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The American economy produces roughly $18 trillion worth of goods and services every year as firms compete to provide consumers the goods and services they demand. But over time, the government has come to play a much larger role in the economy, imposing regulations that cost the economy over $1.9 trillion annually. Unfortunately for consumers, these regulations are often put in place to limit competition and restrict entry into the marketplace by firms trying to avoid the gales of creative destruction. And now, there is a renewed interest in weaponized antitrust, with America’s tech giants under renewed scrutiny at home and abroad. The culprits are competitors seeking to increase their market share through government intervention. Unfortunately, for consumers, this typically means higher prices and reduced choices in the marketplace.
Google’s $2.7 billion fine in the EU highlights the bite of the antitrust watchdogs. At home in the U.S., Amazon’s $13 billion pursuit of Whole Foods has raised some eyebrows, as have concerns about its pricing practices. And Facebook’s Instagram has been accused of drowning out SnapChat. Yet unlike past antitrust enforcement there is no evidence of consumer harm, the traditional trigger for antitrust action. Many of the services provided by the large tech companies are free, and they offer consumer a wide range of choices, whether it’s online shopping or booking a hotel. Critics, however, point to network effects that act as barriers to entry, making it difficult to compete with established firms.