The Antitrust Laws Must Protect Competition, Not Stifle Success

Antitrust laws should not be politicized, they should be enforced.

Consumer welfare, not assumptions that large firms are automatically harmful to competition, should be the core consideration of any antitrust action. The consumer welfare standard serves as the “good reason” in antitrust enforcement as it appropriately looks at the impact on consumers and economic efficiency. So far, it is not apparent that there has been a harm to consumer welfare and many technology companies continue to innovate and are bringing real benefits to consumers.

The Big Tech companies are large and successful, but success alone is not reason enough for antitrust action. A legitimate breach of antitrust law must be the cause of any action against a business. Antitrust law doesn’t condemn a firm for developing a universally popular search engine, such as Google, even if that success leads to market dominance. It’s how a monopoly is obtained or preserved that matters, not the mere existence.

Discussions of antitrust policy are often clouded by common myths about this widely misunderstood area of the law. For example, the Sherman Antitrust Act of 1890 criminalizes monopolistic business practices, specifically agreements that restraint of trade or commerce. At the same time, the Sherman Act allows organic creation of legitimately successful businesses that gain honest profits from consumers. The Act’s main function is to preserve a competitive marketplace.

Antitrust laws should not be politicized, they should be enforced

For example, two-sided marketplaces must never impose terms on our users, other than quality control. Companies such as Uber Technologies, Lyft Platform, Amazon Home Services, Amazon Marketplace, IAC/InterActive Corp (Handy, HomeAdvisor), Redfin (Redfin Partner Program), News Corp (Realtor-dot-com/Opcity), Booking Holdings Inc. (Booking-dot-com), DoorDash, Instacart, Postmates, Opendoor (Opendoor Brokerage, Open Listings), Rocket Companies (Rocket Homes), and others are built with massive VC capital to transmit per se illegal price fixing and market allocation schemes to consumers via the Internet. The more time passes, the harder it is to disrupt these schemes and the bigger damage they do to free-market forces.

Google and Facebook, on the other side, develop rake-less products such as Google Shopping and Facebook Marketplace. These are examples of Big Five that are fostering open e-commerce.

Over the past several years, the federal government has turned a blind eye on price fixing, specifically, in gig economy. Today, the gig economy is a major part of the socioeconomic imbalance in our society as a result of consistent violation of the Sherman Act.

The real estate industry is even worse, where almost $15 billion is lost each year in junk fees due to blanket broker-to-broker agreements promoted over the Internet in scale.

Yes, building a startup in a Big Five environment is hard, but it is not Google that hampers progress, as much as companies that use Google to advertise their high rakes and price-fixed services to consumers.

Entrepreneurs building “clean” e-commerce don’t care which party supports what — we want the law to be enforced, otherwise we will not have an opportunity to profit from open e-commerce, and consumers will not see open marketplaces available to them.

When we speak of fostering innovation, we must understand that the e-commerce revolves about the take rake. Products that impose high take rakes must suffer from them, so that others have an incentive to come up with an alternative. In the current price-fixing scenario, as given, neither “Uber for X” nor “Lyft for Y” have any incentives to lower their take rakes — their prices to consumers are fixed either way. The competition between such “rivals” is not to deliver the most efficient platform, but to deliver the most efficient price fixing strategy.

Author: Litesand

Antitrust, real estate, e-commerce, fintech, proptech, bigtech

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