Consumers are best served when the natural dynamics of the market are allowed to play out.
Antitrust has been a hot topic for media coverage ever since the Biden administration appointed Lina Khan to the chair position of the Federal Trade Commission (FTC). And while Khan’s days may be numbered at the FTC, antitrust enforcement will continue to be a contested issue for some of America’s most successful businesses thanks to current cases being brought forth by the Department of Justice (DOJ).
Take, for instance, the DOJ’s efforts to force Google to sell off its Chrome browser, which is reminiscent of a case brought against Microsoft three decades ago. In 1997, the DOJ sued Microsoft for bundling its web browser, Internet Explorer, with its operating system, Windows, and asserted that doing so constituted monopolistic and anticompetitive behavior. The DOJ disregarded the fact that Microsoft’s revolutionary Windows 95 technology was of benefit to consumers, by increasing convenience and lowering costs, and the government agency forced Microsoft to modify its proprietary technology to enable other web browsers to have access.
Over time, the DOJ’s case against Microsoft proved to be largely misguided, with a skewed view in relation to the web browser sector. Prior to Microsoft’s integration of Internet Explorer on its operating system, Netscape was the dominant web browser, with roughly 90 percent of market share. And even though Internet Explorer would come to unseat Netscape’s top spot in the late 1990s, Google Chrome was quick on Microsoft’s heels after it launched in 1998, and Mozilla Firefox garnered great interest in the early 2000s as a favored web browser.
Essentially, the DOJ’s suit was a waste of taxpayer dollars and diverted Microsoft’s attention and resources away from developing new innovations toward adjusting its existing offerings to comply with the law. Fast-forward to today, and Internet Explorer’s market share is miniscule—only 0.11 percent for 2023. In fact, it turns out that “80% of people remove Internet Explorer as their default browser as soon as they get a chance.”
Google Chrome presently sits as the top web browser of choice, yet its 64 percent market share pales in comparison to Microsoft’s peak market share of 95 percent in 2004 and Netscape’s 90 percent in 1995. And that is a shame, since we’d likely be better off if Chrome dominated the market to a greater degree given that it is a superior service when it comes to safeguarding users from malicious websites and data vulnerabilities.
The DOJ forcing Google to sell off Chrome is punishing success more than it is promoting competition, and Google is not the only firm that the DOJ is currently targeting for having a favored market position as an industry leader. In September, the DOJ sued Visa for “illegally maintain[ing] a monopoly over debit network markets,” which is a claim that has some antitrust economists puzzled. First of all, as stated by William Kovacic, a former FTC commissioner and Global Competition Professor of Law and Policy at George Washington University, “Attaining a monopoly by itself is not illegal under antitrust laws.” And secondly, fierce competition is currently present in the payment processing industry. Fintech advancements are unseating traditional forms of payment management systems, and Apple Pay, Venmo, Square, and PayPal are all aiming to increase their market share.
Like Google, Visa rose to prominence by establishing itself as a brand that merchants and their consumers can trust. No one wants to use a debit card that is devoid of market dominance—consumers want to use the best card with the best network, just as they want to use the best browser with the best safety features.
Overall, the Biden administration’s aggressive approach to antitrust law is a befuddling matter for both consumer welfare and business growth, and it would be good for the Trump administration to not follow on this same path. Market mechanisms are best at determining winners and losers, which is why the government should refrain from its interventionist stance and stop punishing industry leaders for the status they have strategically attained.
It should be those who produce and consume that influence in the business sector, not shortsighted government agencies with no stake in the game. Joseph Schumpeter said it best:
Nothing should be more obvious than that the business organism cannot function according to design when its most important “parameters of action”—wages, prices, interest—are transferred to the political sphere and there dealt with according to the requirements of the political game or, which sometimes is more serious still, according to the ideas of some planners.
And Thomas Sowell, as he often does, sums it up well: “The most basic question is not what is best, but who shall decide what is best.”
Even the greatest of firms face competition and technological disruptions over time. So let’s let business do business, let consumers choose how they want to browse or pay, let innovators try to unseat industry leaders—and let’s keep bureaucrats at bay.
