Over the past few years, an antitrust “War on Big Tech” ramped up in both the United States (U.S.) and the European Union (EU) politics. Alleging companies like Meta, Apple, and Google cornered their competition, achieving a monopoly in the technology industry, and “wield unparalleled power over Americans’ lives”, the War on Big Tech receives support from progressive Democrats and new-age Republicans alike.
Critics of “Big Tech” promise to restore small business rights, uplift individual liberties and privacy rights, and decentralize corporate power in America. By and large, they depend on a “David vs. Goliath”, looking-out-for-the-little-man narrative. Yet in promising to protect the working class or Middle America, these anti-Big Tech policies create an economic burden on a diverse, largely middle-to-working class population: state and local government employees.
Ongoing U.S. and EU antitrust litigation against major tech companies costs state and local government employees thousands in their pensions, which are leading shareholders in many of these companies. Costly lawsuits could jeopardize the retirement benefits of millions of pension plan members, estimated up to at least $3,015. The financial fallout would also impact private sector workers with retirement investments in these companies, and potentially the salaries of working-class tech employees alongside the prices of critical products like cell phones.
While promising to help ordinary people and fight entrenched business interests, anti-Big Tech warriors are doing the opposite. These court cases hit the working class where it hurts — retirement savings, salaries, and price inflation — all to score political points in Washington. Likely well-intentioned, as the way social media applications and Google seem to pervade everyday life can be cause for concern, this litigation does more harm than good. Simply put, it’s bad policy with little economic basis.
As they politicize the financial returns of state funds, the Federal Trade Commission (FTC) contradicts decades of work to stand up for the consumer welfare standard in antitrust law. Under the consumer welfare standard, antitrust law and policy seek to derive the maximum benefits from goods and services consumed by people. Based upon tangible, quantitative economic data, this principle protects against the negative consequences of monopolies while not inhibiting the free market from pursuing mergers and acquisitions (M&A).
Opponents of this standard, including Biden cabinet officials like Secretary of Labor Robert Reich and FTC Chair Lina Khan, seek to extend the law to further “social good” causes and intervene in other corporate affairs. They stereotype all M&A activity as fundamentally harmful to employment rates, income inequality and consumer rights. Instead, they propose a “fairness” standard to remedy their political concerns with companies deemed “too big to fail”, accusations of inadequate media political diversity, and other economic affairs.
Believing they can outsmart the market, opponents of consumer welfare promote lawsuits like those against major tech companies to browbeat their moral belief in “fairness”. But any sensical person understands “fairness” is a subjective metric, unlike the legitimate data used under the consumer welfare standard. Ultimately, this legal movement fails at its foundational objective of achieving better outcomes — wages, prices, and competitiveness — for the working class by championing an empty virtue with no statistical basis.
Simultaneously, lawsuits like these continue demonizing the tech industry and companies that have fundamentally transformed the world. Entrepreneurship in the 21st century relies on Apple cellphones, Google Drive and Microsoft Office. Social media marketing, SEO and crowdsourcing websites help startups reach broad audiences nationwide and uplift small business owners to incomparable success. Don’t let the doomers confuse you, entry into competitive industries, such as tech, is better — not worse — thanks to established Tech companies.
American policymakers shouldn’t steer clear of the EU’s regulatory approach to tech markets in favor of lower taxes and less red tape. Agencies such as the FTC should commit to following financial metrics, like the consumer welfare standard does, not politics or personal endeavors. As economist Milton Friedman warned us, “Underlying most arguments against the free market is a lack of belief in freedom itself.”
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