Nerdfighters

Monopolies Using Antitrust Laws to Defend Themselves Against Potential Competitors

Sometime last year, I claimed in the forums that anti-trust law actually protects the large, monopolistic companies that it is supposed to prevent from developing.

I think that the anti-trust laws are harmful to competition in general, as I do for a lot of law, on the basis that true competition needs a very basic set of laws and that any law in addition to that and that any additional law favors companies with large, experienced, legal departments and the money to carry out multi year legal campaigns. While people try to put in protections against the laws being used improperly, the variety of judges, complicated political processes, and the pressure of simply threatening a lawsuit weaken those protections.

Apparently, there is a lawsuit threatening Google which is competing with "incumbent" Microsoft, among other companies. Rather than Microsoft pressing the lawsuit themselves, some other companies associated with Microsoft are doing it instead. This would avoid the literal protections from the anti-trust law and allow Microsoft to attack Google through legal antitrust law. I think that the actual lawsuit is bogus, but grandstanding State attorney generals can be very scary, as one of them pressured Craigslist to make severe unnecessary changes to the adult services section of their website.

I'm not claiming that this is a serious threat to Google. I am claiming that anti-trust law is very vulnerable to abuse and we would be better off without it. In practice, the companies that are supposed to use it, small businesses competing with an incumbent, usually ignore it, as they tend to compete very well.

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Tags: business, competition, google, law, legal, microsoft, monopolies

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Comment by Kenny (TOK) on September 8, 2010 at 2:00pm
I shall try to watch the video at some point where I feel less constrained by time.
Comment by Bryan Rosander, FL on September 8, 2010 at 6:44am
I don't claim that all small businesses will be capable of competing. Businesses, both large and small, need to be constantly adapting to the needs of the market. Family farms and family owned retail outlets stereotypically did not seek out new customers even as their customer base dwindled, which is a disaster.

Also, big companies tend to receive a ton of support from other legislation, especially subsidies and protections for existing business models. I don't expect small businesses to compete favorably against that, but the problem is not a lack of anti-trust law.

My desire to remove laws in general is based in part on my libertarianism but more specifically on the research of Clayton Christensen on disruption. Laws can potentially create a problem called "regulatory capture" where the laws protect existing business models and keep them from going out of business. That tends to increase prices and produce bad service. Here is an example of him presenting his concepts with respect to health care: http://nerdfighters.ning.com/profiles/blogs/free-market-approach-to...
Comment by Kenny (TOK) on September 7, 2010 at 6:23pm
While I would agree that anti-trust laws are vulnerable to abuse, arguing that is a sufficient reason to strike them down, rather than attempt to shore them up, is blatantly ridiculous. For example, corporations have used the 14th Amendment to gain legal "person-hood," however, in light of this abuse my response isn't to go back to the practice of slavery. To argue that the law should be repealed, one would need to argue that it's intended purpose was not necessary. While you assert that "small businesses competing with an incumbent... tend to compete very well," no evidence is given. Ignoring the fact that small businesses may, in fact, be the incumbents, I think the evidence given by family farms closing in favor of factory farms, the increasing number of franchises rather than locally owned businesses, provides ample evidence that your assertion, in addition to being unsupported, is in fact unsupportable.

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