In a free market, companies win by innovating, building better products that consumers prefer, and outcompeting other businesses. However, a growing trend threatens to replace dynamic competition with bureaucratic warfare. Some firms are attempting to gain a market advantage not by out-innovating their rivals, but by dragging them into costly, prolonged regulatory battles. This strategy doesn’t just hurt individual companies, it threatens to undermine American innovation and leave consumers worse off.
While this kind of regulatory gamesmanship can occur in any industry, it has become prevalent in the tech sector. This is especially concerning given the government’s focus on encouraging private sector investment into new technologies like artificial intelligence, as well as the demand from consumers for new, more innovative digital products and services. Antitrust enforcement should be about protecting consumers and ensuring competitive and dynamic markets, not picking winners and losers based on lobbying power. Marketplace competitors undercut those goals when they rely on favorable regulation as a cudgel to retain market power.
Startups and smaller companies suffer most in an environment where legal battles replace product development. When deep pockets can be used to influence regulatory efforts, it’s no longer the best and most innovative companies that win. This discourages small businesses and startup companies from investing in research and development, stifling innovation. Additionally, with fewer new entrants willing to challenge established businesses, competition suffers.
Regulatory interventions backed by competitors are often cloaked in the language of consumer protection, but consumers don’t benefit when companies focus on influencing rulemaking and litigation instead of improving their products. Oftentimes, businesses that support regulators targeting their rivals aim to break popular digital products and services that consumers love and rely on. This kind of competition enforcement risks leaving consumers with fewer choices, higher prices, and slower progress in new innovations and technologies.
Take, for example, the Department of Justice’s (DOJ) ongoing lawsuit against Google Search. While framed as a case about protecting competition, the lawsuit has been quietly encouraged by rival firms that stand to gain from government intervention. Some remedies to the case proposed by the DOJ, including plans to mandate web query data sharing or proposals forcing Google to sell off Chrome, would ironically further entrench Google’s large competitors and leave consumers with fewer options. The Google Search trial, concerningly, is not an isolated example. Other companies have advocated for regulatory intervention aimed at breaking app stores or blocking their competitors from investing in AI research.
Enforcement of antitrust laws was never meant to be used as a weapon in corporate rivalries to help pick winners and losers. Competition laws exist to protect consumers and encourage competition, not pick winners and losers in the marketplace.