America has gone from a land of megamergers to a hostile zone for big technology companies

ManzanaReported by the Department of Justice and fifteen states for anti-competitive practices (March 2024). AlphabetBecause of the monopoly of its star product, Google, in the advertising market. TargetSuit filed by federal commissionercio (FTC, the equivalent body to the National Market and Competition Commission in Spain) to buy start up Virtual Reality Within (July 2022), and for Abuse of Dominant Position by the same organization and 48 states (August 2021). MicrosoftAlso sued by the FTC for acquiring video game company Activision Blizzard (December 2022). AmazonReported by FTC for antitrust (September 2023); Lockheed Martin, to purchase missile engine maker Aeroject Rocketdyne; And jetblue By its rival, the airline Spirit Airlines.

These are some of the most notable actions that United States competition authorities have taken since the arrival of Joe Biden For the White House. The country that, since the 1980s, was most willing to authorize megamergers and business giants has become a hostile zone for the giants who, in effect, have given it global technological and financial primacy.

is the best example of the magnificent SevenNamely, the technology companies that took down Wall Street with their stratospheric valuations and that made the rest of the world’s stock markets look ridiculous: Apple, Amazon, Alphabet (Google), Meta (Facebook), Microsoft, NVIDIA And Tesla (Although the price of the latter is now only half what it was three years ago). Complaints of misuse of prominent position are pending against the first four in the list. Microsoft has successfully emerged from an effort to block Activision’s purchase of Blizzard. Nvidia and Tesla aren’t the only ones affected by the sudden enthusiasm from US regulators.

What happened? If you ask the companies, their response is unanimous, and that includes two pertinent names involving politics: Leena Khan And elizabeth warren, If you ask defenders of the Joe Biden government’s actions, the answer is a bit more complicated, and revolves around two ideas: the end of antitrust paradoxBy Robert Bork, which has transformed the United States – and, as well, the rest of the world – into an economy in which there is virtually no free market, but only oligarchs who control every sphere of activity.

Khan is the chairwoman of the FTC, and Warren is a senator from Massachusetts who has considerable influence on the left wing of the Democratic Party, to which Joe Biden belongs. The president’s great obsession has been to keep his party united, which is not easy at all, because the Democrats, ideologically from pp to sumar, In Warren’s case, the endorsement had a specific price: keeping only those she approved in regulatory agencies. This meant that the companies being regulated would not hire anyone who had professional experience – to avoid conflicts of interest and revolving doors – and whom they also approved.

Biden has no choice but to bow to that demand, which for Warren — who spent her career first at Harvard and later in politics, attacking big banks — is non-negotiable. This is where Khan, who spent most of his professional career in academia, came in, where he wrote a controversial and influential article: Amazon’s antitrust paradoxwhich was a direct and sustained attack Robert BorkThe man whose legal theory has guided US antitrust defense since 1981 Ronald Reagan Entered the White House.

Bork’s thesis is that if a company achieves a dominant position in the market, in most cases this will not be detrimental to consumers, as the company concerned can use the additional profits to invest in technology, improve its efficiency or even Will have to cut prices to gain profits. More market share.

Bork’s defenders cite history. There are very few remnants of the great business leaders of the past, at least in the United States, an economy that has an incredible ability to ruthlessly swallow its business giants. IBMThe company which was a symbol of technological power in the seventies has today become just another player. this tA holding company The giant who took part in the coup in Chile in 1973 has practically disappeared.

His argument is also based on the fact that technological advancements, in addition to the Internet, have reduced prices. Uber is cheaper than taxi. Shopping online is more cost effective than shopping in a store. Barriers to entry on the Internet are also very low, as a large market can be reached with hardly any intermediaries. Microsoft Explorer had a US market share of 94% in 2004; When the company took it back eighteen years later, it had reached only 0.5%. Its successor, Microsoft Edge, reaches only 5.35%. Meta and Alphabet control online advertising, but their market share has fallen from 54.7% to 43.9% in just seven years.

But these arguments are neither true for Khan, nor for all the other members of competition regulatory agencies that Biden has nominated. Monopoly is still monopoly, and even more so in this age big DataAlgorithms and Artificial Intelligence (AI), when it is possible to know consumers completely.

In addition, there is the Internet Entry Gate Like any other industry. An app is required to be in the Android and Apple stores, which in practice means a monopoly whose two members, Apple and Alphabet respectively, can charge practically whatever they want. An online store will make far more sales if it does so through Amazon than if it puts up its own website. Later, the company was established jeff bezos It will buy the cheapest product and sell it at a lower price on its website, causing companies using its platform to sink.

This is one of the main ideas of the article Amazon’s antitrust paradox: Online platforms are, at the same time, arbiters and competitors of those who use them. Secondly, selling below cost price is not irrational if financial markets provide incentives for companies to gain market share in exchange for losing money. Best example, Amazon. The company did not begin earning profits commensurate with its stock market valuation until 2017, exactly 20 years after its founding.

Khan’s critics and other members of the so-called Brandeis movement Those who advocate a return to defense of traditional competition, i.e. with market share, don’t buy those arguments. For Hebert HowecapThe FTC Chairman’s views, one of the leading competition experts in the US, are “inconsistent”. Besides, there is another factor: Khan has never hidden that he is an activist. In December 2022, amid their dispute with Microsoft over the purchase of Activision Blizzard, he also published an article new York Times’In which he said that, although his cases failed in court, the important thing was to convey to public opinion that there are large companies that are actually monopolies.

The idea of ​​a regulator that clearly states it wants to expand Good News His ideas are really innovative for the general public. But, in fact, many others have done this before. The best example is that of the son of the former Commander-in-Chief of the Armed Forces, Colin Powellwhich was during the presidency George W. Bush -whom his father was Secretary of State for-chairman of the Federal Communications Commission, which regulates everything from the media to the Internet. “I was waiting for the visit of the messenger of public interest. I waited the whole night. But he did not come.” With such a declaration of principles, it is not surprising that Powell liberalized the telecommunications market. Nor, since leaving office, has he been president of the National Cable and Telecommunications Association, the main employers’ association and lobby in the sector.

Psychologically, it should be a good thing for Khan that he doesn’t mind losing a case in court, as the scoreboard of his conflicts with big business has often ended in humiliating defeats. If Donald Trump wins the November elections, it is also quite possible that the US state will withdraw most of its demands. Of course, this again depends on politics. When Biden proposed Khan for his current position, it was approved by a significant portion of Senate Republicans along with support from Democrats.

This is because Silicon Valley is as unpopular today as Wall Street was fifteen years ago. The left sees Internet giants as the worst form of capitalism, and does not forgive Meta for allegedly giving ‘free rein’ to Russian disinformation in the 2016 campaign to put Donald Trump in the White House. On the right, it’s exactly the opposite. Silicon Valley companies are “socialist” (although no one knows very well how institutions worth billions of euros and whose founders are worth more than 100 billion euros can be socialist), they promote pedophilia and human trafficking. Gives. For followers of the QAnon conspiracy theory, Meta’s founder and largest shareholder, Mark Zuckerberg, is one of the leaders of the global network of cannibalistic pedophiles that runs the world and against which Donald Trump is single-handedly fighting. Overall, Trump will be more cautious toward companies. However, for now, it is Khan’s reign. And, if Biden wins in November, there is no doubt that Elizabeth Warren will continue to have a veto over who defends competition in the United States.