Antitrust and Competition

A large share of the recent growth in the United States economy has been in high-technology industries or service industries that use high-tech services. Information and communications technologies have developed very rapidly, generating productivity growth throughout the economy. The firms developing many of these technologies�such as Oracle, Intel, and Microsoft�have achieved a dominant position in the marketplace and thus attracted the attention of competition authorities. But successful innovation, with or without patent protection, is often accompanied by a position of market power. Transitory or even not so transitory monopoly profits are the reward for successful innovation and may be required to promote a dynamic economy, as Joseph Schumpeter explained decades ago. As a result, successful innovators often find themselves in conflict with competition policy authorities.

Whether the firms that supply Internet hardware and software should face restrictions on the use of their property is an important and controversial policy issue. Advocates of “net neutrality” � including President Obama and the current FCC majority�believe that owners of broadband distribution systems (hardware used to distribute Internet and video services) and producers of certain “must-have” video content should be subject to prophylactic regulation transcending present-day antitrust law enforcement. Their objective is to protect the free and open culture of the Internet from efforts to foreclose or limit competition in the provision of content, including online video services, which they see as potential competition to older video distribution methods.