Amanda Reeves, Daniel Wall, Mar 30, 2011
There has been a great deal of recent discussion, both inside and outside of antitrust circles, on the merits of “open” as opposed to “closed” business structures. Much of this discussion focuses on key technology markets, in which competition among products and systems that exhibit relative degrees of “openness” is commonplace and longstanding. An increasingly vocal group of openness advocates has begun to suggest that openness is an antitrust issue in its own right, and that antitrust regulators should adopt “openness” as a kind of social norm for the interaction of players in technology markets.
Timothy Wu’s arrival at the Federal Trade Commission (“FTC”) presents a good opportunity to discuss these issues, as he has been an outspoken critic of closed systems and what he perceives to be the failure of antitrust institutions to adequately police “information monopolists.” In his recent book The Master Switch, Wu argues that antitrust law has failed to protect consumers’ interests when it comes to regulating competition in the computing and internet spheres. Underlying his critique is his explicit and forcefully stated preference for open business models (his favorite example being Google) and his deep suspicion for closed systems (his favorite current example being Apple). Wu also argues that antitrust regulators should give greater weight to effects such as whether a particular merger or practice is likely to broaden public access to information. Wu believes that antitrust law has historically failed to facilitate the optimal information output and contends that it is time to consider whether antitrust law can do more to achieve these ends. He proposes a bold “Separations Principle,” which would “mean that those who develop information, those who own the network infrastructure on which it travels, and those who control the tools or venues of access must be kept apart from one another.”
In this Article, we address the antitrust treatment of open and closed systems, using Wu’s proposals as a convenient (if hardly singular) reference point for the argument in favor of regulating towards openness. Our message is simple: antitrust law has dealt with the genuine competitive issues posed by closed systems adequately without any presumption or bias in favor of open systems. Antitrust’s existing doctrinal mechanisms do a sufficient job not only of capturing anticompetitive conduct but also of promoting the innovation that follows from vigorous competition, which-particularly in technology markets-often takes the form of rivalry among closed systems. We fear that the inclination exemplified by Wu to inject antitrust’s well-settled frameworks with subjective notions of what is “good” or “bad” would undermine pro-competitive behavior that in some sense is “closed,” leading to more standardization and less differentiation. This is a price that antitrust regulators should not be willing to pay.
