Choose Quality of Results for Consumers, Not Equality of Outcomes for Competitors

From the outside, antitrust prosecutions appear to seek competitive behaviors that are scrupulously “fair” among competitors. But no two competing companies have identical assets, experience, intellectual property, employee and leader skills, customers, or even identical goals. Their path forward depends on how well their strategy anticipates the live marketplace and on their skill in adapting to unforeseen events. Antitrust officials can offer a “level playing field” in only the crudest sense. At best, their help means a chance to prosper. It does not mean a guarantee of equal or even similar results. When antitrust officials hear complaints, they sometimes forget that they cannot and should not see fairness as equality in outcome.

The European Union (EU) seems determined to “school” some of the largest, most successful US technology firms on what antitrust and privacy mean on the right side of the Atlantic. The EU’s antitrust officials have been investigating complaints about the competitive behaviors of Google, Microsoft, Apple, Amazon and Qualcomm. Yesterday, the EU threw out a 15-year old agreement that allowed tech firms to move Internet data between countries.  The change is a direct threat to U.S. high tech firms.

In the past, the EU claims a firm abused its dominant position. These US firms hold significant market shares earned over decades in the US and in other high-tech economies where they competed against other best-in-class firms. Their success in the EU is no surprise to given their nimbleness and innovation in competitive markets of the US high technology sector.

The outstanding innovations, scale and efficiency of Google, Microsoft, Apple, Amazon and Qualcomm in their respective fields can explain their competitive success against the EU’s homegrown rivals. Naturally, US firms recommend the high quality relevant products from their own affiliates. Those will benefit the customer. Pricing equipment near cost in order to sell a larger quantity also benefits the customer. Asking what price you need to beat to get the business is a question whose answer will also benefit the customer. These behaviors are not antitrust violations, rather they are the tactics of confident sales teams. Forcibly halting recommendations of good products will not be in EU consumers’ interest. Hobbling US firms’ customer service will advantage only the homegrown EU tech firms who have failed to earn a strong following among EU consumers.

The EU’s antitrust thinking seems obsessed with de-linking search and software operating systems products – forcing consumers to think through several related choices. This may conform to a regulators abstract view of the market, but most travelers want the flight itinerary and price in one step. If they want the information broken up into stages, they are savvy enough to search for it in stages.

The US suffered from de-linking philosophy in a market redesigned by its antitrust court. The court forced consumers to choose separate local telecom providers, separate Internet service providers and separate “interLATA” long distance carriers. The goal was to provide all competitors with a path to equal success, even for those competitors who lacked the capital, experience, or scale needed to serve the customers. Regulatory officials at the state and federal levels embroidered the court-ordered structure into a truly cumbersome mess that was hostile to consumers’ interests.

The only beneficiaries of preventing seamless interconnection in America were antitrust attorneys and lobbyists. Let’s hope that EU officials spare their consumers a repeat of that lunacy.

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