TWO SYSTEMS OF BELIEF ABOUT MONOPOLY: THE PRESS VS. ANTITRUST.

• Author: Auer, Dirk
• Position: Clinical report

The emergence of large corporate organizations in digital markets has attracted substantial press coverage. Much of that coverage describes these organizations in derogatory terms like "big tech," "behemoths," "gatekeepers," "giants," "goldilocks," and "titans." The press also makes extensive use of the concept of "monopoly," which raises the question of whether the press representation of monopoly is in line with the socio-legal baseline enshrined in antitrust laws. To test that hypothesis, this article features a longitudinal study looking at press coverage of monopolies over a 150-year period.

Our inquiry points out three biases. First, press coverage of monopolies is usually negative and distorts the meaning of monopoly found in the antitrust literature. Second, data show that press coverage of the emergence of monopolies is more widespread than stories of their disappearance. Third, the coverage of monopolies is often clustered around "hot topics."

This article proceeds as follows. We begin with a discussion of the basic hypothesis that motivates our study--namely, a possible discrepancy between the representation of monopoly in the mass media and the antitrust meaning of the term. Next, we review the literature related to the biases generally encountered in mass media and discuss potential antitrust and regulatory applications. We then analyze the use of "monopoly" in the press by looking at 150 years of press coverage. Finally, we sketch out some policy implications of our findings.

Parallel Narratives of Monopoly

We posit that there are two conflicting narratives about monopoly: the first is conveyed by the mass media, while the second is enshrined in the antitrust laws. The mass media coverage of digital economy markets often uses "monopoly" as a buzzword to convey a biased vision of monopoly. In contrast, antitrust laws in the United States and European Union (EU) tend to make a more dispassionate use of the term. There is no underlying assumption that monopolies should, by their very nature, be sanctioned. Instead, antitrust laws reflect a compromise whereby monopoly is treated as a mostly unobjectionable market fact, in which legal consequences are triggered when certain additional (actors are present. On the basis of this observation, we formulate the hypothesis that the mass media conveys a normative representation of monopoly that deviates from the positive interpretation prevailing in the social-legal order.

The Monopoly Buzzword

The start of the 21st century has played center stage to the swift rise of the digital economy and a raft of global corporations. Unsurprisingly, the success of these firms in the marketplace has caught the interest of the press and the public alike.

A random search of the mass media coverage of digital economy firms denotes an observable tendency to discuss them in monopoly terms. If we restrict our inquiry to The Economist, Wall Street Journal, New York Times, Washington Post, and Guardian, from June 7, 2012, to June 7, 2017, we find numerous articles that use the terms "monopoly," "digital," and "technology." Several recurring features can be observed.

First, large digital economy firms have been labeled as "monopolies" by the press. Amazon (Streitfield and Scott 2015), Apple (Tsukayama 2013), Facebook (Taplin 2016), Google (Business Leader 2015), Uber (Wadhwa 2014), and Yahoo (Leaders 2016c) are all said to enjoy, or to have enjoyed, a monopoly. Microsoft is the most frequently mentioned "monopoly," although this term is often linked to past antitrust findings. In one article in the Guardian, all the above firms (and others) are brought under the umbrella category "digital monopolies" (Pasquale 2015).

Second, the monopoly label is sometimes literal, sometimes metaphorical. A nontrivial amount of mass media coverage we have surveyed discusses digital economy firms with terms like "giant" (Leaders 2012a; Garside 2014), "titans" (Carr 2014), "behemoth" (Carr 2014), "empire" (Neil 2015; Leaders 2016a), "colossus" (Leaders 2012b), and "walled gardens" (Leaders 2012b).

Third, in some instances, the mass media does not directly tag the monopoly label on digital economy firms, yet the narrative indirectly achieves that result by recourse to historical analogy. In this variant, digital economy firms are often compared to well-known instantiations of monopoly companies in contemporary history. This includes Standard Oil (Briefing 2014, 2017), AT&T (Neil 2015), Microsoft (Leaders 2016b), and AOL (Editor's Note 2014). Sometimes the historical reference is less explicit, and the mass media calls upon memories of times when monopolies were said to be the industry norm. Thus, we find references to such terms as "trustbusting" (Leaders 2014) and "robber barons" (Wadhwa 2014).

Fourth, the mass media representation of digital economy companies as monopolies is found in both reporting and commentary journalism, though the line between those two categories is sometimes blurred (Stiglitz 2016). This confluence may denote some spillover from the normative opinions conveyed in commentary pieces to objective renditions of facts in reporting pieces.

Finally, in most of the press articles we examined, the word "monopoly" is pejorative. For example, in a piece on Silicon Valley companies in the New York Times, the authors write: "The word 'monopoly' has a distinctly nefarious ring to it, conjuring up images of thuggish industrialists in smoky rooms, scheming to undermine their rivals" (Gelles and Isaac 2016). Some articles underline die peril posed by these "monopolists" by adding cartoon representations--of the kind found in H. P. Lovecraft imagery--that are reminiscent of the famous Standard Oil octopus.

Admittedly, this brief overview of the representation of digital economy firms as monopolies in the mass media is not dispositive.

But it may be suggestive of a wider trend, whereby the press's representation of monopoly deviates from its positive and legally accepted understanding. In the next subsection, we explore, and carry further, this conjecture by comparing the representation of monopolies in the press with that found in the antitrust statutes on both sides of the Atlantic.

The Socio-legal Baseline: U.S. and EU Antitrust Laics

Constitutional political economies define various rules of law that ope rationalize social preferences. Among them are "rules of the market order" that "coordinate the actions of individuals" and "define the private spaces within which each of us can carry on our own activities" (Brennan and Buchanan 1985: 12-15). Antitrust rules are an important component of market rules and reflect a socio-legal understanding of monopoly.

If we focus analysis on antitrust laws in the United States and European Union, we can derive several principles regarding the concept of monopoly.

* First, a monopoly is not a bad state of the world. Neither U.S. nor EU antitrust laws take a categorically hostile view of monopoly through the formulation of a general prohibition in statutory law or a per se prohibition in case law.

* Second, antitrust laws do not presume that a monopoly position will be durable.

* Third, society admits that monopoly market positions may sometimes generate efficiencies not found in less concentrated market structures.

Antitrust Neutrality toward Monopoly Positions. A certain agnosticism toward monopoly can be observed in several areas, and at several levels of U.S. and EU antitrust laws. To start, the unilateral conduct statutes of both jurisdictions do not proscribe the possession of a monopoly position. In the United States, Section II of the Sherman Act states that it is unlawful to "monopolize" (or "attempt" to monopolize) and liability is focused on the behavioral process that degenerates into a monopoly position or inefficiently perpetuates one. In the European Union, Article 102 of the Treaty on the Functioning of the EU (TFEU) forbids "any abuse" of a "dominant position" and liability focuses on the conduct constitutive of an exploitation of a dominant market position. A finding of dominance is thus not sufficient to trigger EU antitrust liability.

Antitrust doctrine has on numerous occasions confirmed these important nuances. In the United States, it is conventionally admitted that Section 2 of the Sherman Act catches the process of willful acquisition or maintenance of monopoly. In United States v. Grinnell Corp., (1) the Supreme Court ruled that "the offense of monopoly under [section] 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of superior product, business acumen or historic accident." (2) Moreover, it is apparent from the Congressional Record leading up to the adoption of Section 2 of the Sherman Act that Congress did not seek to outlaw the mere possession of monopoly power. (3) In the EU, where the concept of monopoly does not appear in statutory law, and where the somewhat looser concept of dominance is used as a surrogate to monopoly, the Court of Justice affirmed in Michelin that "a finding that an undertaking has a dominant position is not in itself a recrimination." (4)

The neutrality of antitrust law toward monopoly can also be observed at the remedial level. Neither the Sherman Act nor EU statutory laws give courts and agencies a power to dismember monopoly or dominant firms. Granted, both the enforcement of the Sherman Act and EU statutory laws can lead to divestiture orders. But such orders remain contingent on proof of illegal willful monopolization or abusive conduct and are strictly limited to restoring the "but for infringement" state of the world. In the past, the conventional statutory (and doctrinal) limitations of the U.S. and EU antitrust statutes have fueled proposals supporting the adoption of "deconcentration" legislation to...