By Carl Shapiro
Sen. Elizabeth Warren, prominent antitrust academics and even a Facebook founder have all called for an antitrust suit to break up Facebook. Now state attorneys general have announced an investigation.
But breakup advocates should be careful what they wish for because the real problems Facebook creates — addicting people like a drug, promoting fake news, allowing a foreign power to tip a presidential election, allowing mass murderers to broadcast their massacres and diminishing our privacy — are all likely to be aggravated, not mitigated, by a breakup.
Breakup advocates are right that Facebook’s acquisitions of WhatsApp and Instagram eliminated competition. Unwinding these mergers would most likely create more competition, which is exactly what antitrust law seeks.
Antitrust law promotes competition to keep prices low so that Americans can afford more goods and services, with the implicit assumption that goods are good and the more the better. More competition is a great thing in markets where firms produce goods –– things we really do want more of. But more competition is not a great thing in markets where firms produce bads –– things that cause harm. In those markets, increased competition is likely to lead to even more bads.