Unfortunately, ‘Big Is Bad’ Is Back

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An AT&T store in Daly City, Calif., Jan. 25.



Photo:

David Paul Morris/Bloomberg News

Will the Biden administration break up Big Tech? Antitrust basically operates under two main schools of thought. The Harvard school is best summed up as: Big is bad. This is an echo from Justice

Louis Brandeis,

who disliked big business, especially railroads.

Fortunately, the Chicago school has held sway for more than 40 years. That school’s thinking was popularized by Yale’s

Robert Bork

in his 1978 book, “The Antitrust Paradox.” His thinking was that if consumers are harmed, regulators should look into why. But if consumers aren’t harmed, there’s no case.

But “big is bad” is back!

Grover Norquist,

president of Americans for Tax Reform, told me to beware of “Neo-Brandeisians.” “Break up Big Tech,” said the

Elizabeth Warren

presidential campaign. Channeling Brandeis, Columbia Law School professor

Tim Wu’s

book was titled “The Curse of Bigness.” Does that include big government? Apparently not. Mr. Wu is now working for the White House, specifically on technology and competition for the National Economic Council.

Lina Khan,

currently awaiting confirmation to the Federal Trade Commission, once railed against “Big Chocolate” and has offered recommendations for how to break up

Amazon

in an article for the Yale Law Journal.

There’s even a neo-Brandeisian offshoot known as “hipster antitrust,” which focuses on “social harm” including distribution of wealth, political power and employment.

Sen. Amy Klobuchar

(D., Minn.) introduced legislation in February 2020 that would have required companies to prove to regulators that a merger or acquisition wouldn’t reduce competition.

Sen. Josh Hawley

(R., Mo.) introduced legislation in April that would end all acquisitions by companies worth more than $100 billion. But these legislative efforts are going nowhere fast.

Fortunately, the consumer-welfare school still seems to rule. And rewriting antitrust laws doesn’t appear to be in the cards. Of course, the other way to break up companies is simple: Catch them in the act of harming consumers.

Let’s go back.

AT&T

used to have a government-granted monopoly on telephone calls, local and long-distance alike, and even on hardware. To protect their network, Federal Communications Commission tariff number 132 provided: “No equipment, apparatus, circuit or device not furnished by the telephone company shall be attached to or connected with the facilities furnished by the telephone company, whether physically, by induction or otherwise.” So customers were forced to lease clunky Western Electric rotary-dial phones.

In the 1950s, Hush-A-Phone Corp. sold a plastic snap-on device to reduce noise on calls. AT&T decided it wasn’t allowed. Hush-A-Phone sued. “To say that a telephone subscriber may produce the result in question by cupping his hand and speaking into it, but may not do so by using a device,” a judge ruled in 1956, “is neither just nor reasonable.”

Soon thereafter, an entrepreneur named

Thomas Carter

invented a device that would connect two-way radios to the phone system. AT&T wouldn’t allow it, so Carter sued. The case was referred to the FCC. Still embarrassed by the Hush-A-Phone mess, the commission in 1968 ruled in what’s known as the Carterfone decision that non-AT&T devices are allowed to be connected to the AT&T network. It wasn’t long until we got faxes, answering machines and even modems, ushering in the modern era. It took forever, but in 1984 AT&T was broken up.

I mention all this because the recently finished Epic Games v. Apple trial had an eerily similar feel.

Apple

claimed it needs to collect 30% fees for using its app store for “user security and privacy.” Federal Judge

Yvonne Gonzalez Rogers

didn’t seem to buy it. “The 30% number has been there since the inception,” she said in court. “And if there was real competition, that number would move, and it hasn’t.” We await the final verdict, but it may be as important as Hush-A-Phone or Carterfone.

What’s next? Expect lawsuits and trials to dig even deeper. Do

Facebook

or

Twitter

algorithms restrict certain stories from spreading? Ask anyone who postulated on Wuhan lab virus leaks. Can someone show consumer harm? Maybe. Same for Amazon and Google favoring their own products in search results. The trick is for some clever company, like Epic Games, to be bold enough to point out bad behavior and sue.

I still believe competition will eventually cure Big Tech of the supposed dread disease of bigness. Heck,

Microsoft

is finally retiring its Internet Explorer browser next year. No one worries about

IBM

anymore. Or

Nokia.

Or AOL. But if there is real consumer harm, it will be lawyers and courts that point this out, not politicians.

Write to kessler@wsj.com.

Journal Editorial Report: Paul Gigot interviews General Jack Keane on a response. Image: Sean Gallup/Getty Images

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