The 'Policeman at Your Elbow' Is Drunk

Tim Wu, who worked from the White House to coordinate the antitrust agenda of the early Biden Administration, explains the role of the government regulator as the necessary “policeman at the elbow” to restrain corporations from unfairly squeezing out competition. President Biden’s enforcers, Lina Khan, Chair of the Federal Trade Commission, and Jonathan Kanter, head of the Department of Justice antitrust division, push progressive policing of the economy with enthusiasm.

They are always at capitalism’s elbow, reflexively opposing almost any proposed merger or acquisition as a danger to the future health and well-being of the nation.

To be effective in this mission, progressives must believe they are effective prognosticators. They must be able to peer into the future — like the milk-bath clairvoyants in “Minority Report” — to see the precrime atrocities that future mergers will wreak on the market, consumers, and the various “stakeholders” that progressives have added to the antitrust equation.

The validity of their prognostication ability can decide truly vital issues. For example this administration attempted to join with European regulators to prevent Illumina, a life sciences firm, from reacquiring biotech specialist firm Grail, to create a blood test that could screen for 50 types of cancer. Such a multi-cancer early detection test does not exist. Yet the FTC opposed the merger — until slapped down by their own administrative law judge — on the grounds that it would likely lead to a lack of competition in these life-saving tests, which, again, don’t yet exist.

"The FTC's theory asks the court to forego the life-saving benefits of this transaction to avoid the potential harm that could not possibly occur for years — that could only occur, we submit, if other tests actually in fact ultimately are developed," said a lawyer for the two merging companies. He added the FTC theory "needlessly gambles with human lives."

With the economy and human lives at stake, we should ask just how good are the prognostications of progressive antitrusters? Now, thanks to a new study from the International Center for Law & Economics (ICLE), we have a scorecard of their forecasting acumen. ICLE found:

• When Amazon purchased Whole Foods in 2017, Lina Khan — then warming up in the academic and policy bullpen — warned this acquisition “would allow Amazon to potentially thwart future innovations.” Thank goodness for that “potentially” qualification! In 2023, the stocks of many rival retail companies significantly outperform Amazon’s. ICLE reports that Whole Foods’ market share has not meaningfully increased since its acquisition by Amazon.
• When Anheuser-Busch InBev put forward a deal in 2016 to acquire SABMiller, progressive antitrusters told us it would “eliminate competition” in brewing, with “devastating” effects on the craft-brewing industry. In the following four years, the U.S. market saw an 11% increase in the number of craft brewers, while market concentration by the four largest breweries dropped from 90% to 68.6%.
• Khan has particularly harped on Facebook’s acquisition of Instagram in 2012, calling it a “killer acquisition.” Now known as Meta, the company’s stock has fallen by half, while it bleeds users to newer, hipper platforms.
• Google’s 2019 purchase of Fitbit prompted progressive senators to warn that “Fitbit’s consumer data to Google could further diminish the ability of companies to compete with Google in … ad technology markets.” Did that happen? Google’s share of online advertising spending has declined from 34.7% to 28.8%. Fitbit’s share of the smartwatch market has fallen from 5.7% to 3.8%. Google does not use Fitbit data to target Google Ads.

I could cite other examples from ICLE, but this is starting to feel like clubbing baby seals.

The lesson learned is that very bright people with splendid educations are apt to overestimate their cognitive powers and ability to predict the future. There are simply too many variables in economics, global trade, psychology, and the vagaries of fashion and human tastes for complex predictions to pan out. We are better off rooting antitrust in the consumer welfare standard, an ideologically neutral small-d-democratic principle which holds that quantifiable attributes like price and choice are better guides than gut feelings and science-fictional scenarios.

If you’re still not convinced, consider how hard it has been to predict the final four of March Madness. In the NCAA official bracket challenge, only about one out of every 600,000 submitted brackets correctly predicted the remaining four. Even the experts were way off in designating this tournament’s seeds.

Sports predictions may prompt someone to lose their office lunch money. The guesses of regulators can have considerably more dire consequences, as it could with Illumina-Grail’s multi-cancer early detection test. And besides, having a policeman at your elbow is not exactly conducive to creativity and innovation.

Robert H. Bork Jr. is president of the Antitrust Education Project.