TThis week, the government filed a groundbreaking antitrust lawsuit against Facebook, seeking to divide the corporation for monopolistic practices. The lawsuit comes on the heels of a similar case against Google, as well as an aggressive congressional report written by Democrats recommending disarming not just Google and Facebook, but Apple and Amazon as well.
The evidence against Facebook seems overwhelming, with the enforcers pointing to internal email conversations in which CEO Mark Zuckerberg and his colleagues allegedly conspired to monopolize the social media space by buying up rivals and stifling competitors. The proof of intent to violate antitrust law appears to be broad. However, news articles covering the case describe it as “far from being a dunk”, and competition law experts predict that law enforcement will “face an uphill battle” to prove their claims.
Embedded in these muted words about the legal viability of the case is a political battle over the nature of economic power. Both antitrust lawsuits are the result of a new movement of academics and antitrust advocates pushing to reform a heavily concentrated and warped American economy. However, within the encapsulated world of orthodox antitrust experts, there is a suspicious lack of enthusiasm for breaking Facebook or any of the tech giants. Fiona Scott Morton, for example, a former Obama executor and opinion leader at Yale, wrote last year that “ruptures are not a good solution to the economic damage created by large companies in this sector.” And last year, leading antitrust scholar Herb Hovenkamp argued that “the remedies for breakups are radical and often have unintended consequences,” warning that “judges are not good at dividing companies.”
In this formulation, breaks are a legally difficult and flawed remedy, similar to amputating the leg of someone in need of a pedicure. Some politicians continue to listen to these experts; Republican politicians have expressed skepticism of the breakups, but even the 2020 Democratic platform says regulators should only consider the corporate breakup “as a last resort.” More than politicians, judges listen to these arguments and rewrite antitrust law from the court to make bringing monopolization cases and winning them, even when the evidence is overwhelming, too costly and difficult.
This situation is historically unusual. As historian Richard John points out, the United States has a long history of corporate disintegration. Some of those divided entities include logging companies in Maine in the 1840s, Standard Oil in the 1910s, and AT&T in the 1980s. In fact, in 1961, the Supreme Court declared that company dissolution “has been qualified as the most important of the antitrust remedies. It is simple, relatively easy to administer and secure. “
So what explains this modern reluctance?
The standard narrative is that a group of libertarian law and economics academics from the University of Chicago and its environs again focused on antitrust in the 1970s. These men, led by Milton Friedman, Robert Bork, and George Stigler, tried attack the regulatory state of the New Deal and free up concentrated capital. Bork led the legal crusade against what he called the “militant ideology” of aggressive antitrust agents. Their goal was to take control of this area of law out of the hands of liberal legislatures and into the hands of highly technical conservative economists and lifetime appointed judges who would listen to them. When Ronald Reagan became president, he slashed antitrust, amounting to what Bork called a “revolution in major American policy.”
But this is only part of the story. It does not explain how, in 2004, Antonin Scalia convinced his fellow Supreme Court justices, including Stephen Breyer and Ruth Bader Ginsburg, to join him in a unanimous Supreme Court decision that undermined the ability to bring monopolization cases. arguing that the “charge of monopoly prices are not only not illegal, but are an important element of the free market system.”
The liberal judges were swayed by a different group of academics, less known in the revolution that has produced the current monopoly economy. These scholars challenged Bork-influenced libertarians on certain methodological issues, but accepted the ideological claim that antitrust should be a technical area without broader democratic goals.
This group is led by Hovenkamp, a centrist academic technocrat, who is the most important antitrust thinker in existence today, nicknamed the “dean of the antitrust bar association.” His association with Lyndon Johnson’s antitrust chief Don Turner and Harvard scholar Phil Areeda in a key antitrust treaty laid the foundation for his intellectual dominance in the 1980s. Stephen Breyer, a liberal judge and Hovenkamp supporter He once noted that advocates would prefer to have “two paragraphs of [the] tried on your side than three courts of appeals or four justices of the supreme court. ”Breyer was not underestimating the point; Hovenkamp has been subpoenaed by our highest court in 38 different cases to date, far more frequently than Bork.
Hovenkamp is an intellectual historian by training, and his views on antitrust policy are set in a misleading narrative. His research radically downplays the historical importance of legislative and social movements focused on the democratic need to control big business, and instead emphasizes the role that economists and technocrats began to play in shaping the law during the Golden Age. As part of this narrative, he sells an incomplete account of the origin of the Sherman Antitrust Act of 1890, the most important piece of antitrust legislation ever enacted by Congress. Hovenkamp argues that there is no evidence that the drafters of the Sherman Act sought to restrict monopolies caused as a result of “superior skill or industry.” According to Hovenkamp, the United States Congress – and by extension Americans in general – never had a problem with large corporations, not even with monopolies; We just didn’t like those monopolies turning predators.
This elitist and technocratic framework overlooks our rich antitrust tradition. Thomas Jefferson, James Madison, and Frederick Douglass opposed monopolies on political grounds, and state legislatures in the 19th century began dividing companies almost as soon as they began issuing corporate charters. Senator Sherman himself explained that the purpose of the federal antitrust law was “to put an end to large aggregations of capital due to the defenselessness of the individual before them.”
Judge Learned Hand, whose decisions in contract and corporate law are still reverently read, established the basic federal antitrust framework that was endorsed by the Supreme Court in 1946 and 1968 and governed our economy for most of the 20th century. By ordering the breakdown of Alcoa’s aluminum monopoly in 1945, Hand concluded that monopoly power, itself, was illegal. He explained that the Sherman Act is a law that prohibits monopolies, period, regardless of whether they are predators. He noted that Congress updated antitrust laws four times in the 20th century to counter the courts that tried to reduce them.
Antitrust theory is dominated by reactionary but often wildly inconsistent thinkers. Hovenkamp, who for decades resisted any action to reign in the big tech firms, argued a year ago that the breakdown of these giants would return the economy to the “Stone Age.” This week, reversing his position, Hovenkamp admitted that the Facebook break-up is now justified, revealing that his entire school of thought is largely a reactionary force torn between leaning toward concentrated financial power and outrageous headlines of abusive market power.
It is encouraging that the government is seeking to split Google and Facebook, and that lawmakers reject flawed legal theories. But the resistance to restoring our antitrust tradition runs much deeper than Robert Bork and his right-wing legacy. As we have seen, it is equally ingrained in the academic and judicial center citadels of well-intentioned technocrats who carry a deep-seated fear of excessive democratic influence over the economy.
Lawmakers and judges will have to shed the misleading narrative woven by the current antitrust establishment. Doing so is essential not only to support fair markets, but to preserve democracy itself.
Matt Stoller is the research director of the American Economic Liberties Project and author of Goliath: The Hundred Year War Between Monopoly and Democracy
Shaoul Sussman is a legal member of the Institute for Local Self-Reliance
Digsmak is a news publisher with over 12 years of reporting experiance; and have published in many industry leading publications and news sites.