One wonders if, back in 2004, today’s trustbusters would have been losing sleep over the success of Blockbuster. Back then, Blockbuster had over 9,000 stores globally and was raking in nearly $6 billion in revenue as the leading video rental service in the country.
Break up Blockbuster!
Enter Netflix. We all know what happened next. Let’s just say that there is a small video store that rents DVDs in Arlington Heights, Illinois, and is thought to be one of the last in America.
This is hardly the only example of a once-dominant business getting wiped out due to innovation. Automobile manufacturer General Motors was once considered a monopoly—and has since been forced to come to taxpayers hat-in-hand, asking for assistance to merely stay afloat.
Whether in the case of Blockbuster or GM or the airline TWA, it’s clear that any effort by the government to enforce “antitrust” against these companies would have been, at best, extremely shortsighted. It’s simply the nature of government to fight yesterday’s battles because it lacks the creativity and knowledge that exists in the private sector.
Moreover, it seems no one in Washington understands the ideas of Austrian economist Joseph Schumpeter, who taught us about the free market’s “gales of creative destruction.” The innovation process always prevails. Something new always displaces something old.
A similar dynamic is now playing out in the tech sector—except at a much more hyperbolic speed. And those calling for the enforcement of antitrust actions, especially senators such as Republican Josh Hawley and Democrat Amy Klobuchar, would be wise to take note.
Facebook parent company Meta’s latest earnings report, described by Wall Street as “dismal,” has sent its stock cratering. Meta’s stock had crashed as of late last month by more than 40 percent in the previous six months; that’s a record $200-billion-plus loss in market cap and shareholder value. Wow! That really is some monopoly.
The fact that the Federal Trade Commission (FTC)—which is led by the most economically dangerous unelected bureaucrat in the Biden administration—is currently suing Facebook as its shareholder price has crashed, for being a “monopoly” is so preposterous as to be hard to comprehend.
Was Facebook ever a monopoly? Well, just like Ford Motor Co., which perfected the mass-produced automobile, for a while, Facebook, as the dominant company in a brand new industry we now call “social media,” it may well have been. It was the only game in town—as any new market leader always is. That’s the nature of free-market capitalism. Invent something that people want. Build a company. Make as much money as you can—while you can.
But for anyone at the FTC or in Congress who may be reading this: You’re about four years too late when it comes to Facebook.
Now, consider who benefits most from the FTC’s legal assault against Facebook’s business model with a stack of subpoenas? Don’t think it’s consumers. The tens of millions of Americans who have Facebook accounts like it just fine. Obviously, the winner here in this litigation fight (other than the lawyers, of course), is Facebook’s Chinese competitor TikTok.
This antitrust crusade isn’t exactly putting America First. It’s putting our chief competitors first. And because U.S. firms are facing similar litigation for acting as monopolies, the fact that our own regulators are making these charges against home-grown American companies, only reinforces the legal case that the Europeans and Asian countries are building for the explicit purpose of extracting money from American shareholders.
Our government should be defending U.S. companies when foreigners, who can’t compete on a level with America’s technological prowess, bring forward these fraudulent claims.
Many Republicans are angry at U.S. tech companies for their clear bias against those with conservative views. Fair enough. But empowering Biden’s bureaucrats to punish companies such as Google, Amazon or Apple won’t be confined to the Silicon Valley and the tech sector. Now, that this antitrust Pandora’s Box has been opened, it’s already being used to attack American industries across the board. The Biden FTC is already investigating McDonald’s over its ice cream machines! Drug companies, oil companies, beef companies, and airlines are under the spotlight.
Meta is now facing a real battle for its future existence, and the government should keep its hands off and let them compete and hopefully succeed. A possible loss of another near-trillion dollars of shareholder equity would be devastating to our country. This won’t just hurt Zuckerberg—who has already made his tens of billions of dollars—or even his rich Silicon Valley pals. It will reduce the wealth and savings of mom and pop U.S. shareholders and pension funds by hundreds of billions of dollars. Is that what the trustbusters want to have happen?
The market will eventually decide the victor in this fight between Facebook, TikTok, and now a multitude of social media platforms crowding this supposedly monopolistic space. But let’s stop putting our thumb on the scale in favor of the Chinese.
The same struggle that Facebook is now facing—like Blockbuster in the past—will one day emerge for all of America’s Big Tech companies. Amazon founder Jeff Bezos even acknowledged as much when he told his employees in a 2018 meeting, “One day, Amazon will fail” but it is our job is to delay it as long as possible.
Short-sighted antitrust enforcement will only hurt America’s successful and profitable businesses and our largest employers, and the Chinese will get the windfall. And when Chinese companies come to dominate these 21st-century industries, they will be like OPEC, and we in the United States will feel the pain of what a real monopolist does to gauge consumers and dominate the world market.
It won’t be pretty and there won’t be much our Justice Department or our trustbusting politicians will be able to do about it.
Stephen Moore is co-founder and Jonathan Decker is executive director of the Committee to Unleash Prosperity.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.