Do Not Pass Go: Monopolies Are Bad For Business
A Note On Oligarchy, Democracy, And Innovation
Goodbye, Lina Khan
Behind every strong businessman is another CEO checking out their partner’s bosom the FTC Chairperson watching their activities for anti-competitive behavior.
For the last four years, that Chairperson was Lina Khan — one of the most respectable and aggressive Chairs to ever lead the Federal Trade Commission (FTC). To commemorate Khan reaching the end of her term, the FTC released a brilliant summary of the agency’s accomplishments during her tenure. As an American citizen and beneficiary of her success, I find this list so endearing. Here are some snippets:
+ Finalized a “click to cancel” rule requiring companies to make it just as easy to cancel subscriptions as it is to sign up.
+ Returned nearly $60 million to more than 140,000 Amazon Flex drivers after Amazon illegally withheld tips from its drivers.
+ Took numerous actions to help ensure Americans have access to affordable health care, including challenging patents on drug products, including inhalers and EpiPens, that were improperly listed in the FDA’s Orange Book.
+ Strengthened the Children’s Online Privacy Protection Rule (COPPA) to further limit companies’ ability to profit from kids’ personal data.
+ Secured $48 million in refunds for consumers who the agency alleged were charged junk fees, suffered unfair eviction practices, and unfairly had their security deposits withheld…
+ Sued the three largest pharmacy benefit managers for allegedly engaging in anticompetitive rebating practices that inflated the cost of insulin.
+ Sued Amazon for raising costs for sellers that rely on the platform to reach consumers.
+ Ordered Mastercard to stop illegally blocking merchants from routing debit card payments through its payment network and raising costs for small businesses…
+ Defeated Meta’s summary judgment motion in the FTC’s ongoing lawsuit alleging Meta engaged in a series of acquisitions, including Instagram and WhatsApp, to illegally maintain its monopoly power.
In an era where political polarization is sky high and government work is utterly thankless, civil servants like Lina Khan deserve their flowers. I am deeply grateful for her work and am inspired by her example. I hope we see much, much more of her in the future.
Khan’s exit is accompanied by the appointment of Andrew Ferguson to take her place. Ferguson accepted the position immediately and then issued the following remark:
“I am honored that President Trump chose me to lead the Federal Trade Commission. Under the President’s leadership, we will end the previous administration’s assault on the American way of life, and we will usher in a new Golden Age for American businesses, workers, and consumers.”
All week, I couldn’t help but feel that Ferguson’s appointment was being underreported, as the news cycle was understandably dominated by Trump’s all-star lineup of CEO’s. This asymmetry, however, is what merits our attention. Although Ferguson was not onstage for the inauguration, he might be every bit as important to the emerging business landscape (and therefore the political landscape) as Bezos, Zuck, Musk, and the others. Here’s why.
Gloves Off
In honor of Meta’s latest board member, let’s use a UFC analogy — imagine Big Business as the pugilists fighting over profits and market share in the Octagon. Then imagine the FTC as the referee. When one fighter gets carried away and throws a head-butt, it’s the referee that steps in to enforce the rules and restore order. In the same way, the FTC is the agency responsible for stepping in when companies exhibit anti-competitive behavior (price fixing, collusion, tying and bundling, etc..) or when they seek to take advantage of consumers.
Whether its the Vanderbilt's transit system, Microsoft’s OS, or AT&T’s telecommunications network, America has a wonderful legacy of trying and charging its own companies with anti-competitive behavior. The result has always been a huge unlock of value for citizens, as well as an abundance of innovation and invention for the world.
When companies use their size or influence to manipulate the market, its the consumer that gets the shaft. We are not only forced to pay higher prices on basic items, but companies are no longer incentivized to create quality, varied, or novel products to earn our patronage. Our options become limited to whatever the monopolists hand down and new alternative businesses with truly delightful innovations are snuffed out before they can become viable.
This is why I never could join in the current zeitgeist of professionals who conflate deregulation with completely unfettered markets. This is why I am skeptical of claims that Trump’s support of these tech overlords means that he is pro-business; because being pro-business requires that one also be anti-monopolist. And just like the referee of our analogy, the FTC isn’t there to spoil the game — they’re there to protect it.
Will We Endure A King?
Furthermore, our forefathers were wise enough to realize that more than markets were at stake when it came to monopolies. As John Sherman, the Father of Anti-Trust, stated in 1890:
“Monopolies are inconsistent with our form of government. If we will not endure a king as a political power, we should not endure a king over the production, transportation, and sale of any of the necessaries of life. If we would not submit to an emperor, we should not submit to an autocrat of trade…”
Robert Pitofsky, burning with the same spirit as Sherman, said it this way:
It is bad history, bad policy, and bad law to exclude certain political values in interpreting antitrust laws. By "political values," I mean, first, a fear that excessive concentration of economic power will breed antidemocratic political pressures, and second, a desire to enhance individual and business freedom by reducing the range within which private discretion by a few in the economic sphere controls the welfare of all.
I confess, this kind of rhetoric stirs an uncharacteristically patriotic instinct inside of me. I tentatively hope it does the same for you. Aldous Huxley once said that the price of freedom is eternal vigilance — and I am trying my best to stay watchful. Ferguson’s open support of the tech-overlord agenda does not inspire confidence, but it is too soon to tell exactly how he will lead. All I know is that it is neither prescient nor courageous to simply predict more of what is already taking place; and despite the anxiety in the atmosphere, I am hopeful yet.
Thank you for letting me get these brief thoughts off my chest. I have a fun newsletter in the works for next week. As usual, please forward this on to someone who may enjoy it. Don’t forget to subscribe and let me know your own thoughts in the comments!
Curiously yours,
Bradley
