TPRC 2024: The 52nd Research Conference on Communications, Information and Inter

Link to paper

Abstract:
Robert Bork’s The Antitrust Paradox (1978) has been a justification for a lack of antitrust enforcement for over four decades. This paper addresses how the Bork criteria can be used today, if applied correctly, to supplement the approach to antitrust. His test asks if consumers are harmed by the pricing practices of the firm in the market in which they purchase the good or service. Even if these firms are monopolies or oligopolies in their fields with huge economic rents, if they pass this test, no action is taken against them. “Bigness is not bad.” This narrow view, inter alia, ignores two- and multisided markets (MSM) where the appearance of “no harm” is addressed to only one side of the market. The correct view is to examine all the markets impacting potential harm to consumers. It illustrates the harm which is “free” to the users, but advertisers pay dearly for the ability to micro-focus on potential consumers of their products. Facebook and Google are used as examples. This advertising cost is added to the sales price of the product, resulting in consumers being harmed by the embedded advertising costs in the products or services purchased. We argue here, using Bork’s own criterion – except to expand it to the other side of the market – that much needed antitrust action has been ignored by this narrow criterion. This analysis indicates that antitrust action is long overdue after considering two-sided markets. In addition, we argue that his “consumers’ welfare” criterion is misleading and liable to deceive, thus the deception. The Biden administration has taken a more aggressive approach to antitrust and consumer protection than previous administrations. Three antitrust suits have been filed against Alphabet (Google) and two against Meta (Facebook) in the United States. The European Community, which has been more aggressive in its pursuit of Big Tech – Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft, etc., is considering additional rules and regulation of the sector. This paper addresses how the Bork criteria can be used today, if applied correctly, to supplement the neo-Brandeisian approach. We address the Bork Paradox in its own terms by examining the second side of the market which harms consumers indirectly by increasing the price of the products and services they purchase. Using the corrected Bork metric – both sides of the market and no producer’s surplus – the estimated loss of consumers’ welfare was $101.9 and $36.8 billion respectively from Alphabet (Google) and Meta (Facebook), respectively in 2023. The cumulative loss from 2013 to 2023 is over $888 billion