There’s a cheat-code in US antitrust law, one that’s been increasingly used since the Reagan administration, when the “consumer welfare” theory (“monopolies are fine, so long as the lower prices”) shoved aside the long-established idea that antitrust law existed to prevent monopolies from forming
at all.
The idea that a company can do anything to create or perpetuate a monopoly so long as its prices go down and/or its quality goes up is directly to blame for the rise of Big Tech. These companies burned through their investors’ cash for
years, selling goods and services below cost, or even giving stuff away for free. Think of Uber, who lost $0.41 on every dollar they brought in for their first 13 years of existence, a move that cost their investors (mostly Saudi royals) $31 billion.
The monopoly cheerleaders in the consumer welfare camp understood that these money-losing orgies could not go on forever, and that the investors who financed them weren’t doing so for charitable purposes. But they dismissed the possibility that would-be monopolists could raise prices after attaining dominance, because these prices hikes would bring new competitors into the market, starting the process over again.
Well, Uber has doubled the price of a ride and halved the wages of its drivers (not that consumer welfare theorists care about workers’ wages – they care about
consumer welfare, not
worker welfare). And not just Uber: companies that captured whole markets have jacked up prices and lowered quality across the board, a Great Enshittening whose playbook has been dubbed “venture predation”:
Not only was this turn predictable – it was
predicted. Back in 2017, Lina Khan – then a law student – published a earthshaking
Yale Law Journal paper, “Amazon’s Antitrust Paradox,” laying out how monopolists would trap their customers and block new competitors as they raised prices and lowered quality:
Today, Khan is the chair of the FTC, and has brought a case against Amazon that turns her legal theories into practice, backed by a cheering chorus of Amazon customers, workers, suppliers and competitors who’ve been cheated by the e-commerce giant:
ALT