(Drivebycuriosity) - The Biden administration launched massive lawsuits against 2 of America`s largest corporations. The Department of Justice (DOJ) sued Google, claiming that Google is a monopoly and abuses her power to harm competition. The Federal Trade Commission (FTC), Americas antitrust authority, sued Amazon with the claim that the corporation is a monopoly and stifles emerging competition.
Why does the government attack 2 corporations which are the engines of the American economy and popular with millions of customers? The answer comes from economics, known as "Public Choice". This is the scientific analysis of government behavior and those who want to influence it.
The late Prof. Gordon Tullock, one of the developers of "Public Choice", predicted the lawsuits already in 2002 (in the book "Government Failure" review).
Antitrust measures are supported by:
"1. Competitors of successful firms that want to harm their rivals or appropriate parts of their businesses;
2. Firms disadvantaged by technological change that seek to mitigate market outcomes unfavorable to them;
3. The personal ambitions of government administrators who do not prosper in quiet times, and
4. The class interest of the legal profession (trial lawyers), which is engaged in redistribution through lawsuits aimed at stifling market processes."
Today the DOJ Google lawsuit is joined by unsuccessful competitors, including search engine provider DuckDuckGo, Bing (owned by Microsoft) and by service-recommendation site Yelp (searchengineland ). The plaintiffs are using courts and the government in order to harm Google as predicted by Public Choice. This behavior is known as "Rent Seeking".
The lawsuits and the monopoly claims are unfounded. I use Google search & maps very frequently because they are free and the alternatives are inferior. Google cannot force me or others to uses their services. They reached their dominant market position by being the best search engine and provider of internet maps.
Similarly Amazon became huge because it is efficient, focused on cost control and customer services. Amazon`s efficiency translates into low prices, fast & reliable deliveries, which make it superior to many of its competitors.
Both lawsuits try to protect competitors which are less efficient and offer lower quality.
As Public Choice also predicted (point 3) DOJ leader Assistant Attorney General Jonathan Kanter and FTC chair Lina Khan are using the lawsuits to foster their careers, extend their power and to expand their administrations (drivebycuriosity ). They get supported by armies of lawyers and antitrust journalists at Bloomberg & Co. who are making a living from the enormously costly antitrust law suits.
Who will pay for all of this? You, the consumer! If the courts decide in favor of the less efficient plaintiffs you will get fewer free services (Google Maps?), lower quality and you will have to pay more for goods & services (Amazon Prime?).
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