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Antitrust Is Bad Quality Intervention

Here’s a letter to the Wall Street Journal:


Michael Faulkender and Stephen Miran argue that social-media companies such as Twitter and Facebook exercise monopoly power by governing what may and may not be said on their sites (“Censorship Is a Consumer Harm,” October 12). Because, in the authors’ view, this content control reduces consumer welfare, these companies are proper targets for antitrust action.

Like many others, I’m disgusted by the content decisions made by large social-media companies. But I strongly oppose responding with antitrust. Such a response would set a dangerous precedent for using government to restrict private parties’ freedom to control what sorts of expressions occur on their properties. Additionally, a new and dodgy precedent would be created for antitrust enforcement – namely, the use of allegations of declines in subjective product quality as objective evidence of monopoly power.

It’s true that a monopolist might express its market power, not in the form of higher prices, but as lower product quality. Yet for all of the practical problems with inferring monopoly power from prices, the practical problems of inferring monopoly power from product quality are magnitudes worse. Unlike a price, not only is product quality subjective – ultimately it’s in the eyes of consumers – product quality also has countless dimensions, ranging from the readily observable (such as length of warranty) to the practically unobservable (such as the ease or aggravation consumers experience in purchasing the good or service). If low product quality becomes an antitrust offense, attorneys and expert witnesses will make a mint over the coming decades arguing over whether or not this car-maker’s model-year upgrades are sufficiently high, or whether or not that tech company could have made its new login procedure even easier.

And when making decisions on what level of product quality to offer, even the most competitive companies will pay less attention to consumers and more attention to their antitrust counsel.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030