President-elect Trump faces a pivotal choice: continue the Biden administration’s ill-advised antitrust crusade against America’s leading tech companies, or chart a more balanced course that lets customer choice foster invention and growth.
The stakes are high. If the campaign against digital companies creating uniquely valuable products, sometimes by acquisition, is successful, it will do more than harm a few prominent tech firms. This path could irreparably damage America’s leadership in the digital economy, with consequences rippling far beyond Silicon Valley.
Before substantial damages is done to American market, antitrust needs to be reconnected to business realities.
The most recent example of this challenge is the Federal Trade Commission’s antitrust case against Meta, the parent company of Facebook. The case revolves around two dangerously flawed ideas. The first is the FTC’s narrow and arbitrary definition of “market” based on select product features. In Meta’s case, the FTC claims the company dominates a nebulous “personal social networking” market, a term invented to suit its legal argument. The second is an attack on acquisitions as a legitimate path to growth, suggesting that companies must build internally rather than acquire all new capabilities.
Taken together, these ideas set a dangerous precedent that could bring an entire digital economy under siege.
The FTC has made up a market of product features so specific to Facebook that the company seemingly only competes with itself. This tactic is perilous for every successful tech platform, whether it is OpenTable, YouTube or LinkedIn, as each company differentiates itself through unique features. If regulators are allowed to segment markets based on such distinctions, nearly every digital business could be deemed a monopolist in its own narrowly defined space.
This matters because the health of the digital economy depends on constant innovation. Companies compete fiercely to win users’ time and attention, and they do so by offering new and better features that attract users. If every successful innovation leads to antitrust scrutiny, firms will be discouraged from taking the risks necessary to innovate. The chilling effect on investment and growth would be profound, stifling a sector that is a key driver of the U.S. economy.
The FTC’s second flawed idea — that acquisitions of potentially successful products are inherently anticompetitive — compounds the problem. The agency has long targeted Meta’s purchases of Instagram and WhatsApp as examples of “killer acquisitions” designed to eliminate competition. This narrative ignores the economic reality of how innovation often works. Acquisitions enable innovators with great ideas but limited resources to see their inventions scale and thrive under the umbrella of larger, business-savvy firms. Before being acquired, neither Instagram nor WhatsApp was profitable or on a clear growth trajectory. Meta’s expertise turned them into global success stories, expanding their reach and improving their services for millions of users.
If the FTC’s view prevails, successful companies will shrink away from acquiring promising technologies. This would not only discourage startups but also deprive consumers of the benefits that come from the integration of cutting-edge technologies into sophisticated platforms.
It is also troubling that the court allowed the FTC to test different definitions of “personal social networking” until landing on one that the court liked. Initially, the court found the agency’s assertions too weak and allowed it to amend its complaint. Then, after two years of legal back-and-forth, the judge recently ruled that the FTC’s newly evolved definition is plausible. This kind of regulatory maneuvering should alarm anyone who values legal consistency. Antitrust enforcement needs grounding in clear, objective standards, not subjective interpretations bent to meet political goals.
This antitrust experiment, even if well-intentioned, is fundamentally misguided. The agenda of breaking up large firms and punishing successful acquisitions overlooks the complex dynamics of competition in digital markets. Restricting these pathways risks turning the U.S. into a less dynamic, less competitive economy.
The Biden administration acts as if its attorneys can redesign companies and markets at will, like a crooked card dealer stacking the deck to determine winners and losers. This is a dangerous and false belief. Businesses are built from the inside out, not compiled. Successful ones create dynamic, bespoke characteristics that constantly evolve to offer customers something fresh and uniquely valuable.
Sometimes success depends on acquiring key technologies, such as Meta acquiring Instagram’s photo sharing capabilities. But this too is risky and requires costly adaptation, as Meta CEO Mark Zuckerberg explained to shareholders. The fallacy of the Biden administration’s belief is evident in the severe decline of Dish’s retail wireless service, which the government assembled in the wake of T-Mobile’s acquisition of Sprint.
The Trump administration now has an opportunity to course-correct. It can adopt an approach to antitrust that is more grounded in business realities in the digital age and that prioritizes consumers over theories that only a bureaucrat could love. America’s digital future — and its broader economic prosperity — depends on striking this balance.
Mark Jamison is a nonresident senior fellow at the American Enterprise Institute.
