Radical Antitrust Remedies Would Increase Prices for Consumers
By Trevor Wagener, CCIA’s Chief Economist and Director of the CCIA Research Center; formerly Deputy Chief Economist of the U.S. Department of State during the first Trump Administration
The 2024 election made one thing abundantly clear: consumers are fed up with rising prices. Whether it’s the cost of groceries or gasoline, inflation and price sensitivity dominated public discourse and voters’ minds and drove their voting intentions. Against this backdrop, the incoming Second Trump Administration must assess policy proposals with an eye toward their direct impact on the average household budget.
Yet, as the Second Trump Administration begins to set its economic agenda, there is a worrying trend: calls to continue the radical antitrust policies inspired by Lina Khan, President Biden’s Chair of the Federal Trade Commission (FTC). These proposals aim to break up large technology companies, dramatically reshaping the digital economy. While proponents argue that such measures would enhance competition, the reality is far less rosy. Breaking up tech leaders is not a costless public initiative. It may not just fail to deliver meaningful benefits, but actually harm consumers by increasing prices, dismantling free services, and destabilizing the very ecosystems that have driven digital innovation. Prominent economist Larry Summers’ admonition to antitrust radicals in 2022 that “populist antitrust policy [] will make the US economy more inflationary and less resilient” is as true today as it was then.
A case in point is the Google Search antitrust trial, now in its remedies phase. On Monday, November 18, news reports announced that the Department of Justice Antitrust Division was “planning to ask a judge to force Google to sell its Chrome browser” and impose “data licensing requirements along with other remedies tied to AI and its Android smartphone operating system[,]” a very aggressive set of remedies in search of a problem to solve.
The Economics of “Free”
Many of the services we rely on every day—search engines, social media platforms, email, cloud storage—are provided at no cost to consumers. Companies like Google, Meta, Amazon, and Apple compete on business models that use revenues from other parts of their ecosystems to subsidize these free offerings. For instance, Google’s search engine is free for ordinary users because other services in its ecosystem, such as its advertising platform, generate the revenue needed to support it.
Splitting up these companies would force these formerly integrated units to operate as standalone entities, disrupting the delicate cross-subsidization that keeps services free or low-cost. A newly independent Chrome browser, stripped of its advertising arm, would need to find alternative revenue streams—which could include introducing subscription fees for access or inundating users with intrusive ads, either of which would harm consumer welfare. The only plausible circumstances in which Chrome stayed free and enjoyable to use would involve Chrome being combined with another digital ecosystem to cross-subsidize it– replacing the Google ecosystem with another large company’s ecosystem.
Lessons from the Election: Price Sensitivity Rules
The recent election serves as a powerful reminder that consumers are acutely aware of price changes. Surveys conducted during and just after the 2024 campaign season found that voters consistently ranked the rising cost of living as their top economic concern, ahead of the border and various culture war topics. Politicians who ignored this dynamic saw their approval ratings plummet. This dynamic appears to be a global one, as OECD countries with elections in 2024 saw incumbent parties lose seats and/or power in every country, with inflation and cost of living concerns consistently ranking near the top.
It is baffling, then, that proponents of antitrust policies prioritizing aggressive remedies would ignore this reality. Consumers are not clamoring for the government to break up the companies that provide them with free and valued digital services. Instead, they want lower prices for essentials and greater economic stability. By targeting leading tech companies in ways that would drive up costs and separate free-to-use services from the ecosystems that support them, policymakers would not only worsen the inflationary pressures consumers are already grappling with but also risk alienating the very electorate they seek to serve.
Competition Is Thriving—Consumers Are Winning
Those who support the anti-tech initiative argue that tech companies stifle competition, yet the evidence suggests otherwise. The tech industry is one of the most dynamic and competitive sectors in the economy. New entrants routinely disrupt established players, as evidenced by Facebook disrupting Myspace, YouTube bringing social media to video, the later rise of TikTok in the social media short-form video space, and the recent explosion of AI startups and new tools challenging incumbents and offering innovative new services. Consumers are enjoying unprecedented choice and innovation, from streaming platforms to ride-sharing apps to digital assistants.
Moreover, leading tech company ecosystems’ scale and integration often result in consumer benefits that smaller competitors would not replicate. Google’s leadership in browser quality and search ensures its ability to invest billions in improving search quality and developing complementary services like Google Maps or YouTube. These efficiencies do not reflect a lack of competition; they reflect the high stakes of competing in a fast-moving market where consumers ultimately hold power, and failing to invest in innovative improvements could spell irrelevance.
Aggressive Antitrust Policies Ignore Consumer Welfare
Modern antitrust policy, at least as it has been applied in the United States for decades, is grounded in a simple principle: consumer welfare. If business practices benefit consumers—by lowering prices, improving quality, increasing output, or increasing innovation—they are deemed pro-competitive, even if it results in the company that serves consumers best gaining market share. This framework has guided the success of America’s digital economy, ensuring that companies can innovate without fear of arbitrary government intervention.
Some recent antitrust proposals try to upend this consumer-focused framework in favor of vague notions of “fairness” and “market structure.” These concepts are often untethered from economic reality and prioritize abstract grievances over tangible consumer outcomes. Breaking up leading tech companies may satisfy a desire to do something “big,” but it would do so at the expense of the very people antitrust law is supposed to protect: ordinary consumers.
What Radical Antitrust Advocates Get Wrong
Supporters of using antitrust to break up tech speculate that breaking up tech businesses would lead to more competition, lower prices, and better services. This argument rests on a flawed understanding of both economics and the unique dynamics of digital markets.
First, minimum scale may be needed for many of the benefits and free products provided by large tech platforms. Leading tech companies invest in infrastructure, research, and innovation at a scale that smaller competitors simply cannot match. This scale allows them to drive down costs and deliver services more efficiently. Splintering these companies would eliminate these efficiencies, driving up costs across the board.
Second, the digital economy has continually played an important deflationary role over the past decade. Economic research has consistently found that the digital economy helps combat inflation by offering more efficient and lower-cost options to consumers. Digital economy prices are actually lower today than in 2014, while prices are up considerably in the rest of the economy overall. Over the past decade, while the consumer price index for the economy writ large increased by more than 30%, online prices for a comparable digital basket of goods actually declined by at least 20%. Undermining the efficiency of leading digital service providers like Google would increase inflationary pressures and harm consumer welfare.
Finally, the idea that breaking up tech companies like Google would unleash competition ignores the realities of digital ecosystems. Many of these companies operate in highly competitive, interdependent markets, where there are significant synergies and cross-product benefits. In such ecosystems, companies compete by offering a product ecosystem. Artificially separating components of such ecosystems would not foster competition; it would create inefficiencies that ripple across the entire economy. In all likelihood, it would end up picking winners and losers: for example, forcing Google to sell or spin-off Chrome would make Google a loser, but make its acquirer a winner that would, in all likelihood, integrate Chrome into their ecosystem similar to how Chrome is integrated in Google’s ecosystem today, albeit with fewer synergies and new security risks arising from the structural separation.
The Path Forward: Protect Consumers, Not Ideology
As the Second Trump Administration crafts its economic policy agenda, it must prioritize the concerns of ordinary Americans and ensure that U.S. tech platforms can actually compete with foreign rivals. Excessively aggressive antitrust policies, no matter how ideologically appealing to their proponents, fail this test. By driving up prices, dismantling free services, and disrupting ecosystems that have delivered unparalleled benefits to consumers, these policies would do far more harm than good.
Instead, policymakers should focus on solutions that genuinely enhance consumer welfare. This includes addressing inflation, fostering innovation, and ensuring that businesses—large and small—can compete on a level playing field without unnecessary government interference.
The digital economy has been a cornerstone of American prosperity, delivering unprecedented access to information, services, and goods at affordable prices. Undermining this success with ill-conceived antitrust interventions would be a grave mistake. Policymakers should heed the lessons of the recent election and remember what voters care about most: lower prices, greater choice, and economic stability.
Excessive antitrust policies cannot deliver these outcomes. The Second Trump Administration should reject them—and focus instead on policies that put consumers first.
