Biden Antitrust: The Paradox of the New Antitrust Populism
GAICIL Insights
Antitrust swings like a pendulum between economics and politics.1 Biden Antitrust: The Paradox of the New Antitrust Populism argues that the pendulum swung hard toward politics, with serious consequences for innovation. The 2020 election, the article observes, put antitrust at the center of the presidential campaign. The policy that followed, which the article labels Biden antitrust, is marked by an abundance of actions based on numerous assumptions disseminated by the Neo-Brandeisian movement.
The article is no blanket indictment. Some actions, it grants, help competition and innovation, mostly because they remove government-created barriers to competition. Knocking down those barriers lowers the cost of entry and lets newcomers challenge incumbents. The objection targets key proposals that the article considers detrimental to further innovation and growth, adopted in the name of competition.
That is where the paradox in the title lives. Biden antitrust, the article argues, revives an antitrust populism co-existential with the adoption of the Sherman Act more than a century ago. It signals a radical departure from the economic analysis of antitrust laws and disapproves of legal and economic knowledge accumulated over decades of enforcement. It promotes competition by promoting small businesses with incremental, modest forms of competition and by preserving a deconcentrated market structure. The new populism disparages disruptive innovation enabled by large businesses and favors incremental competition by smaller, sometimes less efficient firms.
Now hold that doctrine up against artificial intelligence. Frontier AI devours compute, data and talent on a scale few firms can finance. Large firms fund much of that investment and race one another for the next breakthrough. A policy that equates deconcentration with competition sees their scale as the problem. The article's dynamic lens sees scale as the vehicle through which radical innovation gets financed and commercialized. In its words, radical innovation generates the dynamic competition that benefits consumers, improves American competitiveness and embraces the fundamental dynamics of capitalism.
Imagine an AI market policed by the populist rulebook. The firm that trains the best model and wins the most users becomes the prime suspect, precisely because it won. The rational response for every would-be champion is to aim lower. That is the hidden tax of treating success as evidence.
The article offers enforcers a different compass. Federal agencies and courts are well-advised to approach innovation and competition more dynamically. Competition for the next innovation, competition through large-scale enterprises that commercialize innovation, and competition for opening new markets are essential features of the competitive process. Each is visible in AI right now: firms racing to release more capable models, scaling them to millions of users, and opening markets for applications that did not exist a few years ago.
It also says where to aim the heavy artillery. Agencies, the article argues, should focus on the most egregious practices, cartels and collusive practices, and avoid policies that promote incremental competition at the expense of innovation and consumer welfare. For AI markets that yields a workable triage. Collusion among rivals, agreements to restrain competition for talent or to fix prices, are clear harms that deserve vigorous pursuit. Structural interventions premised on the size of innovating firms carry a far higher risk of suppressing the competition that matters most.
Neo-Brandeisian thinking, the article contends, overlooks these aspects at the expense of consumer benefits and the dynamism of a capitalist society. The stakes outlast any administration. The intellectual framework behind enforcement shapes the incentives of every firm considering a large bet on innovation. When large-scale success is suspect, firms rationally invest less in the radical innovation that produces large-scale success.
The article closes on its paradox in full. Biden antitrust has so far embodied an approach that fights the disruptive innovation of dynamic competition in the name of fairer or more open competition, and in doing so stifles innovation and distorts the competitive process. A competition law designed to open markets ends up closing off the very disruption that opens them.
For AI policy, the lesson can be stated in one line: protect the process of rivalry, including the rivalry large innovators bring, and save the strongest tools for conduct that genuinely restrains it. A law that targets success will tend to produce less of it, and in a technology race, less success at home rarely means less success everywhere.
Introduction
No abstract was published with this article. The text below is the opening of its Introduction, quoted verbatim.
The 2020 election placed antitrust at the center of the presidential campaign.
Takeaway
Biden antitrust is characterized by an abundance of actions based on numerous assumptions. This Article discussed the dubious assumptions that Neo-Brandeisians achieved to convey within the Biden Administration. To be sure, a number of actions outlined above are beneficial to competition and innovation—mostly because they remove government-created barriers to competition. However, key proposals are detrimental to generating further innovation and growth in the name of competition.2 Biden antitrust is the revival of an antitrust populism that was co-existential with the adoption of the Sherman Act more than a century ago. The antitrust and competition policy of the Biden Administration relies on a large number of flawed assumptions that Neo-Brandeisians have successfully disseminated over the last few years.1
The competition policy adopted by the Biden Administration signals a radical departure from economic analysis of antitrust laws, disapproves of the legal and economic knowledge accumulated over the last few decades on antitrust enforcement, and is, generally, detrimental to disruptive competition–namely, unfettered competition through radical innovation. Indeed, the promotion of competition by the Biden Administration rests on the promotion of small businesses with incremental, modest forms of competition by preserving a deconcentrated market structure. This renewed antitrust populism disparages disruptive innovation enabled by large businesses. It favors incremental competition by smaller (and sometimes less efficient) businesses. But, it is radical innovation that generates the dynamic competition that benefits consumers, improves American competitiveness, and, more fundamentally, best embraces the fundamental dynamics of capitalism.3 Contrary to the new antitrust populism inherent to Biden antitrust, federal antitrust agencies and courts are well-advised to approach innovation and competition more dynamically. Competition for the next innovation, competition through large-scale enterprises enabling the commercialization of innovation, and competition for opening new markets are essential features of the competitive process.4
Neo-Brandeisians shaping Biden antitrust unfortunately overlook these aspects at the expense of consumer benefits and the dynamism of the capitalist society. Antitrust agencies should instead focus on the most egregious practices (i.e., cartels and collusive practices) rather than engaging in policies promoting incremental competition at the expense of innovation and consumer welfare. Unfortunately, Biden antitrust has so far embodied the paradox of the new antitrust populism—namely, fighting the disruptive innovation of dynamic competition in the name of promoting “fairer” or “open” competition, which nevertheless stifles innovation and distorts the competitive process.
Notes
- Aurelien Portuese, Biden Antitrust: The Paradox of the New Antitrust Populism, 29 Geo. Mason L. Rev. 1087 (2022), https://lawreview.gmu.edu/print__issues/biden-antitrust-the-paradox-of-the-new-antitrust-populism/. Takeaway source: Conclusion, reproduced from the free-to-read version from the publisher. ↩
- See Atkinson et al., supra note 6, at 4–5.. ↩
- See Robert D. Atkinson, Opinion, Antitrust Can Hurt U.S. Competitiveness, Wall St. J. (July 5, 2021, 5:25 PM), https://perma.cc/AXT5-XZ2G (discussing how aggressive antitrust regulation can harm competitive U.S. innovation).. ↩
- See generally Portuese, supra note 30.. ↩
Cite as: Aurelien Portuese, Biden Antitrust: The Paradox of the New Antitrust Populism, 29 Geo. Mason L. Rev. 1087 (2022), https://lawreview.gmu.edu/print__issues/biden-antitrust-the-paradox-of-the-new-antitrust-populism/
Header image: 6936 Podlaski Tax Office in Bialystok November 2019.jpg by Rakoon, CC0, via Wikimedia Commons.
