“Recently, though, there have been signs that antitrust law may shift in a more aggressive direction: The Justice Department tried, albeit unsuccessfully, to stop AT&T’s purchase of Time Warner. And a nascent movement led by the Open Markets Institute, a small but influential Washington-based think tank, is trying to reverse several decades of court decisions in order to bring the law back to its Progressive Era roots. Some of those involved call it the “New Brandeis” movement, after Supreme Court justice Louis Brandeis, an outspoken opponent of monopolies.
Rather than focus on consumer pricing, or even consumers at all, these New Brandeis thinkers want to preserve competition itself. Some of them are even pressing to separate the divisions of companies that own infrastructure, real or virtual, from those that use it — so an Internet store that dominates online commerce wouldn’t be able to sell so many of its own goods, and a company that dominates search couldn’t consistently point users to a suite of sites it also owns. That would mean fundamentally changing the way the Internet works. It could even mean breaking up Google.
FOR THE LAST couple of decades, American antitrust policy has been a bit of a policy backwater, of interest mostly to academics and economists. “In law school, when I told people I was interested in antitrust, their eyes would glaze over,” says Lina Khan, the Open Markets Institute’s director of legal policy. Now, according to a January New York Law Journal headline, “Antitrust is Cool Again.” That shows how quickly things are changing: Khan, 29, just graduated from Yale Law School last year.
Khan, who plans to clerk for a federal appellate judge, has already provided a good share of the intellectual fuel for the nascent New Brandeis movement. In January 2017 she published a 24,000-word article in the Yale Law Journal about “Amazon’s Antitrust Paradox” that’s been cited in The New York Times, The Wall Street Journal, and dozens of other mainstream publications. In it, Khan argues that the current antitrust standard doesn’t deal well with companies like Amazon, which can price goods below cost in order to build market share, then expand into an array of adjacent businesses and build an online infrastructure their rivals depend on that gives them access to the data their transactions generate.
Khan got interested in the concentration of economic power as an undergrad at Williams College, where she became “captivated” by the financial crisis. In 2011, she went to work for Open Markets executive director Barry Lynn, a former journalist who had devoted himself to sounding the alarm about the growing concentration of corporate power, initially in the 2010 book “Cornered: The New Monopoly Capitalism and the Economics of Destruction.” Khan, who was born in London and raised there and in suburban Westchester County, N.Y., began her career working for Lynn and writing reported features about business and regulation for the Washington Monthly. Her academic articles are so compelling because she combines factual reporting with historically grounded legal arguments. (“It’s easy to forget,” she mentions offhand, “but antitrust was the key issue in the 1912 election.”)
Khan and her colleagues at Open Markets think the current antitrust standard lets big corporations dominate the industries they’re in. “We’ve been living through an experiment, and the results are all around us,” says Khan, who rejoined Lynn’s organization after Yale. There are four major US airlines and three major drugstore chains, and mega-retailers like Walmart and Amazon have the power to dictate terms to their suppliers.
“Rather than focus on consumer welfare, or any metric,” Khan says, “antitrust needs to focus on competition.” Like other progressive antitrust scholars, Khan — who’s spoken about her ideas with progressive icons Elizabeth Warren and Bernie Sanders — believes the law needs to serve as a referee to ensure fair competition, not promote lower prices or any other specific outcome.
These New Brandeis ideas represent a significant departure from the current state of US law, but they would have sounded familiar to the Progressive Era creators of antitrust law. The Sherman Antitrust Act was passed in 1890, to preserve a free market at a time when railroads and banks were consolidating. “If we will not endure a king as a political power, we should not endure a king over the production, transportation, and sale of any of the necessaries of life,” said Senator John Sherman, the law’s main author. In 1911, the Supreme Court broke up Standard Oil, which had come to dominate the US energy business through its control of pipelines and railroads. As recently as the 1980s, the breakup of AT&T’s telephone monopoly opened up the telecommunications market.”