Federal Trade Commission (FTC) Chair Andrew Ferguson recently spoke to Yale’s CEO Caucus. Amongst the attendees were the CEOs of J.P. Morgan, GAP, Dell, and Goldman Sachs. Chair Ferguson assured the CEOs that under his leadership the FTC would not let “good” mergers “die on the vine,” but would block mergers, acquisitions, and other transactions if the agency determined they would “hurt Americans economically.”
Chair Ferguson’s comments could have been made by almost any of his predecessors. After all, who could oppose “good” transactions? This should not allay concerns—raised by some of his recent actions—about how Ferguson will run the FTC, such as his retention of the 2023 revised merger guidelines. These guidelines could be used to justify blocking almost any merger or acquisition.
Chair Ferguson may have kept the guidelines because they make it easier to use antitrust to punish “woke” corporations. In his remarks before Yale’s CEO Caucus, Ferguson talked about how, when he was an aide to Senate Republican leader Mitch McConnell, he received calls from businesses regarding social issues, such as police reform. Ferguson also criticized big tech companies for their censorship of American citizens. He said that these experiences helped him “understand the real connection between large economic power and the transfer and leveraging of that power for social and political impact.”
Chair Ferguson ignores the fact that the “social and political impact” of woke capitalism has mostly been the loss of revenue by businesses who angered their consumers by promoting social and political causes. Ferguson also ignored the fact that the most extreme examples of online censorship occurred at the behest of the Biden Administration. Whether businesses should use their resources to promote social or political causes is up to the business owners—not the government. Ferguson needs to remember that businesses have a First Amendment right to take stances on political and social issues, and that consumers and investors have the right to not give these businesses their money.
Ferguson’s lack of trust in the market when it comes to woke capitalism is mirrored by his confidence in federal regulators. In his remarks before Yale's CEO Caucus he (correctly) observed that the looming debt crisis requires “creating an innovative and vibrant economy for all.” He then said this required the government to guard against “monopolies (that) slow innovation, slow growth, and injure American consumers." At the same time, he acknowledged that “we also don't want regulators who slow down the process.”
Ferguson assumes that government officials are wise enough to know when an innovative firm has become a monopolistic impediment to growth. The truth is that government regulators cannot know whether a firm is too big. That can only be determined by the market. One reason for this is that government officials make their determination of whether a firm is “too big” by relying on present market conditions. But markets are constantly changing, as consumers abandon once dominant businesses for newer, more innovative competitors. The only role for government is to not limit the ability of new businesses to enter a market by imposing regulations that big companies can afford to absorb but which cripple smaller, newer firms.
History is full of examples of once dominant businesses failing to smaller, more innovative competitors who offered a product better suited for consumers. For example, twenty years ago the social media landscape was dominated by MySpace. No one would have predicted that MySpace would lose its market share to a site started in a Harvard dorm as a prank.
Today, Facebook remains the leading social media site and is the foundation of Meta, which also owns popular social media sites Instagram and WhatsApp. Meta had been targeted by antitrust enforcers in both the Trump and Biden Administrations. Supporters of these actions claim they are necessary because Meta’s market power is so great that the company is immune from competition. However, Facebook and other Meta properties are changing to better compete with TikTok. If TikTok is forced to abandon the U.S., another business will emerge to challenge Meta and the other big tecdh companies. That’s how markets work. Consumers, workers, and investors don’t need Andrew Ferguson to help create “an innovative and vibrant” economy. They just need government to get out of the way.
