The Curse of Bigness
The counter-case, and the Brandeisian revival.
Summary
Wu, a law professor who coined the term net neutrality, argues that American antitrust law has been narrowed to a consumer welfare standard focused on price, that this narrowing was a deliberate intellectual project led by Robert Bork and the Chicago school, and that it abandoned the original purpose of the antitrust laws.
His historical argument is that the Sherman Act and its successors were passed for political reasons: to prevent concentrations of private power that could dominate government and remove economic independence from citizens. He traces this through Brandeis, whose phrase gives the book its title, through the trust-busting era, and through the mid-century enforcement that broke up or constrained AT&T, IBM and others. He argues that the technology industry's development was made possible by those interventions, since the AT&T consent decree released the transistor patents and the IBM case forced software to be sold separately.
His case against the current standard is that measuring harm by short-run consumer prices cannot detect harms to innovation, to labour, to suppliers or to political structure, and that free products defeat the test entirely.
His proposals include reviving merger review with structural presumptions, breaking up the largest technology platforms, and restoring a broader standard of harm.
The book is short and polemical. Economists in the antitrust field dispute both the historical claim about the statutes' purpose and the practical claim that a broader standard is administrable. The argument has since moved substantially toward Wu's position in enforcement practice, which makes the book a useful statement of where that shift came from.
Key takeaways 7
- American antitrust law was enacted to prevent concentrations of private power from dominating government, not primarily to lower consumer prices.
- The consumer welfare standard was a deliberate intellectual project that narrowed enforcement to price effects, and it succeeded within about fifteen years.
- A price-based standard cannot detect harms to innovation, labour, suppliers or political structure, and free products defeat the test entirely.
- The AT&T and IBM antitrust actions created the conditions for the computing and software industries by forcing the release of patents and the unbundling of software.
- Merger review should operate with structural presumptions against high concentration rather than requiring proof of predicted price effects.
- Dominant firms acquire nascent competitors specifically to prevent competition, and this is invisible to a standard that examines current market shares.
- Economic concentration and political concentration reinforce each other, which is why antitrust is a constitutional question rather than only an economic one.
Who should read it
Investors and operators in concentrated industries who need to understand the intellectual case behind the shift in antitrust enforcement.
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