In the aftermath of the third and final presidential debate, it is worth reflecting on how the political and economic climates have changed over the course of the last century. While both Barack Obama and Mitt Romney discussed their individual thoughts on U.S. foreign policy and overseas conflicts, the viewers were reminded that their current circumstances are far different than they were in 1912.
Back then the defining issue was how to manage dominant industrial monopolies, with the incumbent and presidential challengers of the time proposing different courses of action. While President Howard Taft was determined to dissolve prevailing monopolies, challengers Woodrow Wilson and Teddy Roosevelt proposed alternate ways of regulating companies such as the American Tobacco Company and Standard Oil.
Antitrust Law and Monopolies
History tells us that Woodrow Wilson won the election and subsequently created two antitrust acts which were passed straight into legislation. In addition to the pre-existing Sherman Act, these three policies have underpinned antitrust law in the United States ever since, although they have been forced to evolve and adapt considerably as the nature of industry has changed over time. One thing that has not changed is the core purpose of antitrust law, which was established to protect the wider interests of consumers rather than independent business owners.
Another thing that has remained constant over the last century is the prevailing attitude of government officials and law groups, who generally maintain that monopolies or firms with monopoly power are extremely detrimental to the economy and consumer interests. This philosophy has seen a number of large corporations challenged as monopolies throughout history, with technological leaders such as Google, Intel and Microsoft among those that have been regularly targeted by antitrust enforcers.
Microsoft in particular, has faced an extremely difficult time since technological advancement began to gather momentum during the early 1990s. Not only was it continuing to innovate and striving to establish itself as a market leader, it was also facing considerable pressure from antitrust investigation units. More specifically, as the corporation strived to optimize its software and Windows operating system, it was accused of destroying web browser competition in the system market and creating significant barriers to entry for its competition.
Why Challenging Perceived Monopolies Could Be Detrimental for Consumers
Microsoft ultimately won a prolonged legal battle against President Clinton's Justice Department at the turn of the century, although it fared far worse when found guilty of contravening EC (European Commission) competition law in 2004. Despite these mixed fortunes, it is worth questioning whether antitrust enforcers are acting in the consumer's interests when they pursue large corporations such as Microsoft. In addition to this, there are serious concerns as to whether the existing laws can regulate the rapidly evolving and increasingly competitive technology markets today.
In terms of the former, it is worth bearing in mind that being a monopoly is not considered a criminal offense in the U.S. Similarly, consumers actively benefit when corporations offer lower price points and strive to innovate as a way of improving their products or service, with the increasingly competitive smartphone market providing a relevant case in point. Regardless of whether a single firm is dominant or has a disproportionate share of the market compared to its rivals, the only consideration that needs to be made is whether the monopoly in question is harming customers or actually benefiting them.
The Bottom Line
With this in mind, it is clear that monopolies can sometimes be positive for U.S. consumers, as long as they do not create a barrier to entry for rival firms and continue to protect the financial interests of their customers. It has also been argued that corporations with monopoly power create standardization within the market place, which encourages technological efficiency and also creates a far smoother consumer experience.