Digital platforms inhibit innovation to address today’s most pressing issues

The large research and development expenditures of the leading digital platforms (Alphabet-Google, Apple, Meta-Facebook, Amazon, and Microsoft) may send an image of beneficial investment and innovation, but the reality is that they suppress healthy innovators by depriving them of the “oxygen” needed to survive. Ariel Ezrachi and Maurice E. Stucke write that we should not be betting on tech barons’ ecosystems to deliver much-needed innovations to address pressing needs like global warming, wealth inequality, social unrest, growing population, and threats to democracy. They propose three principles to guide future policies aimed at promoting innovation in the digital economy

Digital platforms inhibit innovation to address today’s most pressing issues

The large research and development expenditures of the leading digital platforms (Alphabet-Google, Apple, Meta-Facebook, Amazon, and Microsoft) may send an image of beneficial investment and innovation, but the reality is that they suppress healthy innovators by depriving them of the “oxygen” needed to survive. Ariel Ezrachi and Maurice E. Stucke write that we should not be betting on tech barons’ ecosystems to deliver much-needed innovations to address pressing needs like global warming, wealth inequality, social unrest, growing population, and threats to democracy. They propose three principles to guide future policies aimed at promoting innovation in the digital economy

Virtual Competition: The Promise and Perils of the Algorithm-Driven Economy, by Ariel Ezrachi & Maurice E. Stucke

Proponents of laissez-faire economic philosophy have long relied upon the concept of the “invisible hand” to justify non-intervention by governments in markets. The term is typically interpreted to describe how the independent actions of self-interested individuals can lead to a beneficial societal outcome. Since Adam Smith introduced the concept in 1776, the invisible hand has become an important foundation of economic analysis and has consistently been a source of controversy, debate, and policy inspiration. As one of the core tenets of neoclassical economic theories and the Chicago School of economic thought, the invisible hand has been associated with the modern shift in emphasis from regulation to free market philosophy. However, the appeal of the concept has somewhat diminished in the wake of the 2008 financial crisis, with many blaming rising income inequality and reduced social mobility on lax regulations and limited oversight of the financial sector

SUSTAINABLE AND UNCHALLENGED ALGORITHMIC TACIT COLLUSION

Algorithmic collusion has the potential to transform future markets, leading to higher prices and consumer harm. And yet, algorithmic collusion may remain undetected and unchallenged, in particular, when it is used to facilitate conscious parallelism. The risks posed by such undetected collusion have been debated within antitrust circles in Europe, the US, and beyond. Some economists, however, downplay algorithmic tacit collusion as unlikely, if not impossible. “Keep calm and carry on,” they argue, as future prices will remain competitive. This paper explores the rise of algorithmic tacit collusion and responds to those who downplay it, by pointing to new emerging evidence and the gap between law and this particular economic theory. We explain why algorithmic tacit collusion is not only possible but warrants the increasing concerns of many enforcers

The Effective Competition Standard: A New Standard for Antitrust

America’s failing antitrust system is, in large part, to blame for today’s market power problem. Lax antitrust law and enforcement have allowed troubling trends like corporate consolidation to remain unchallenged, further embedding our skewed economy. In highly concentrated markets, individuals have limited choice and little power to pick their price, quality, or provider for the goods and services they need; workers are met with powerful employers and have little agency to shop around or bargain for competitive wages and benefits; and suppliers can’t reach the market without paying powerful intermediaries or succumbing to acquisition. Our Essay offers an alternative to the courts’ consumer welfare standard. Ambiguous and inadequate, the consumer welfare standard identifies threats to competition only by the potential consequences for consumers and ignores adverse effects on workers, suppliers, product quality, and innovation. Our effective competition standard would restore the primary aim of antitrust laws—namely, to promote competition wherever in the economy it has been compromised, including throughout supply chains and in the labor market. These changes are essential to protect competitive markets in the United States, as well as individuals and the economy at large, by deconcentrating private power

Antitrust Review of the AT&T/TMobile Transaction

In August 2011, the United States brought a landmark antitrust lawsuit to prevent the merger of two of the nation\u27s four largest mobile wireless telecommunications services providers, AT&T Inc. and T-Mobile USA, Inc. But why are so many elected officials asking the Obama administration to intercede in the Department of Justice\u27s lawsuit to force a settlement? Why are they approving a merger that would likely lead to higher prices, fewer jobs, less innovation, and higher taxes for their constituents? Does it have anything to do with the money they are receiving from AT&T and T-Mobile? This Article examines the recent lobbying efforts in the AT&T/T-Mobile merger. AT&T spent $11.69 million on political lobbying in the first six months of 2011. In addition to hefty campaign contributions, it lobbied lawmakers with$52 steaks and $15 gin-and-cucumber puree cocktails. But lobbyists, as this Article outlines, are not the problem. The problem is the combination of lax campaign finance rules and antitrust law\u27s prevailing legal standard, a flexible fact specific rule of reason