vertical integration allows it to ensure the quality of its product and pass along savings to consumers.  

Anger at Big Tech no excuse to abandon free market

Rather than celebrate the innovations made possible by the free market, some in Congress are calling for even more strenuous efforts to eradicate “the curse of bigness.” Except, of course, when it comes to government. 

There is no lack of bills designed to empower government control of the marketplace and make vertical integration more difficult. Missouri Republican Senator Josh Hawley’s “Trust-Busting for the Twenty-First Century Act” would ban all mergers and acquisitions by companies with a market capitalization exceeding $100 billion. As Robert H Bork, Jr., writes, the Hawley bill would “lower the threshold for prosecution under existing federal antitrust laws, replacing ‘consumer harm’ standard with one that ‘protects competition.’” Such an approach basically admits that the goal of preventing mergers is not the welfare of the consumer but rather a mandate to seek some theoretical level of competition, regardless of whether the consumer is injured or not. 

Minnesota Democrat Senator Amy Klobuchar’s “Competition and Antitrust Law Enforcement Reform Act” would presume that any merger of a certain size violates the law and shifts the burden of proof to the merging parties to demonstrate that the merger is legal. According to Bork, the Klobuchar bill “would enact so many potential ways to prosecute, abuse, and torment companies that government would, in essence, become the real board of directors of every major company in America.” 

Klobuchar also teamed up with Iowa Republican Senator Chuck Grassley to introduce the “American Innovation and Choice Online Act,” which would prohibit platforms from preferencing their own products.  

Anger at Big Tech no excuse to abandon free market

Big tech employs the same vertical integration that companies like McDonald’s use. Pictured: McDonalds at 2142 Third Avenue in East Harlem 
(Google Maps)

Dominick T. Armentano, professor emeritus of Economics at the University of Hartford, explains the fallacy of such legislation. He argues, “competition is supposed to reward firms that innovate first, that build integrated systems, and that expand before their rivals do. Thus, to make such firms prime antitrust targets is a screaming contradiction to the alleged intent of antitrust law and reveals, instead, its true protectionist purpose.” 

If enacted into law, these three bills would, respectively, cap the amount of success a company could enjoy while seeking to become more efficient, declare some corporate mergers illegal until proven otherwise, and kill services that consumers find popular, like Amazon Prime. 

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The Wall Street Journal editors also note breaking up or inhibiting big American tech companies ignores the fact that these “American giants also operate in a global economy with emerging competitors, especially from China. … Politicians who are fretting about China’s drive for global economic dominance should think twice before dismantling the U.S. firms that invest heavily in artificial intelligence and can compete worldwide.” 

Yesterday’s innovations would likely have been prevented by today’s antitrust proposals. As antitrust expert Asheesh Agarwal notes, bigger firms acquire smaller firms to the benefit of both parties and the public. For example, Microsoft purchased Forethought, which allowed it to improve PowerPoint. In 2005, Google purchased a failed dating website called YouTube and helped transform it into a sharing platform visited by over 2 billion users every month. Had the threat of antitrust litigation been stronger, these acquisitions — and innovations — may never have been made.  

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I may be angry with YouTube for its policies that silence debate, but I would not allow my anger to support the use of antitrust to destroy the system that made YouTube possible. Doing so now would only freeze YouTube’s dominant position by preventing competitors from emerging. Rather than pursue even stronger antitrust laws, Congress should allow the free market to thrive where consumers, not the government, decide how big a company should be.  

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