Microsoft’s recent effort to ensnare Yahoo!–fended off in part by a cooperative venture between Yahoo! and its competitor Google–raises important but overlooked questions: What happened to antitrust? Can competitors today combine at will? Would Microsoft, whose grip on the desktop computer remains unshaken after a decade of antitrust litigation and court-ordered relief, have been allowed to acquire control of a new portal so that Internet users might remain in its thrall?
The answer to the “What happened to antitrust?” question lies in the echo of a similar one posed by historian Richard Hofstadter more than forty years ago: “What happened to the antitrust movement?” He pointed out that the political impulses animating antitrust in its first half-century faded as the United States became comfortable with big business. The last great antitrust crusader with political visibility, Thurman Arnold, turned antitrust over to postwar enforcers, who transformed it into a technical exercise managed by lawyers and economists. Hofstadter wrote, “Once the United States had an antitrust movement without antitrust prosecutions; in our time there have been antitrust prosecutions without an antitrust movement.”
We now appear to have reached a time when we have neither an antitrust movement nor antitrust prosecutions. We have dropped “movement” from the question. It’s “What happened to antitrust?”
One thing that happened is that we have taken too seriously Hofstadter’s view that antitrust had become a technical exercise, divorced from political concerns. This is not so. The technical economic analysis that rightly underpins antitrust often provides contested solutions to questions of business behavior and market structure, not clear-cut “truth” on which everyone can agree. Something other than technical analysis is thus needed to make decisions. And the choice of the core concepts on which to focus antitrust enforcement is the product of political values, not technical decisions. Do we care about the distribution of wealth? About maintaining opportunities for entrepreneurs to challenge entrenched monopoly firms? Or do we just want to allow companies the mostly unfettered ability to operate “efficiently”?
Anyone who thinks antitrust is solely a technical exercise should look at what the Bush Administration has done to enforcement. Bookending this period is the Microsoft monopolization litigation. Brought in 1998 by the Clinton Justice Department, twenty states and the District of Columbia, the litigation demonstrated Microsoft’s wide-ranging effort to suppress challenges to the dominance of its Windows operating system, in which it choked off new entrants and controlled the pace and direction of innovation in desktop computing. The remedy was to be a restructuring of Microsoft into two companies, each with market incentives to compete against the other. With Bush’s ascendancy, however, the case was settled with a decree prohibiting certain conduct, but without structural relief.
The Justice Department then went from being Microsoft’s prosecutor to being its enabler. It vocally criticized antitrust enforcers in Europe and Korea for pursuing cases against Microsoft that were very much in line with the original Clinton Administration prosecution. Most recently, Justice refused to join state plaintiffs in asking for an extension of key provisions of the settlement decree, an extension the district court judge granted on the ground that the entire decree needed to continue if it were to achieve its goals. Apparently, the department is no longer concerned about achieving those goals.