US antitrust enforcement is likely to change in the new administration. However, it is also likely that the antitrust cases against big tech firms – and concerns about their effects on society – will continue. Over the past years, countries all around the world have passed or are considering new laws which antitrust authorities can use to prosecute what are seen as abuses by large tech platforms. Most notably the EU has passed and is now enforcing the Digital Markets Act.
Similar new laws were proposed, but failed to pass, in the United States, telling enforcers that the way to prosecute any novel harm is to do it the traditional antitrust way: bring cases ex post against conduct that agencies deem illegal under the existing antitrust laws. This method of enforcement, rather than ex ante prohibitions, does less to stifle entrepreneurship and is friendlier to an innovative economy. Indeed, the EU has long had a more interventionist approach to antitrust enforcement which has stifled the development of more innovative industries, which were the subject of Mario Draghi’s recent report on EU competitiveness. The report notes that the productivity growth gap between the US and the EU can be explained by the growth in the US tech sector alone.
Beginning with the first Trump administration, antitrust enforcers in the US have brought watershed cases against “Big Tech”. The Biden administration continued this assault and even made antitrust policy a key pillar of its economic policy. It bought wholesale into the “Neo-Brandeisian” belief that industrial concentration is the biggest culprit for stagnating wages, income inequality, and even inflation.
Although the major US tech companies have continued to progress, as evidenced by their continued growth in market capitalization over the past four years, the sector could be hobbled by ongoing antitrust cases that seek major changes to its current makeup, as well as the proliferation of digital market regulation following the DMA that predominantly targets US firms.
Market Capitalization of the Big Tech Firms*
| Company | 2020 Year End Market Cap (Trillion USD) | 2024 Market Cap (Trillion USD) | Annual Rate of Market Cap Growth: 2020-2024** |
| Alphabet | 1.185 | 2.354 | 18.72% |
| Amazon | 1.634 | 2.196 | 7.67% |
| Apple | 2.255 | 3.411 | 10.9% |
| Meta | .778 | 1.603 | 19.8% |
| Microsoft | 1.681 | 3.341 | 18.73% |
*Data from companiesmarketcap.com
**Author’s calculation
It stands to reason that their continued growth is a testament to the value that consumers derive from their products and services. If US agencies are successful in obtaining structural (i.e., break-ups) or heavy-handed behavioral relief from courts against the practices they have been targeting, it will have an effect on the value that digital platforms bring to consumers by forcing them to change their offerings. This could in turn lower revenues, earnings, and valuations. It could also imperil the incentives for continued innovation.
A good example is the Justice Department’s case against Google search. The DOJ successfully argued before the district court that Google has monopoly power in online search and that Google’s contracts with device makers like Apple’s browser to pre-load Google as the default search engine were anticompetitive. The DOJ is asking the court to order Google to sell off Android and Chrome. While enforcers are looking for a scalp to hang on the wall, this remedy would be disproportionate to the harm that might have arisen from this business practice.
This preference for deconcentration is a pernicious ideology in antitrust. Indeed, focusing on concentration – “bigness” – in antitrust is unhelpful for many reasons. One of the most salient is that it takes concentration as exogenous and indicative of inefficiency in market performance. This “structure-conduct-performance” paradigm was refuted in the work of Harold Demsetz and other economists in the mid-late 20th century.
Instead of continuing with the neo-Brandeisian policies, antitrust in the new administration should make greater use of the literature exploring how firms evolve in response to incentives, market forces, and even luck. Market concentration can increase competition and better serve consumers and address the anxieties they have about new technology by driving innovations that make them better off.
Of course, beyond complaints based on bad economics, there are other issues concerning the tech sector that make a portion of the American public uneasy. Exactly where those legitimate concerns may reside is a matter of debate. However, to the extent non-competition concerns are the problem, it is likely that antitrust enforcement is the wrong tool for addressing them: antitrust is about preventing harm to competition and consumers. For example, if consumers are concerned about greater privacy, this is an issue that should be handled with privacy and consumer protection law enforcement.
Giorgio Castiglia is an Economic Policy Analyst for the Schumpeter Project at the Information Technology and Innovation Foundation.
READER COMMENTS
Matthias
Apr 8 2025 at 2:02pm
I would suggest you use enterprise value instead of market capitalisation, because capital structure shouldn’t matter.
Also you should probably use total return on enterprise value, so as not to ‘punish’ companies which pay dividends in your calculation.
Giorgio Castiglia
Apr 9 2025 at 12:13pm
Matthias,
Thanks for the suggestion. I will look at those numbers and potentially use them in a future update to provide a more detailed picture of the companies’ overall health in addition to market cap.
nobody.really
Apr 9 2025 at 9:02am
Of all the terms here, I question the meaning of the word should. Antitrust should make greater use of contemporary academic literature–according to whom?
Federal courts increasingly rely on originalism and textualism. Originalism refers to interpreting texts based on the meaning the words carried at the time of writing; textualism refers to interpreting texts by the ordinary meaning of the words. According to originalism, courts should reject interpretations of laws based on events and research arising after the laws were enacted. According to textualism, courts should reject interpretations of laws reflecting specialized understanding of a text that might conflict with how the general public would read the text.
Giorgio Castiglia argues that if, for example, consumers are concerned about greater privacy, this is an issue that should be handled with privacy and consumer protection laws. Likewise, if Congress were concerned about ensuring that antitrust laws promote efficiency as reflected in contemporary economic literature, arguably Congress should amend those laws to reflect that literature.
Giorgio Castiglia
Apr 9 2025 at 12:21pm
nobody.really,
Given that the original antitrust laws were vague in their original language, antitrust officials and the courts have often relied on economists and economic literature for guidance. As far as I’m aware, there is no legal principle that says they are wrong to do so (see Richard Posner’s “Antitrust Law”). The intended meaning of certain phrases, such as “unfair methods of competition” in the Federal Trade Commission Act, at the time the statutes were enacted are not exactly known and so some guide is often employed to interpret how they should be enforced.
nobody.really
Apr 9 2025 at 2:46pm
Indeed the laws are vague. And indeed Posner proposed methods to rationalize them. But Posner published origninally in 1976–and even by the time of his second edition, I don’t know that the mania for originalism/textualism had reached the zenith that it has how achieved.
So you can take my commentary as a critique of your proposal–or, alternatively, as a critique of the current origionalism/textualism fad, which courts embrace or ignore as suits their purposes.
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