Two principles should guide over-zealous regulators: the first is that size alone should not warrant alarm. The second is to acknowledge the limits of antitrust
, bigness need not be bad. The five largest tech firms pay for a quarter of all research and development in America. True, corporate concentration has risen across the decades in both America and much of Europe. But this expansion appears to have been caused mainly by growing economies of scale from technology, not market power.
Moreover dealmaking, even involving big firms, is a vital part of healthy capitalism. Microsoft’s purchase of Activision promises to make gaming more competitive, by developing the nascent subscription and cloud-gaming markets that could challenge the status quo. The consequences of regulators’ emphasis on size are starting to be felt. Nearly any deal involving a large tech firm is scrutinised. Adding “sand to the gears of”, as lawyers put it, sabotages the launch of some worthy bids, because managers choose to avoid the reputational risk of being barred or the headache of compliance.
The second principle is to acknowledge the limits of antitrust. Two years ago President Joe Biden rightly pointed out that blocking deals and anti-competitive practices was just one piece of the puzzle. That idea has been forgotten. Land-use and occupational-licensing restrictions are still entrenched. Firms are being protected by
. Such things win fewer headlines than targeting blockbuster deals. But tackling them would at least boost competition.
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