Recently confirmed member of the Federal Trade Commission (FTC) Mark Meador made waves with the publication of the philosophy behind his approach to antitrust in “Antitrust Policy for the Conservative.” After succinctly summarizing historical conceptions of antitrust policy such as the small government Chicago School and the big government Neo-Brandeisian movement, Meador articulates a path somewhere in between. Unfortunately, his proposed dial-turning would likely do more harm than good to small app companies, especially as it would apply to their ability to leverage curated online marketplaces (COMs).
Throughout the piece, Commissioner Meador opposes handing more discretion or legislative power to unelected judges, as the neo-Brandeisians propose. He reiterates the traditional position that judges should not dictate market makeup with strict structural presumptions. So far, so good. However, he also makes value judgments about what individuals should want from markets, and this is where his philosophical approach overlaps perhaps more than intended with that of the neo-Brandeisians. For example, he asserts that antitrust law’s purpose is “rooted in our national commitment to human flourishing . . .,” a subjective construct that he rightly notes has not played a role recently in court decisions on antitrust claims. These musings spring from the Commissioner’s identity as a conservative, which he associates with prioritizing “tradition and custom over newness for newness’ sake, and beauty and virtue over cold, calculated efficiency.” Taken together with his comment that we must move “beyond the modern tendency to conflate free markets with the unsupervised exercise of private power,” (emphasis added), the Meador philosophy envisions more government involvement in economic exchange. More specifically, the Commissioner concludes that government enforcers ought to “err on the side of cautious deconcentration” rather than relying primarily on market forces, driven by consumer preference—even where that preference appears to favor more concentrated market structures.
This raises the question: if consumers are bad at deciding for themselves, who should decide for them? Is there a way to express a more perfect consumer benefit that does not supplant consumer preference with political aims? The conundrum calls to mind former European Commission Vice President Margrethe Vestager’s dismissal of Apple Intelligence’s delay in Europe by saying she was, “personally quite relieved that I would not get an AI-updated service on my iPhone.” The quote came in response to Apple’s inability to roll out Apple Intelligence on devices in the European Union (EU) due to the applicability of the Digital Markets Act (DMA) to the feature set. It crystallizes succinctly the perspective that learned regulators and enforcers are better positioned than consumers themselves to make the right choice, especially as it applies to concentrated markets. More broadly, it serves as the foundational principle of DMA, that consumers and developers should not be allowed to choose “walled garden” or highly curated and managed marketplaces. Their prerogative, says DMA, should come second to those of “trading partners” who should be far more empowered to press picayune preferences.
Despite saying nothing in the piece about DMA, Commissioner Meador also seeks antitrust policy that elevates “trading partner” equities. He argues that policymakers should reimagine consumer welfare as “consumer or trading partner surplus,” (emphasis added). Judges and policymakers should tread especially carefully here on the subject of “trading partners.” In too many cases, enforcers have brought actions against COMs on behalf of trading partners that are both consumers of marketplace services as well as competitors against marketplace managers. In doing so, they elevate the complaints of specific, well-resourced trading partners—in many cases, multi-billion-dollar companies themselves—in order to reshape marketplaces to fit the needs of those complainants. If Commissioner Meador and the Chicago School both agree that antitrust law should protect consumers—not competitors—both should reject lawsuits that err on the side of intervening to benefit a small subset of trading partners / competitors. This is especially true if siding with a subset of trading partners on a proposed intervention would degrade or eliminate the products and services the smallest trading partners value the most (e.g., marketplace management functions). Enforcers need not allow themselves to be credulously captured by the entreaties of specific competitors (despite convincing evidence that they do not get everything they want from COMs). Notably, the effect of these antitrust actions targeted at COMs, including DMA, has been to shift the costs of distribution down from the largest sellers (where they are now) to the smallest sellers. Thus, it matters how antitrust enforcers and courts view the shares of consumer surplus in these cases. The inquiry is not settled if an enforcer compares the relative interests of the producer in protecting its own surplus versus the consumer surplus of a single, aggrieved trading partner. Regardless of how you define consumer welfare, snatching away consumer surplus from smaller trading partners in order to serve larger trading partner interests is unlikely to square with antitrust policy’s central purposes.
Laser focused on the notion of “economic power,” the piece suggests that antitrust law should do more to prevent its accumulation. In tasking antitrust enforcers with closer “supervision” of markets, such a philosophy risks simply transferring the economic power accumulated by the private sector to government. Similarly, by emphasizing the preventive purpose of antitrust, officials are encouraged to shed the shackles of regulatory humility and make those market predictions that seem to elude even the savviest public servants. Ultimately, even though consumers are also voters—and voters elect politicians who, in turn, handpick enforcers—enforcers’ interests can differ markedly from those of consumers. If antitrust liability is pried open too far, it would give agencies wide latitude to side with the largest “trading partners,” in turn inviting those firms to seek rents via attempts to capture enforcers. Too often, those gambits come at the expense of small businesses and startups, especially in digital markets. The better course for Small Tech is antitrust policy that declines to serve up our consumer surplus to rivals with antitrust lawyers and stops rent seekers’ market restructuring ploys at the door.