Antitrust efforts will backfire and sap FTC funds

Breaking up monopolies draws populist cheer from some antitrust advocates, but that approach could cause more harm than good in the case of digital enterprises, according to Herbert Hovenkamp, Wharton professor of legal studies and business ethics, and professor of law at the University of Pennsylvania’s Carey Law School. A more flexible option to curb anticompetitive practices is to use injunctions, which “opens the path for more competitive choices,” he said.

Regulating Big Tech from an antitrust standpoint can be complicated and the nature of the business does not easily allow clarity on the underlying issues, Hovenkamp said recently on the Wharton Business Daily radio show that airs on SiriusXM. (Listen to the podcast.) It is best for regulators to take a cautious approach and avoid taking strong actions on markets they don’t understand well, he advised in a recent paper titled “Structural Antitrust Relief Against Digital Platforms.”

“[Big tech companies] have certainly done things that could be challenged as antitrust violations,” Hovenkamp said. “However, I don’t think there’s much warrant for this prolonged, repeated attack on Big Tech, which is using up a very large percentage of agency enforcement revenue.” Furthermore, there is “no real evidence of naked antitrust violations” among those companies such as fixing prices, he continued. They tend to focus more on “vertical agreements” such as mergers, he added.

Hovenkamp’s comments are set against the backdrop of recent government actions targeted at Amazon, Google, Facebook, and Microsoft that accuse them of violating antitrust laws. Hovenkamp is the pre-eminent authority on the subject. The New York Times in 2011 noted that many consider him to be “the dean of American antitrust law.” He also co-authored the landmark 21-volume Antitrust Law, which has been cited more than 50 times by the Supreme Court and more than 1,000 times by federal courts, according to his Wharton online profile.