JEFF BEZOS "IS worried about me," grinned Donald Trump back in 2016 while discussing Amazon's bald-headed billionaire. "He thinks I would go after him for antitrust, because he's got a huge antitrust problem because he's controlling so much." President Trump has continued to threaten Amazon and other tech giants with the trust-busting lash. This year, on CNBC, he informatively announced his role model: "The European Union is suing them all of the time. Well, we should be doing this. They're our companies."
You will not be surprised to hear that Fox News talker Tucker Carlson agrees with Trump. But you might blink when told that he arrived at this agreement via a lecture delivered by Professor Elizabeth Warren. The Massachusetts senator has gained traction in a crowded Democratic presidential field by announcing pre-election antitrust verdicts to bust up Amazon, Apple, Google, and Facebook--no legal proceedings required.
Carlson sprinkles conservative holy water upon Warren's Plan for Economic Patriotism, saying her "policy prescriptions make obvious sense." Warren would treat the rise of big tech firms like an exploding offshore oil rig: an emergency to be met by capping, closing, and hosing down the fiery mess. Carlson gushes that Warren "sounds like Trump at his best."
This bipartisan pot of pols and pundits is echoing a school of thought known as the "new structuralism." But you're more likely to hear its nickname: "hipster antitrust." It claims a historical hero in the late Supreme Court Justice Louis Brandeis, and its manifesto is Lina Khan's 2017 Yale Law Journal article "Amazon's Antitrust Paradox."
The antitrust hipsters fear the "winner take all" rivalry in tech platforms while romanticizing the drowsy world of "common carrier" regulation. As seen in transport and communications, this regime has had its unfortunate place in history. While imposing so-called "nondiscrimination" rules on service providers under the auspices of giving everyone equal access, the regulations widely and deeply favor incumbents and legacy technologies at the expense of upstarts and innovation.
In the hipsters' telling, regulation and antitrust are princes riding white horses to our salvation. The computer company IBM was an unrepentant oligopolist, they say, until it was put on the straight and narrow by a federal antitrust suit in 1969. That police action opened the market for Microsoft, which then started monopolizing the software business. Thankfully, the 1998 U.S. v. Microsoft suit busted that diabolical plot. If not for this victory for the Department of Justice Antitrust Division, Google would have been nipped in the bud. Alas, Google's search function then got much too popular, and now it must be disciplined. Indeed, Amazon, Google, Facebook, and Apple have all grown too big for their britches. Each needs to be split up. They would already have been, in fact, had the cop on the beat not dozed off.
This pattern-recognition exercise is a reprise of Justice Brandeis' early 20th century legal attacks on price-slashing innovators such as A&P, Safeway, Sears, Montgomery Ward, and J.C. Penney. Then, as now, each triggering offense was a daring market breakthrough that consumers flocked to embrace. Legislation procured by those who, like Brandeis, saw these commercial successes as threats did more to promote cartels than to promote competition: Oligopolies flourished under the auspices of the Interstate Commerce Commission (ICC), the Federal Communications Commission (FCC), the Civil Aeronautics Board (CAB), and the U.S. Department of Agriculture, with grim effects. Under the rule of the CAB, for example, air carrier competition was drastically reduced. In one of the "most bizarre and illuminating chapters in the history of regulation," Harvard law professor Louis Jaffe wrote in the Harvard Law Review in 1954, only 30 percent of air traffic could be sold at coach fares--and that discounting existed only because "unscheduled" airlines brazenly evaded a government ban. "The CAB is completely committed to the existing certificated carriers," Jaffe explained.
And while the ICC brought stability to railroads, it did so while creating higher average prices. The agency, which was established in 1887, was abolished in 1995 for undermining railroad and trucking efficiencies, wasting fuel, savaging the environment, killing economic growth, and waterboarding consumers. With less "public interest" and more open market rivalry, shipping costs were slashed, pollution declined, and innovation sprouted. A Brookings Institution study pegged efficiencies at $18 billion in 1996 alone, while crediting deregulation for allowing the emergence of new competitors in overnight shipping, including Federal Express.
Waves of deregulation produced protean results elsewhere, too. Legacy markets have been disrupted and powerful incumbents have fallen, with the choices available to consumers proliferating. The emergence of competitive wireless networks--granting 6 billion human beings access to global communications, 5 billion of them new phone subscribers--is itself a prime example of this liberalization. The antitrust hipsters present themselves as populists, but it is a curiously elitist form of populism that would undo the laws that allowed those mass market gains.
Antitrust was recently pushed to advance consumers' welfare. That was part of the liberalization trend. Now it's being tugged back to form a support system protecting "competitors"--guarding against low prices, escalating quality, and market rivalry.
FOR KHAN, A legal scholar currently based at Columbia University, the problem with today's market is epitomized by the operations of one firm. Amazon "generates...