The direction of innovation matters more than innovation per se. Innovation can have both good and bad consequences, but market-driven innovation is more likely to be antisocial

The rhetoric of innovation implicitly asserts that all innovation is valuable, and that, ultimately, it will act as a tide that lifts all boats, to the benefit of everyone. However, this is an inadequate understanding of innovation, focusing only on its quantitative dimension and ignoring its qualitative aspects. It is misguided to assume that innovation is innately beneficial; innovation under capitalism is not brought about solely to further human flourishing, but in the service of profit.96 Correspondingly, the rhetoric of innovation is weakened by appreciating that ‘not all innovations are created equal and the direction of technology matters greatly’.97

Today, innovation enjoys broadly positive connotations. As noted above, it is called upon as a solution to a range of economic, political and social problems. Innovation is something to be strived for. It is rare for its content to be interrogated. However, engaging reflexively with innovation highlights the ambiguity of the concept. As documented by Benoît Godin, innovation has historically been a contested term. Techno-conservatives typically start their analyses of innovation with Schumpeter, but its history goes back far further. It may be traced to Greece in the fifth century BC, with innovation (kainotomia) derived from kainos (new).98 The ancient Greek understanding of innovation related to the breaking of custom, laws, and tradition, ‘introducing change to the established order’.99 Innovation gained an explicitly pejorative meaning in fifteenth- and sixteenth-century Europe, becoming a ‘linguistic weapon’ invoked to criticise those who contested the religious status quo.100 Innovation was a synonym for heresy, as exemplified in 1548 when King Edward VI, seeking to defend Protestantism in England against Catholicism, issued a royal injunction ‘against those that doeth innouate’.101 Over the next two centuries, it was political and social revolutionaries who would face the charge of innovation.102 Edmund Burke, habitually cited as the father of modern conservatism, provides a clear example of this tradition, describing innovation as the ‘greatest evil of all’.103

The meaning of innovation started to become more positive following the French Revolution at the end of the eighteenth century, and this transformation would continue in a piecemeal fashion over the course of the nineteenth century.104 Key to this transition is a new association between innovation and ideas of utility and progress, as captured in the writings of Jeremey Bentham. Bentham—himself an innovator, having designed the Panopticon prison—argued that the use of innovation as a derogatory term stifled economic and social development, writing that it increases ‘the mass of general wealth’.105 The change in the characterisation of innovation, from negative to positive, was completed in the twentieth century, when innovation started to be understood in relation to science, technology, and progress, giving it a more virtuous meaning.106 This connection was made initially by Schumpeter, as well as the far lesser-known William Rupert Maclaurin.107 With its relationship to technological change established, the present status of innovation crystallised. Innovation became a uniformly positive phenomenon, and innovators—previously derided—were embraced.108

This very brief sketch of innovation’s history reveals the ambiguity of the concept. The idea that innovation may be anything but desirable has been lost. The rhetoric of innovation rests heavily on the modern conception of innovation. It emphasises the quantity of innovation—as measured by R&D expenditure and number of patents filed—but neglects the quality of innovation. But producing valuable innovation is about more than spending monopoly profits on R&D and hoarding intellectual property.109 Of course, judging the value of an innovation is not easy or straightforward. Nevertheless, there should be greater interrogation of the desirability and direction of corporate innovation, which is an issue that competition law has so far failed to meaningfully engage with.110

Again, Arrow’s scholarship is instructive. Arrow argues that when dominant companies innovate, they do so in an iterative manner, rather than in a way that is likely to bring about leaps in technological advancement.111 Their innovation follows the already-established path, or else they risk diminishing the value of their existing assets and losing their entrenched market positions. Correspondingly, it is maverick, challenger firms that are likely to produce disruptive, path-breaking innovations, as it is these outsiders that need to create genuinely new products and markets in order to thrive.112 The pharmaceutical industry is illustrative. Dominant pharmaceutical companies—‘Big Pharma’—typically justify high drug prices on Schumpeterian grounds. High prices, and high profits, are necessary to make the investment in R&D required to generate new pharmaceuticals.113 Yet, most drugs developed by Big Pharma are so-called ‘me too’ drugs, only slight molecular variations of existing drugs. Of the 415 pharmaceuticals approved by the US Food and Drug Administration between 1998 and 2002, only 14 per cent were new innovations, 9 per cent represented functional improvements on existing drugs, and the remaining 77 per cent were me too drugs that delivered no functional improvement.114

A similar pattern may be observed in the digital economy too, where dominant companies are inhibiting radical innovation in favour of iterative innovation. The Big Tech companies innovate to protect and advance their business models and market dominance, producing ‘sustaining’ innovations that do not fundamentally change the existing technological paradigm. Significantly, they can use their dominance over the digital economy to impede the ability of mavericks to produce disruptive innovations. The innovative efforts of smaller technology companies are stymied by the need to make any new offering interoperable with Big Tech ecosystems.115 Ezrachi and Stucke highlight Apple’s App Store as an example of such sustaining innovation. Ezrachi and Stucke note that, while Apple invests substantially into improving the experience of App Store users, app developers are allowed into the ecosystem only if they comply with its rules and would not be able to introduce a superior app store that would be compatible with the Apple ecosystem.116 Overall, Ezrachi and Stucke argue, the Big Tech companies ‘make sure to only advance and allow innovation that does not disrupt their business models and profits…. Entrusting the Tech Barons to determine the scope and trajectory of digital innovation will undoubtedly leave us worse off’.117 Deferring to the innovation of Big Tech and other dominant companies means trading the possibility of disruptive innovation for the certainty of sustaining innovation that entrenches existing power structures.