New Data Highlights How Harmful Antitrust Policies Threaten Innovation, Competition, and Consumers

Washington, D.C. (5/8/2024) – Leading American tech companies are responsible for driving U.S. innovation and economic success, and today, the tech sector plays a key role in everything from keeping the United States competitive on the global stage to strengthening Americans’ pension plans. However, some policymakers and antitrust enforcers have walked away from long-standing norms and well-accepted pro-consumer antitrust principles in favor of radical, untested theories. 

As experts dive deeper into aggressive antitrust enforcement actions and regulations targeting leading American tech companies, new data and analysis make it clear that these policies threaten to stifle innovation, harm the U.S. economy, and increase costs for consumers. 

Here’s the true cost of anti-consumer, anti-competition antitrust policies:

New research from the Computer & Communications Industry Association (CCIA) Research Center outlines how aggressive antitrust enforcement actions and overregulation at home and abroad pose a threat to Americans’ pension plans.

CCIA: The Cost of Various Antitrust and DMA-Related Litigation to State and Local Pension Plans:

“…State and local government employee pension plans are major institutional investors, relied upon by at least 28.6 million Americans for retirement income, that typically invest heavily in securities issued by U.S. firms that would be significantly adversely impacted by antitrust and DMA-related litigation. These lawsuits would significantly increase operating costs for regulated businesses, decreasing the market value of stocks and other securities from major companies…

“…On a per-plan-member basis, successful antitrust and DMA-related litigation against GAMMA (Google, Apple, Meta, Microsoft, and Amazon) collectively would cost the average state and local government employee pension plan member at least $3,015…” 

Last week, the Center for Strategic & International Studies (CSIS) released research and analysis outlining how leading U.S.-based companies power American innovation. According to CSIS, harmful antitrust enforcement actions risk stifling innovation, threatening the U.S. economy and global competitiveness. 

CSIS: Beyond Economics: How U.S. Policies Can Undermine National Security Goals

“…Some argue that these FTC and DOJ actions are targeting the wrong industries and that Big Tech is both competitive and innovative. Amazon spent the most of any U.S. company on R&D ($73.2 billion) in 2022, followed by Alphabet, which spent $35.9 billion. Big Tech also has a commanding lead when it comes to new patents. IBM holds the most patents in the United States. Other companies, such as Amazon, Google, Apple, and Microsoft, also promote innovation by rewarding employees with in-house patent recognition programs, regardless of whether the patents are approved or not…

“…(B)reaking up Big Tech through an antitrust approach raises the question of whether the United States has the potential to innovate more than under its current model, which has so far proved very strong.”

For over 40 years, American antitrust enforcers have acted on the basis of the consumer welfare standard, a long-held principle that guides policymakers to work toward the benefit of American consumers. New analysis from the R Street Institute outlines how antitrust enforcement actions that break from the consumer welfare standard threaten to increase costs for consumers.

R Street Institute: An Economic Argument for Antitrust Inaction and the Consumer Welfare Principle

“…The risk antitrust action then poses is twofold: First, splitting large firms into component parts negates the efficiencies that allow firms to provide generally affordable products. Reverting a firm to a smaller size lessens economies of scale and creates higher prices for the consumer. Even more reserved sanctions against a firm, such as significant fines, negatively impact these efficiencies while carrying massive opportunity costs. Second, antitrust action has the potential to dilute the incentive for innovation. Splitting firms into component parts forces the newly minted firms to charge higher prices for the services consumers were already consuming…

“…This uncertainty renders antitrust action perilous at best. Markets are dynamic, competition is faced in both direct and indirect industries, and persistent innovation drives growth. Therefore, any antitrust action must be constrained by the consumer welfare standard—and nothing more…”