In the United States, there has been an ongoing experiment where big companies are given free rein, and the consequences of this laissez-faire approach are becoming increasingly evident in our daily lives. A comparison with Europe reveals that authorities there have been more successful in resisting the consolidation of major industries. For instance, airfares in the United States are now considerably more expensive, with North American airlines raking in more than double the profits per passenger in 2022 compared to their European counterparts.
The internet is another area where Americans pay a higher price. Broadband costs more than twice as much in the United States compared to other countries, and the average cost of cellular service is also significantly higher. This difference in pricing is highlighted by economist Thomas Philippon, who argues that if the United States had maintained the level of competition seen in 2000, the American economy would be around $1 trillion larger today.
The shift towards greater regulation reflects the lessons we have learned in recent years about the impact of corporate concentration. This includes a stronger focus on protecting workers and a recognition of the challenges posed by online business models, particularly in relation to data privacy and competition. For example, Amazon settled an antitrust complaint with European Union regulators by agreeing to stop using data from third-party sellers to inform its own retail decisions.
However, the most significant change lies in our reevaluation of the role of economics in policymaking. Instead of treating economic analysis as the sole determinant of decision-making, it is now seen as a valuable source of information. Antitrust authorities have failed in their duty to the American people by placing the burden on themselves to determine which mergers may be harmful, rather than fully embracing their mandate from Congress to prevent concentration.
Some harms are difficult to quantify, others are hard to anticipate, and sometimes the damage is cumulative. Jonathan Kanter, the assistant attorney general in charge of the Justice Department’s antitrust division, and Lina Khan, the chairwoman of the Federal Trade Commission, argue that these changes represent a restoration of the original intent of our antitrust laws. These laws aim to place limits on corporate concentration even in instances where negative economic effects cannot be proven in advance. Kanter emphasizes that his department’s focus is on protecting competition because that is the goal set by Congress, and they are committed to law enforcement.
However, achieving this goal will require overcoming the skepticism of federal judges who adhere to a minimalist approach to antitrust enforcement. Regulatory agencies have faced several defeats in cases where they sought to enforce antitrust laws more rigorously, such as when Meta was allowed to acquire Within, a virtual reality app maker, and Microsoft was permitted to proceed with its acquisition of Activision Blizzard, a video game manufacturer.
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