Antitrust decreases product innovation and profits.
Katila ’23 [Ritta and Sruthi Thatchenkery; February 24; Professor of Management Science, Faculty Director of the Stanford Technology Ventures Program. Her research is in the intersection of technology strategy and organizational learning, using machine learning, statistical analysis and mixed methods. She is an expert on innovation, competition, and entrepreneurship in large firms; Had a doctoral dissertation that was the winner of the Wiley Blackwell Outstanding Dissertation Award from the Strategic Management division of the Academy of Management, studies how firms can best compete and innovate in high-tech industries; Harvard Business Review, “The Surprising Consequences of Antitrust Actions Against Big Tech,” https://hbr.org/2023/02/the-surprising-consequences-of-antitrust-actions-against-big-tech]//av
But those patents didn’t lead to successful products. Commercialization did not increase in the treated markets, (and there was no difference between low- and high-market-share complementors.) What’s more, we found that most everyone’s profits declined — especially those of complementors with low market shares, who, in theory, should have been the beneficiaries of the antitrust action. Despite being the most innovative of the bunch, they failed to thrive. In contrast, the bigger players who had been nipping at Microsoft’s heels did not patent significantly more after the antitrust settlement than they had before, but they didn’t see the drastic profitability decreases either. If anything, because they did not increase their investment in innovation, the big players seem to have benefited most from the antitrust case against Microsoft by becoming more efficient, not more innovative.
And finally, although regulators might have hoped to see new companies enter the treated markets, it didn’t happen. The number of firms moving into the markets, we found, did not increase following the settlement, another consumer-benefiting outcome that failed to materialize.