- Obama's turncoat antitrust enforcer is angry about the Google breakup: You know you're doing something right when…
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- This day in history: 2013
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Obama's turncoat antitrust enforcer is angry about the Google breakup (permalink)
The DoJ's antitrust lawsuit against Google triggered an avalanche of pearl-clutching editorials from establishment lawyers and economists who argue that such a move is both counterproductive and legally incoherent. These Very Bad Takes are only to be expected, since they emanate from ideologues who volunteered to serve as Renfields for vampiric monopolists.
A prime example is the Washington Post's unsigned editorial, which starts with the conclusion that monopolies are both legal and generally beneficial, then works backwards to invent facts to support that conclusion:
As Jason Kint writes, the editorial simply handwaves away the factual record cited in the 153-page lawsuit, with howlers like "no one is forcing advertisers and publishers to use Google’s advertising services" – this is, in fact, exactly what the DoJ alleges:
They back that allegation up with some pretty damning eviddence of deceptive and illegal tactics that Google used to block competitors and punish publishers who tried to use competing services. Kint's got a great breakdown of the case:
It's wild to see the Post go all in on the idea that monopolizing the ad market is legally sound and economically beneficial, given how much of the DoJ suit turns on the fact that Google (and Facebook) have been stealing ad revenues from publishers like the Post.
Why does the establishment fall all over itself to invent reasons that the DoJ's case is both wrongheaded and doomed? They may not be particularly invested in defending Google itself. Rather, they represent the last gasp of a 40-year-long conspiratorial legal ideology that embraced the Reagan-era idea of "consumer welfare":
This ideology begins with Robert Bork, Nixon's crooked solicitor general, whose crimes scuttled his Supreme Court nomination (his failed confirmation hearing was so cringe-inducing that it spawned the term "borked"). Bork codified this ideology in a 1978 book called "The Antitrust Paradox," which argued that monopolies are engines of efficiency.
You can tell they're efficient because they are able to take over their markets. Attacking monopolies is counterproductive – why should we punish companies for success? This is the heart of the "consumer welfare" theory, but it's underpinned by a much weirder and risible idea: not only is this how the law should be written, it's how the law is written.
That is, Bork claimed that a close reading of existing antitrust laws – the Sherman Act, the Clayton Act, the FTC Act – would reveal that Congress didn't want regulators or judges to prevent or break up monopolies. No no no! These laws were only drafted to punish bad monopolies.
A "bad monopoly" is one that uses its market power to raise prices or lower quality. These bad monopolies hurt "consumers" – but (Bork says) they probably don't exist, because if they did, new companies would spring into existence to compete them out of existence. For Bork, America's landmark antitrust laws exist to fight a mythical bogeyman, the "bad" monopoly, which probably doesn't exist, and if it does, it only lives long enough for entrepreneurs to take notice of it and hunt it to extinction.
This is just bonkers. It's what physicists mean when they say something is "not even wrong." As a technical matter, it's plain that monopolists can capture their markets and use that market capture to prevent new companies from taking the field and disciplining them with competition – that's painstakingly obvious from the factual record developed in the DoJ brief against Google.
But even more bonkers is the conspiracy theory at the heart of consumer welfare economics: the idea that not only should antitrust laws tolerate monopolies, but they actually are tolerant of monopolies, and everyone who enforced these laws from their inception until the Reagan era was reading them wrong.
That is an unsupportable, laughable idea. I mean, think about Senator Robert Sherman's senate-floor speech in support of America's first antitrust law, Sherman Act: "If we will not endure a King as a political power we should not endure a King over the production, transportation, and sale of the necessaries of life. If we would not submit to an emperor we should not submit to an autocrat of trade with power to prevent competition and to fix the price of any commodity."
Those are not the words of a man designing a law to shield monopolists from government overreach except in those rare instances where a monopolist turns out not to be a benevolent dictator. Rather, Sherman – and, later, Henry "Clayton Act" Clayton – didn't want any monopolies. These laws were unambiguously animated by lawmakers' fear that if corporations grew too powerful, they would be too big to fail and too big to jail. In other words, a "benevolent dictator" was still a dictator:
I want to draw a parallel here to chiropractic. On the one hand, chiropractic's theoretical foundation has some serious scientific problems that should give potential patients pause:
But beyond the technical critique of chiropractic, there's also some profound foundational problems, including the fact that the founder of chiropractic said that he learned how to fix people's backs from a ghost:
Consumer welfare antitrust is like chiropractic, then, in that it has serious technical deficiencies – monopolies do exist, they do raise prices and lower quality, markets don't correct them, and they can and do corrupt the political process, and therefore Bork-believing economists are factually wrong and bad at managing economies.
But then there's the other way in which consumer welfare is like chiropractic: its foundational tenets are just bonkers. Chiropractic's founder talked to ghosts, and Robert Bork found gnostic meaning in Qanon-grade close readings of the text of the Sherman, Clayton and FTC Acts that revealed that their drafters were secretly in favor of monopolies. That's the "not even wrong" part.
Even skeptics of chiropractic have largely forgotten that it is ghost-based medicine, and even skeptics of consumer welfare have largely stopped talking about whether the string of court decisions that followed from Bork's ascendancy are simply wrong as a matter of law (that is, even if you think these cases resulted in good economic policy, the judges clearly misinterpreted the law).
American antitrust law always was, and continues to be primarily concerned with power – namely, the power of large companies to usurp democratic accountability and act with impunity, able to use their economic might to buy off or scare off lawmakers and regulators who would otherwise hold them to account.
The fact that we've largely forgotten this truth – a truth that can be easily verified simply by reading the Sherman Act and its successors – isn't an accident of history. Some of the richest people in the history of the human race poured enormous fortunes into burying it. Take the Manne Seminars, lavish junkets for federal judges that bamboozled them with the Bork's conspiratorial account of antitrust laws' true intent:
40% of the federal judiciary processed through the Manne Seminars when they were running, including Supremes like RBG, who later parroted their dogma in their written opinions, which shifted measurably and dramatically to support monopolies:
Bork-driven antitrust's ghost-based foundations were so thoroughly buried that anyone who broke from its orthodoxy was considered a lunatic-fringe radical. Until, that is, Biden appointed three effective, brilliant, charismatic trustbusters who dared to speak the long unspeakable truth that monopolies are both bad and illegal.
These three – Tim Wu, recently departed from the White House; Lina Khan at the FTC; and Jonathan Kanter at the DOJ – wasted no time turning word into deed, taking on mergers, addressing anticompetitive conduct (like blocking noncompetes and protecting Right to Repair), and filing suit against abusive firms:
This naturally triggered an exodus of the government economists and lawyers who'd presided over the ghost-based antitrust era in which monopolies were encouraged and celebrated. Economists who'd built their careers on this collapsing idea wept into their beers, describing this as the end of "independent thinking" at the FTC ("independent thinking" being a synonym for "repeating billionaires self-serving dogma"):
This was genuinely surreal! Imagine if a new NIH chief declared a commitment to evidence based-medicine and think-tankies published feverish editorials lamenting the brain-drain as chiropractors and reiki healers left government service.
This requiem for the ineffectual monopoly-enablers of the waning Bork era continues to this day. The DoJ's Google suit has triggered fresh rounds of garment-rending from corporate shills who once presided over catastrophic mergers while drawing a public salary.
Writing for The American Prospect, Jeff Hauser and Andrea Beaty from the Revolving Door Project do what they do best – reveal the glaring conflicts of interest these monopoly enablers fail to disclose in attacking the DoJ's case:
Exhibit A: Dave Gelfand, who served as the DoJ's antitrust boss during Obama's second term. Gelfand has spent his career rotating between BigLaw firms like Cleary Gottlieb Steen & Hamilton and public service. His rap sheet includes advising T-Mobile on its acquisition of Sprint, a catastrophic merger that has since plunged the enshittification of American telecoms to new lows. Gelfand also represented Coors before the DoJ when it bought Miller, accelerating the process whereby two companies sell nearly all the beer in the world.
And before that? Gelfand represented Google in its acquisition of DoubleClick – one of the anticompetitive mergers the DoJ is currently seeking to unwind.
Given this history, the fact that Obama – a self-style progressive Democrat – put this guy in charge of the nation's antitrust enforcement is darkly hilarious. You couldn't ask for a more canid dingo babysitter. But even more grimly funny is the fact that Law360 – a trade journal for lawyers – got Gelfand to write its op-ed on the DoJ's Google suit:
In his editorial, Gelfand laments that the DoJ's action against Google is "pushing aside decades of bipartisan antitrust enforcement." Ummm…yeah, that's the point. Gelfand, who built his career enabling monopolistic mergers and today makes millions helping monopolists extract billions, is not a reliable narrator on the subject of antitrust.
Shamefully, the Law360 piece includes no disclosures of Gelfand's current clients and which mergers they might be contemplating, nor does it describe whether his partners at Cleary Gottlieb Steen & Hamilton represent Google or other firms that would be adversely affected by a precedent in favor of the DoJ in the Google suit.
Gelfand says that Kanter and the DoJ are "throwing out 40 years of learning" about the correct way to regulate monopolists. Anyone who's paying attention can see through this self-serving nonsense. As Hauser and Beaty write, "Getting Law360 to publish a piece where Gelfand takes credit for steering one of the most consequential and harmful mergers of the 21st century through the merger review process is terrific marketing for Cleary!"
As trustbusters go after monopolists, you're going to hear a lot of this: "fighting monopolists goes against 40 years of precedent." It does. It should. It must. We've just been through 40 years of ghost-based antitrust, founded on a surreal, easily-debunked conspiracy theory about the intent of the drafters of antitrust law. The task before us is precisely to overturn these precedents.
Another common rejoinder you're likely to encounter as we banish Bork to the scrapheap of history: "You can't break up a company like Google – that's like 'unscrambling an egg.'" This week on the Capitalisnt podcast, Dina Srinivasan makes short work of this claim, pointing out that if Google's CEO announced that he was spinning the adtech businesses out as standalones, he'd be praised for his vision and the stock price would shoot up. If an activist investor like TCI Fund Management demanded that the company spin out the business, they'd be lionized for their aggressive business tactics. It's only when regulators propose breaking up a sprawling and unwieldy conglomerate like Google that we're told that such a thing is impossible:
Hey look at this (permalink)
- FTC Forum Examining Proposed Rule to Ban Noncompete Clauses https://www.ftc.gov/news-events/events/2023/02/ftc-forum-examining-proposed-rule-ban-noncompete-clauses (h/t Lee Tien)
new tech bingo https://mastodon.gamedev.place/@_benui/109852367054141914 (h/t JWZ)
God Did the World a Favor by Destroying Twitter https://www.wired.com/story/god-did-us-a-favor-by-destroying-twitter/
This day in history (permalink)
#10yrsago Litterplugs: where the trash gets wedged https://cabel.com/2013/02/04/litterplugs/
#10yrsago Canada's Internet snooping bill is dead https://www.theglobeandmail.com/news/politics/harper-government-kills-controversial-internet-surveillance-bill/article8456096/
#10yrsago Regular expressions crossword https://web.archive.org/web/20130217172759/http://www.coinheist.com/rubik/a_regular_crossword/grid.pdf
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"Attack Surface": The third Little Brother novel, a standalone technothriller for adults. The Washington Post called it "a political cyberthriller, vigorous, bold and savvy about the limits of revolution and resistance." Order signed, personalized copies from Dark Delicacies https://www.darkdel.com/store/p1840/Available_Now%3A_Attack_Surface.html
"How to Destroy Surveillance Capitalism": an anti-monopoly pamphlet analyzing the true harms of surveillance capitalism and proposing a solution. https://onezero.medium.com/how-to-destroy-surveillance-capitalism-8135e6744d59 (print edition: https://bookshop.org/books/how-to-destroy-surveillance-capitalism/9781736205907) (signed copies: https://www.darkdel.com/store/p2024/Available_Now%3A__How_to_Destroy_Surveillance_Capitalism.html)
"Little Brother/Homeland": A reissue omnibus edition with a new introduction by Edward Snowden: https://us.macmillan.com/books/9781250774583; personalized/signed copies here: https://www.darkdel.com/store/p1750/July%3A__Little_Brother_%26_Homeland.html
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