The New York Times publishes many silly opinion pieces on law and economics but a recent article by Jonathan Taplin, Isn’t it Time to Break Up Google, plumbs new depths of folly. The title understates the breadth of its ambition: the author wants to break up or regulate as public utilities Facebook and Amazon as well as Google.
His unproven premise for acting against these successful companies is that they are monopolies. For instance, he contends that Amazon has a monopoly in e-books. But it is not at all clear that Amazon has market power once the market is correctly defined: hardcovers and paperbacks provide substitutes that discipline prices for e-books. Google has a large market share in online search but its competitors are only a click away.
But, more importantly, it is great mistake to break up or bring under comprehensive regulation companies simply because they are monopolies. There is a reason that our antitrust laws attack only monopolization, not the mere possession of monopoly power. As Justice Antonin Scalia observed in Verizon Communications v. Trinko, one of his great but less well-known opinions: “monopoly is what attracts ‘business acumen’ in the first place; it induces risk taking that produces innovation and economic growth. To safeguard the incentive to innovate, the possession of monopoly power will not be found unlawful unless it is accompanied by an element of anticompetitive conduct.”
The desire for monopoly gives life to the economy no less than the desire to procreate gives life to the natural world.