[Editor's note: This story originally was published by Real Clear Markets.]
By Daniel Savickas
Real Clear Markets
Sometimes, especially in politics, the slippery slope fallacy is not a fallacy at all, but merely a basic observation. Perhaps nothing in the last year or two has illustrated that better than many GOP politicians flirting with a return to the Teddy Roosevelt era of the Republican Party.
The desire to weaponize antitrust against big tech companies these politicians see as biased against conservatives has opened the floodgates for Democrats to use it in all sorts of ways. Republicans now stand unable to push back without being hypocrites on the issue. That is exactly what we are seeing take place in New York.
While Republicans look back to Roosevelt, Democrats in New York are now taking that a step further, taking their cues from modern day Europe. Antitrust in the U.S. typically seeks to protect consumers from harmful behavior. Europe, on the other hand, also seeks to protect competitors from what they call, “abuse of dominance.” Even when there’s no consumer harm, regulators will step in.
With this logic, if Company A sets its prices below that of a competitor, Company B, and Company B loses business, the Attorney General could sue Company A on behalf of Company B. You’ll notice that consumers still have two viable options and prices are going down. Things are actually improving, but the government is stepping in to protect a private company from basic competition. This is lunacy.
However, a bill is making its way through the New York state legislature that would make it the first state in the nation to embrace the European antitrust model. Under that bill, the Attorney General would be able to deem any company with at least 40 percent of the market share as “dominant.” This would then subject them to the lawsuits and regulation outlined above, even if over half of the market belongs to other companies.
This fervor for European style regulation is not just limited to New York. A group of House Democrats is circulating draft antitrust bills that take the entire country the way of the Europeans. It is notable that the report that sparked these bills was signed only by Democrats. Yet, the GOP need only look in the mirror to figure out who made antitrust a nationwide bipartisan topic of discussion.
Once that door was opened, Democrats are far more comfortable bringing the hammer of government down on American businesses and are willing to do so more ruthlessly. These bills would fundamentally shift the way America does business and actively harm companies that have provided reliable goods and services for Americans across the nation.
One would prevent companies with over half a million users and a market cap over $600 billion to operate businesses that may present a conflict of interest. Practically, this would mean Apple could no longer operate the App Store or Safari. No consumers would benefit from such a move. In fact, use of Apple products might become increasingly difficult if the company had to make such a sweeping adjustment.
Another related bill prevents companies from giving preference to their own products. Yes, you heard that correctly. In essence, this is targeted to ensure Amazon wouldn’t be able to sell its own branded products on its website. However, this is no more anti-competitive than supermarkets that sell store brand cereal. Yet, House Democrats have introduced a solution in search of a problem.
Another would shift the burden of proof in merger cases from the government to private companies. In other words, any proposed merger would be considered guilty until proven innocent. This would stifle innovative mergers that allow firms to integrate new technologies into their business model and provide better services for customers.
The common thread with all of these bills – at both the federal and state level – is that the best interest of consumers is not the focus. Politicians are seeking political retribution against companies like Amazon, Apple, Facebook, Twitter, and Google. It has become increasingly popular – on both sides of the aisle – to malign these companies in the media and their CEOs have been routinely dragged before a number of congressional committees for even more tongue-lashing.
Once again, this is the logical conclusion when the party that is ostensibly “pro-business” begins to beat the antitrust drum. The Overton window of allowable opinion on the issue shifts dramatically to the left. Once there, the political left can do what it has far more experience doing, over-regulating. If it is at all possible, congressional Republicans need to stop their flirtation with trust busting now and pray the goalposts don’t shift any further than they already have.
[Editor's note: This story originally was published by Real Clear Markets.]
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