Reports of Antitrust’s Death Have Been Greatly Exaggerated

In a new research brief — Reports of Antitrust’s Death Have Been Greatly Exaggerated: Economics, Law, and Technology in the Supreme Court’s Amex Decision — I analyze the economic and legal reasoning used in the Supreme Court’s recent decision in Ohio v. American Express Co. and discuss how it might affect Big Tech in potential antitrust cases.

In the public debate following the release of the decision, the antitrust revisionist movement has framed the ruling as anticompetitive for the credit card industry and a de facto “immunization” for tech platforms from effective antitrust scrutiny. In the brief, I show that the critics of the decision have overestimated the Court’s new standard for anticompetitive harm and interpreted the affected markets too broadly.

This decision comes in advance of the Federal Trade Commission’s Hearings on Competition and Consumer Protection in the 21st Century, which are slated to begin in September. These hearings — and the resurgent interest in antitrust law more broadly — show that the debate over competition policy has entered a new phase. The future impact on the technology industry, however, is anyone’s guess.

From the executive summary:

This brief provides an economic and legal analysis of the Supreme Court’s decision in Ohio v. American Express Co. and discusses the implications of the case for technology platforms. Antitrust revisionists — also called neo-Brandeisians or Antitrust Hipsters — claim this precedent will devastate antitrust law and immunize Big Tech from effective scrutiny. Using the Court’s novel economic framework, the facts of the case, and data on the stock market reaction to the decision, this brief argues that Amex is a red herring for the antitrust revisionist movement. Misconceptions about the case arose from a refusal to acknowledge the existence of two-sided markets, the difference between direct and indirect network effects, and the purpose of subsidizing one side of a market at the expense of the other. Furthermore, when predicting how this decision will affect the tech giants, many analysts have overestimated the Court’s new standard for consumer harm and conflated two-sided transaction and non-transaction markets. In actuality, the economics of two-sided markets are not too complex for the legal system to grasp and technology platforms are not guaranteed to avoid antitrust liability.

Read the full brief here.