History isn’t on the trustbusters’ side
Trustbusters are back in force in DC, occupying key positions in the Biden administration and valuable chair space in the House and Senate. These crusaders against very big business are loosely united in a goal to protect consumers.
But as the Cato Institute’s Scott Lincicome writes, they are also almost always chasing the wrong villain with the wrong tools well after the market has changed the players. Among the allegedly all-powerful monopolies trustbusters pursued, but the marketplace soon turned into also-rans, are:
The Great Atlantic and Pacific Tea Company (A&P), which rose to dominate the grocery business in the 1920s and 30s, was challenged by big‐box supermarkets in the ‘80s and ‘90s, and finally declared bankruptcy (twice) last decade.
Kodak, which in 1976 “was estimated to have 90 percent of the U.S. film market and 85 percent of the market for cameras,” and filed for bankruptcy in 2012. Today, it’s trying to reinvent itself—again—as a (state‐subsidized) pharmaceutical company.
Netscape, which dominated web browsing in the mid‐1990s, yet was put out to pasture by 2003. It was crushed, of course, by Microsoft’s Internet Explorer—itself the subject of antitrust scrutiny (and deemed an unstoppable monopoly) in the early‐2000s, right as new competitors like Firefox and Safari were emerging to replace it.
Myspace, which controlled early social media in the 2000s—leading to the hilarious‐in‐retrospect 2007 headline “Will Myspace ever lose its monopoly?” in the Guardian (of course)—and is today a punchline. As Bourne notes, Myspace’s demise is a strong counter to current claims that Facebook and others’ “network effects” make them unstoppable: “The time invested in uploading content, coupled with the utility of the product rising with the number of users on the network, supposedly made Myspace’s dominant position unassailable.” Not so much.
Nokia, which was a “mobile monopoly” in 2007 and 2008—right before the iPhone came out…
iTunes, which dominated digital music sales (and faced a French antitrust suit) in 2010, yet was by that time already being disrupted by streaming services like Pandora and Spotify—a model that today dominates but is also thick with competition (including copycat Apple Music).
None of these history lessons will cool the prosecutorial zeal of the trustbusters. Nor will those same trustbusters admit that the biggest foe of competition and innovation is very often government itself via regulation, taxation and old-fashioned politics.