WASHINGTON (October 30) – Tech platforms like Google, Facebook and Amazon are beset by critics who claim they have amassed so much market power that antitrust regulation must be rethought and retooled. With both consumers and the platforms in mind, Tom Lenard of the Technology Policy Institute is urging legislators to, first, do no harm, remember history and think twice before upending antitrust law.
In “Curbing Digital Dominance,” Lenard’s paper just published in the Milken Institute Review, he takes aim at the recent report issued by the British blue-ribbon Digital Competition Expert Panel led by Jason Furman, President Barack Obama’s chairman of the Council on Economic Advisors.
“Implementing the British report’s key recommendations would be a risky experiment in public utility-style regulation for the digital sector, a radical departure from current policy,” Lenard writes. “It would create what amounts to an ‘internet commerce commission’ with broad powers to override market incentives.
“Similar regulatory regimes in the U.S.-the Interstate Commerce Commission for surface transportation and the Civil Aeronautics Board for airlines, to name two-were eliminated when centrist reformers convinced a bipartisan majority in Congress that they largely served to protect incumbents consumers’ expense,” he warns.
“I find it ironic to argue that a pro-competition agenda is needed because of the market power of the largest firms, and then to invite these same firms to join in the rulemaking.”
Lenard takes issue with the report’s understanding of the digital marketplace, calling its assessment of platform markets incomplete and “misleading”. He also faults the report for not weighing the costs and benefits of its proposals.
“The issue with digital platforms is not whether they ever reduce consumer welfare and inhibit innovation, but whether the proposed intervention will make it better or worse. By this test, the report seems a nonstarter.”
Lenard is a TPI senior fellow and president emeritus.
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The Technology Policy Institute
The Technology Policy Institute is a non-profit research and educational organization that focuses on the economics of innovation, technological change, and related regulation in the United States and around the world. More information is available at http://www.techpolicyinstitute.org/.