Are today’s high-tech firms so different from companies of the Industrial Age as to make classic
antitrust analysis archaic and no longer applicable?
Top antitrust minds, like Federal Trade Commission Chairman
Robert Pitofsky, are wrestling with this very question as government trustbusters take on Microsoft, Intel, Nextel and
others.
Pitofsky, addressing the American Bar Association in Scottsdale, Ariz., recently said-at the very least-
“it is essential to acknowledge that high-tech industries are different and enforcement must take those differences
into account.”
He continued: “That does not mean there will not be old-fashioned predatory
strategies or cartel behavior from time to time in high-tech industries; indeed, I am confident that does occur. But more
subtle problems of antitrust enforcement must adjust to the special circumstances of high-tech industries.”
He
said his views do not necessarily represent those of the FTC.
The FTC, which is probing possible antitrust violations
by computer chip giant Intel, declined to take action against Microsoft several years ago.
Not to worry. Justice
Department antitrust czar Joel Klein is on the case. While taking a hard line on the Bill Gates Empire, Klein is signing
off on mega-telecom mergers left and right.
Back to Pitofsky. Setting high-tech apart for purposes of antitrust
oversight, according to the FTC head, are technical issues that cloud identification of relevant markets; speed of market
transition associated with the swiftness and unpredictability with which high-tech products and services can undermine
existing market power; the need for collaborative activities in order to share risks and to combine complementary
technologies; barriers to entry that can be self-correcting; output and price effects that do not follow traditional
monopolists’ tendency to curtail output in order to raise prices; and network efficiencies that tie value and potential
market power to the number of individuals who use a given product or service.
Pondering this is more than just an
intellectual exercise, though. You see, there’s apparently some queasiness among antitrust regulators about taking a
high-tech antitrust action that could have a damaging ripple effect on the knowledge-based New Economy. Now that’s
interesting. Is the suggestion here that we think twice about taking on a high-tech bully because we’re so heavily
invested in him?
Left unsaid in all this heady hand-wringing is what an economic downturn, prompted by a high-
tech antitrust strike, would mean politically for, say, the undistinguished Clinton-Gore legacy.
The truth is, no
matter how the means to market dominance change and will evolve over time, the basics remain. Local bottlenecks
mean landline telco monopolies. And specialized spectrum dominance means market control.
Yep, it’s really that
simple once you strip away the fancy, high-tech dressing that can make otherwise thoughtful regulators starry-eyed.
