House Antitrust Hearing Misses the Real Consumer Threat

Washington, D.C., September 16, 2010 – This morning, the U.S. House subcommittee held a hearing to examine “competition in the evolving digital marketplace.” While the members heard angry diatribes against major high-tech firms, they were also warned of the serious risks to consumers of unwarranted governmental intervention in innovation-intensive markets.

 

“In the information age, we must challenge the conventional wisdom of ‘smokestack era’ antitrust law and the allegedly harmful practices it targets—and not just with superficial reforms,” said Wayne Crews, Vice President for Policy. “Even when companies misbehave, they do not act in a vacuum. Providing the necessary competitive responses to successful firms like Google is exactly what markets are for.”

 

“Instead of probing the behavior of businesses competing in hyper-innovative digital markets, Congress should apply the microscope to antitrust laws themselves,” said Ryan Radia, Associate Director of Technology Studies. “The greatest threat to consumers comes not from high-tech firms, but from harmful governmental regulations that constrain innovation and growth.”

 

“Antitrust is all about preventing, not promoting, competition in the evolving digital economy. It thwarts the natural evolution of the market, ultimately harming consumers and entrepreneurs,” Crews said. “Antitrust weakens the next generation of incentives to innovate in building tomorrow’s technologies and complex networks. By undermining the profit motive and the drive for market power, antitrust impedes the evolution of advanced information retrieval systems. By depriving consumers of that competition, antitrust regulation destabilizes the very industries it purports to foster.”