AT&T’s acquisition of Time Warner reportedly hit a snag with the Department of Justice, and some wonder whether Trump’s hatred of CNN is to blame. Ironically, many of the folks now suspicious of the motives of Trump’s DOJ were previously critics of the merger.
Among progressives sympathetic to the so-called “hipster antitrust” approach, the 2011 Comcast/NBC merger should not have been approved, and the proposed AT&T/Time Warner marriage seems like a direct sequel. Whether or not Trump is innocent of meddling as he claims, the executive branch has much more arbitrary power in a hipster antitrust world, and that should give us pause.
The hipster antitrust approach rejects the mainstream consensus on antitrust law that emerged in the late 1970s. The bipartisan and multinational consensus holds that antitrust law should focus on one objective: consumer welfare. While it might seem simple, this insight revolutionized antitrust law, which previously served a miasma of ill-defined policy objectives, many of which actually harmed consumers. Inefficient competitors were protected by law, benign product bundles were banned, and large companies were deterred from making valuable investments for fear of antitrust litigation.
The conventional wisdom has fared well in the Internet age. For example, the signature progressive antitrust cause of the 1990s, Microsoft’s bundling of Internet Explorer, looks laughable in retrospect. Unless you work for Microsoft or work with idiosyncratic government-sponsored legacy systems, you likely don’t use Internet Explorer. Other suggested antitrust interventions seem even more absurd with age. (’Member MySpace? ‘Member AOL?)
The hipsters, who call themselves the New Brandeis School, reject the prevailing conventional wisdom. Irrespective of direct consumer prices, hipsters believe industrial concentration undermines income equality, workers’ wages, and even democracy itself. Thus, the Amazon/Whole Foods merger was opposed by hipsters even though it reduces prices for consumers.
Trump’s fixation with CNN and the Washington Post—media outlets part of large conglomerates—is entirely consistent with the progressive hipster approach. In fact, Trump’s remarks on the AT&T merger mirror those of Bernie Sanders.
So, how can we tell if antitrust enforcement serves noble hipster purposes or shameful autocratic urges?
We can’t. According to Matthew Yglesias, the root problem with the DOJ’s apparent demands on AT&T is that Trump “lies consistently” and is “openly disdainful of the social function of a free press.” Therefore, we cannot trust Trump’s claims to have good intentions, and his comments threaten to undermine any progressive antitrust enforcement executed by career professionals.
But a theory of antitrust law that depends on virtuous executives is a bad theory. Other politicians have been known to lie, and they’ve certainly disdained the social function of a free press. We cannot distinguish the acts of Trump the autocrat from DOJ hipsters because hipster antitrust has no clear guiding principles like consumer welfare.
With the conventional antitrust principle of consumer welfare, regulators have some discretion, but the analysis is focused on questions like “what is the relevant market and market share?” When federal agencies care strictly about consumer welfare, vertical integration like the AT&T merger will almost always be approved because, as Hal Singer discusses in detail, there’s little risk consumers would be worse off. Makan Delrahim, leader of Trump’s DOJ Antitrust Division, got it right last year: “This is more of what we call a vertical merger . . . I don't see this as a major antitrust problem.”
However, when antitrust law no longer focuses on consumer welfare, and when vague hipster concerns about the bigness of firms are actionable, regulators have a free hand to demand conditions for political or personal advantage. While we might be concerned about media consolidation, antitrust enforcement generically aimed at “big business” is a gift to would-be tyrants.
As for the reported conditions on the AT&T merger, they seem misplaced in an age when anyone with a smartphone can be a content creator, and when new entrants like Netflix, Amazon, Hulu, and Disney are disrupting content distribution.