If you read the word antitrust somewhere before, it probably ended up being the reason why you closed that article tab. If you haven’t done so again already, I’ll try to explain what antitrust is and why you should care about it.
What is it?
Antitrust is a collection of laws that are put in place to make sure that companies compete with each other effectively and fairly. In order to do so, antitrust is interested in three main issues:
1. Unilateral actions of big market players
Companies that enjoy large market power can act, to a large degree, independently. Take Microsoft for example. More than 80% of the computers out there at the moment run the Windows Operating System (‘OS’). That means that if Microsoft tries to spoon-feed you their software (Office, Outlook or Internet Explorer to name a few) by integrating them in their OS, rival software like Google Docs, Gmail and Chrome will have a hard time competing with them. In the end, you might end up being stuck using a lesser product or a product that you just don’t like, just because the competitors don’t integrate well with Windows.
2. Cooperation between companies
When companies are not big enough themselves, they might try to cooperate with each other to avoid competing. The simplest situation is when a company secretly approaches their rival to agree to fix their prices. In the early 2000, for example, a number of banana importers were found to have conspired to keep the price of bananas at a higher rate than what they would have charged otherwise. That way, everyone won! Except you, who ended up paying for a golden banana.
3. Mergers and acquisitions
Similar problems can arise when a company buys another one. For example, when Google bought Motorola, competitors worried whether Google would only offer the best versions of Android to Motorola phones. In the end that didn’t end up being the case, but if that happened, competitors would have been driven away because you wouldn’t want to buy a phone with a bad version of Android.
Why care for it?
Antitrust can be very relevant to you because, at the end of the day, it makes sure that you will end up getting the best products. Antitrust is designed to help companies, small or big, to compete on a level playing field. In this way, antitrust rewards innovators and punishes those who are sluggish. Next time that you’re frustrated about the prices of printer cartridges or about the fact that every time that you click on a link on iMessage Safari pops up, antitrust might come to the rescue.