TRUST ISSUES

The Facebook director searching for Trump’s top antitrust officials believes monopolies are good

Peter Thiel, the Facebook board member and billionaire venture capitalist who is searching for people to lead US anti-trust enforcement, has some curious ideas about market manipulation and monopoly power, particularly when it comes to tech companies.

Thiel has argued that monopolies can be good if they are not “illegal bullies or government favorites” but rather “the kind of company that is so good at what it does that no other firm can offer a close substitute.” His singles out Google, which was the subject of an FTC antitrust investigation that closed in 2013. Facebook, where he is on the board, is similarly dominate, accounting for a commanding share of the online advertising industry. Thiel is reported by Buzzfeed News to be helping Trump choose the next head of the Federal Trade Commission and the antitrust chief at the Department of Justice.

In his 2014 book, Zero to One, Thiel wrote:

Since [Google] doesn’t have to worry about competing with anyone, it has wider latitude to care about its workers, its products and its impact on the wider world. Google’s motto—”Don’t be evil”—is in part a branding ploy, but it is also characteristic of a kind of business that is successful enough to take ethics seriously without jeopardizing its own existence. In business, money is either an important thing or it is everything. Monopolists can afford to think about things other than making money; non-monopolists can’t. In perfect competition, a business is so focused on today’s margins that it can’t possibly plan for a long-term future. Only one thing can allow a business to transcend the daily brute struggle for survival: monopoly profits.

Thiel argues that monopolies are also good for customers because they increase creative competition:

In a static world, a monopolist is just a rent collector. If you corner the market for something, you can jack up the price; others will have no choice but to buy from you. Think of the famous board game: Deeds are shuffled around from player to player, but the board never changes. There is no way to win by inventing a better kind of real-estate development. The relative values of the properties are fixed for all time, so all you can do is try to buy them up.

But the world we live in is dynamic: We can invent new and better things. Creative monopolists give customers more choices by adding entirely new categories of abundance to the world. Creative monopolies aren’t just good for the rest of society; they’re powerful engines for making it better.

Aside from a promise to block a merger between AT&T and Time Warner, Donald Trump has not clearly articulated a position on antitrust regulations. But many have expected him to favor active enforcement. According to Buzzfeed’s report, Thiel’s search has reflected that expectation.

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