Should Amazon (and Google, and Facebook) Be Canceled by Antitrust Law?

Donald Trump, Elizabeth Warren, and "hipster antitrust" scholars and activists say big tech companies need to be broken up. Economist Tom Hazlett says they're wrong.

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Should Amazon (and Google, and Facebook) Be Canceled by Antitrust Law?

What a difference a decade makes! Ten years ago, everyone loved big tech companies such as Amazon, Facebook, Google, and Twitter. They were bringing low, low prices and vast selection to consumers, allowing us to connect and build community in new and powerful ways, and helping the least-powerful among us speak up against power and even start revolutions.

Nowadays, those same corporations are favorite targets of politicians all across the political spectrum. Congress demands their executives testify before the House and Senate, President Donald Trump rarely goes a day without inveighing against tech giants for allegedly screwing with his popularity and reelection chances, and Democratic presidential candidates like Elizabeth Warren have promised to break up companies they say have too much cultural, economic, and political power.

Lurking behind the new attacks on big tech is a novel interpretation of antitrust law known as "hipster antitrust" because it's being touted by a new, younger generation of legal scholars. Law professors such as Lina Khan and Tim Wu are inspired by Louis Brandeis (1856-1941), the Harvard Law professor and Supreme Court justice who warned against "the curse of bigness" and defended small, local firms against national behemoths like Standard Oil and A&P.

In the cover story for the October 2019 issue of Reason, Clemson economist Thomas W. Hazlett delves into the ideas and analysis of hipster antitrust and the new push to break up the tech giants. He says that the hipster antitrusters, Warren, and Trump have got it almost all exactly wrong and that companies such as Amazon actually are massively benefiting consumers. On today's Reason podcast, Hazlett tells Nick Gillespie about the checkered history of past antitrust actions and what proponents of hipster antitrust get wrong about today's (and tomorrow's) tech sector. Read Hazlett's story here.

(Joanna Andreasson, Reason)

Support Reason magazine with a print or digital subscription and get to read stories early and gain full access to our archives. Subscriptions start at $14.97. Go here to subscribe. 

Audio production by Ian Keyser.

Comments

[damikesc]

"Warren, and Trump have got it almost all exactly wrong and that companies such as Amazon actually are massively benefiting consumers."

As did Standard Oil. Yet they were broken up. One company running everything is no better than the government doing so.

I don't see how monopolies really fit into Libertarianism, but man, libertarians seem to have a massive hard-on for them.

Because regulatory capture isn't really a thing or something.

[loveconstitution1789]

People should pay attention to how these companies become behemoth corporations.

Amazon had good ideas and was receptive to customer demands. Amazon didnt get fuck you money until they ventured into Cloud servers storage for the NSA and other government agencies unconstitutionally spying domestically. NOTICE NOT MUCH DISCUSSION ON THAT FROM REASON OR MSM.

Then all of a sudden Amazon can waste money on not splitting their stock and buying loser companies like Whole Foods.

[mad.casual]

Once again, Joe Lieberman literally called up Amazon and told them to kick off Julian Assange and Wikileaks and they did. This isn't even some sort of back room secret either. After he did so he released a statement to the press effectively saying that he hopes other hosting providers get the message.

Imagine if Trump or MItch McConnell phoned up Twitter and told them to kick off Madonna or Megyn Kelly and, after they complied, Tweeting that he hoped other social media companies can take a hint.

[Metazoan]

But the solution to this is obviously not to further empower the state (and anyway, they have no interest in harming their own power--they love corporate centralization as proxy for state power). The solution consists of decentralized alternatives; unfortunately, nobody seems willing to advocate for some legal room for innovation in that space.

[mad.casual]

But the solution to this is obviously not to further empower the state

I don't agree with anti-trust. I think the problem could be solved by the free market and a re-unburdening of civil litigation.

unfortunately, nobody seems willing to advocate for some legal room for innovation in that space.

There's already protection in the space selectively enacted specifically to protect it. I'm dubious but maybe different or other legal room is needed, but you've got to get rid of the construct that's not working first.

[Metazoan]

Oh, maybe I wasn't being clear, but I was referring to decentralized organizations that work via blockchain and cryptocurrencies. That has effectively been stifled by an SEC pocket veto.

[JesseAz]

The practices of block chain servers are already under attack to silence others, see attacks against gab and minds.

[mad.casual]

That has effectively been stifled by an SEC pocket veto.

You've stolen a base and/or this is oxymoronic. If blockchain and crypto are superior then refusing to use them is disempowering. If they are superior but the only way they become so definitively is through SEC adoption (or whatever you consider the opposite of a veto to be) then that's literally further empowering the state. If they're worthless or worthless without SEC adoption then not only is the SEC decision not exceedingly rational, but pro-liberty as well.

You seem to either not understand or willfully conflate the distinction between a veto and a ban.

[JesseAz]

The state already has the power, and generally is supported by libertarians, to break up anti competitive players who disrupt markets. Some of you are so blind to the actual facts thinking it is solely about conservative speech. The entire anti trust argument at DoJ is about anti trust, not speech. The squelching and harming of competitors and the like.

[ThomasD]

Anti trust action is not limited to purely economic concerns. Rights in our property and property in our rights.

[Sometimes a Great Notion]

What is AWS montary value of contracts broke down between gov and private? I just don't know if it is enough to throw the baby out with the bathwater.

[chemjeff radical individualist]

Standard Oil was broken up due to populist politicians grand-standing against the tyrannical abuses of a giant evil corporation, much like today and politicians grand-standing against Google and Amazon.

The market share of Standard Oil reached a peak at about 90%, but then was falling even before they were broken up, to about 60%, indicating that market forces alone were destroying the dominance of Standard Oil and breaking them up by the government was unnecessary.

[Metazoan]

The market share of Standard Oil reached a peak at about 90%, but then was falling even before they were broken up, to about 60%, indicating that market forces alone were destroying the dominance of Standard Oil and breaking them up by the government was unnecessary.

Thank you. It is troubling that even advocates of the free market believe the pseudo-history about SO and antitrust.

[chemjeff radical individualist]

It is so discouraging to see the Howard Zinn - Paul Krugman version of the Standard Oil story to be repeated so uncritically around here.

Here is a better take on Standard Oil. Spoiler alert: They didn't act like the big bad monopoly that they were accused of being.

https://fee.org/articles/the-myth-that-standard-oil-was-a-predatory-monopoly/

[JesseAz]

Except for their actions such as price cutting at a loss to drive out competition and contract binding to stop transport of competitor oil.

God you're dumb.

[hause L]

hello try and read on dank vapes
Sure the world must be wondering where to get the best dank vapes flavours.

[JesseAz]

Jeff, ignorant again. They were broken up due to actions to target competitors and anti market actions.

https://learning.blogs.nytimes.com/2012/05/15/may-15-1911-supreme-court-orders-standard-oil-to-be-broken-up/

[ThomasD]

It's not ignorance, it's intentional disinformation.

[chemjeff radical individualist]

One company running everything is no better than the government doing so.

Neither one is desirable, but the government running everything would be worse - the government can force you to use their 'services' and throw you in jail for not complying, while no matter how big any company is, it cannot force you to use its service.

[Metazoan]

Right. And often the only way to have a sustained monopoly as a business is to have the government prevent entry of competitors (see: telecom).

[BYODB]

And this is what is meant by 'regulatory capture'. Natural monopolies are a rare bird in the wild. The American brand of regulatory capture monopolies are much more common the world over.

Don't worry though, Facebook is way too useful of a tool for the alphabet soup of government to use to spy on the populace. There's not a chance in hell that they're going to decentralize such a useful surveillance tool.

[Metazoan]

Oh, not worried about that. In fact, they are making it difficult to construct decentralized alternatives.

[Jerryskids]

Said it before and I'll say it again - be careful when you run to the wolf to protect you from the fox.

[Chipper Morning Wood]

I think a better saying is "be careful when you run to the bear to protect you from the fox," because "fox" is slang for a hot chick and a "bear" is a big, hairy gay dude.

[Á àß äẞç ãþÇđ âÞ¢Đæ ǎB€Ðëf ảhf]

Because the only real monopolies are those created by government, whether by patent, copyright, fiat, or any other reason.

Standard Oil never was a monopoly. Best proof of that is that their high market share had been dropping for several years before the government even started the anti-trust proceedings.

[Square = Circle]

And when they were "broken up," they were merely broken up into subsidiaries state-by-state, with Rockefeller still maintaining control over the whole thing. A largely symbolic action.

[JesseAz]

You dont have to be a sole monopoly to practice anti competitive actions. The goal is to stop those practices before the competition dies off.

[Overt]

"As did Standard Oil. Yet they were broken up. One company running everything is no better than the government doing so."

I missed the part where you explained why it was a good thing that Standard Oil was broken up. As far as I can tell, they were broken up because their business model hurt a bunch of competitors, and they (with the help of friendly journalists) pedaled all these scares amounting to, "Sure SO is great now, but after we are driven out of business, they can soak all the poor customers!"

In the case of Standard Oil, their break up wasn't really that consequential to industry, because they had already started to decline because of natural market evolution. But the real damage done was to our legal and educational systems that tell the history incorrectly.

[Chipper Morning Wood]

There is nothing wrong with natural monopolies. Libertarians only have a problem with coercive monopolies.

[JesseAz]

They arent even beneficial. They've led to increases in depression, lost productivity at work, and stifled new inventions with anti competitive practices such as buy and kill. It's almost like reason has an income from these entities....

[Mary Can]

I am not sure about this
https://bestdrillchainsaw.com/husqvarna-359-chainsaw-review-price-specs-parts-diagram/

[loveconstitution1789]

Corporations are creations of government with statutory limited liability.

If you want the rights and privileges of individuals as a company, stick with single proprietorships and partnerships.

Otherwise, Incorporation involves the company agreeing to being in the "Public Interest".

Every type of company has its advantages and disadvantages. Choose wisely, grasshopper.

[Rossami]

re: "Incorporation involves the company agreeing to being in the “Public Interest”."

Citation, please.

I ask because I don't see that requirement anywhere in the laws about incorporation. It's not on the forms you file for incorporation and it's not in the charter of any for-profit corporation that I'm aware of. I don't even see that as a philosophical argument in the history of the evolution of corporations.

[See Double You]

Pretty unlibertarian of you to advocate for the concession theory of corporate governance (i.e., limited liability as a state-conferred privilege) instead of a private contract between the entity and creditors. Just because common-law courts did not recognize limited liability does not mean unlimited liability is "natural."

[See Double You]

Here's a good scholarly article by Law Professor Larry Ribstein (RIP) discussing why the concession theory is wrong: https://core.ac.uk/download/pdf/56357953.pdf

[Juice]

statutory limited liability

Limited liability need not be statutory and can be completely common law. I don't see why passive partial ownership of some company (ie just some random stockholder) should reasonably be expected to be fully liable for the actions of the company and possibly lose everything they have. I would guess that most judges and juries would agree with that.

[ThomasD]

AS IF common law does not involve state coercion.

NOTHING is common law until a court deems it so.

[hpearce]

"Should Amazon (and Google, and Facebook) Be Canceled by Antitrust Law?"

What should be cancelled are coercive monopolies like the state which @Reason actually supports (despite claiming to support free markets).

It is the largest monopoly in the U.S. not mention a coercive one

[Metazoan]

Where do you get that Reason supports the state? Or do you mean that they are only minarchists, not anarchists? I don't think there is a uniform opinion on that one either, though.

[BYODB]

They're straight up progressive at times, just not doctrinaire progressives.

[Metazoan]

I understand that they have socially progressive views, and a couple writers have endorsed policies that are not exactly libertarian doctrine. But most of the others seem pretty libertarian. They just focus on issues where a lot of commenters disagree with libertarianism.

[mad.casual]

But most of the others *seem* pretty libertarian.

Wow, really making the case that the magazine is the flagship publication of libertarian movement with that endorsement.

Most of the writers at Sports Illustrated seem like they like sports. They just focus on issues where a lot of commenters disagree with sports.

Most of the writers at Car and Driver seem like they like cars pretty well. They just focus on issues where a lot of commenters disagree with car culture.

[Á àß äẞç ãþÇđ âÞ¢Đæ ǎB€Ðëf ảhf]

How can Reason be both "straight up" and "not doctrinaire" progressives?

[Metazoan]

Reason derangement syndrome?

[Juice]

Orange blog bad.

[Chipper Morning Wood]

Haha, that's great!

[Juice]

They’re straight up progressive at times

When?

[Ryan (formally HTT)]

They're for open borders while being fine with the expansion of the welfare state

[hpearce]

Gillespie said that in an article here that this is what libertarians support.
I also know this from prior articles when the anarchy VS government debate was taking place.

[MiloMinderbinder]

Ten years ago, everyone loved big tech companies such as Amazon, Facebook, Google, and Twitter.

Nope, ten years ago I beat the rush and was already hating Facebook, Google and Twitter. Amazon was an exception.

[ThomasD]

How long ago did South Park do the Sucked Into Facebook episode?

Ok, so it was only nine years ago.

[Diane Reynolds (Paul.)]

There is every reason to distrust the Big Tech firms-- less so with Amazon-- it seems to me they're just hawking wares. But the Google's and the Twitters and the Facebooks-- yes.

However, because of that mistrust, there's every reason to believe that the turn has already started, and within the next decade we'll wonder what all the hub-bub was about, kind of like we wonder why everyone hated Microsoft.

[Diane Reynolds (Paul.)]

I'm also confused about why every news story keeps showing Bezos's face. Is that because Google has become kind of like The Borg and has no single, easily-identifiable figure at its head? Facebook is a little different in that there's Zuckerberg. Does anyone know what Jack Dorsey looks like? Maybe they're not as hard on twitter because twitter is essentially us.

Well, Twitter is a bunch of journalists in a burlap sack swapping hats for a living.

[Jerryskids]

Twitter is a bunch of journalists in a burlap sack swapping hats for a living.

LOL - that's as good a description as I've ever heard. Concise, evocative and sharp. Have a cookie.

[OpenBordersLiberal-tarian]

"... Democratic presidential candidates like Elizabeth Warren have promised to break up companies they say have too much cultural, economic, and political power."

We Koch / Reason libertarians shouldn't let this rhetoric from Warren discourage us. Like many leading Democrats, she might talk tough about taking on "the 1%" or "the mega-corporations." But she is fundamentally on the same side as our billionaire benefactor Charles Koch where it really counts — immigration.

I'm confident Koch, Bezos, Gates, and the rest of the top 10 wealthiest Americans would prosper much more under the Warren economy than they are during this #DrumpfRecession.

#VoteDemocratToHelpCharlesKoch
#ImmigrationAboveAll

[hpearce]

The problem with open borders is that it assumes all illegal border crossers are "innocent" immigrants. Even if they are dressed in foreign military uniforms and armed.

But to address that situation would require that borders no be open.

[JesseAz]

They have a long history of ip theft and buy and kills. Two of the biggest anti trust formalities out there. It is an easy yes.

[Eddy]

Eh, the govt and the big corporations will fight, then they'll climb into bed together for makeup sex - it will be the public getting screwed, as usual.

[Nick]

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