In today’s complex business environment, being a CEO is akin to playing three-dimensional chess. Markets and supply chains are constantly disrupted by global conflicts, financial markets remain volatile, and AI is transforming industries at a breakneck pace, not to mention the shifting political winds and declining public trust in institutions.
Despite these complexities, the Biden administration is embracing a Neo-Brandeisian approach to antitrust that is stubbornly one-dimensional: breaking up large companies without consideration of context and repercussions.
The latest target in this naïve program? Live Nation.
The recent case filed by Department of Justice (DOJ) exemplifies the administration’s tendency to view company breakups as a panacea for perceived market ills. The DOJ argues that Live Nation’s integration of concerts, event venue ownership, talent agencies and ticketing creates barriers to competition and enables the company to engage in unfair practices. The DOJ believes that spinning off Ticketmaster, which Live Nation acquired nearly 15 years ago, and Live Nation’s concert venues will foster a more competitive market.
History suggests otherwise. Let’s take a step back and revisit two prominent antitrust cases that today’s Neo-Brandeisians view as antitrust successes: the breakups of Standard Oil and AT&T.
In the early 20th century, Standard Oil was dismantled into 34 companies under the premise that it was a monopoly engaging in price-fixing. Yet market forces had already begun to erode the company’s dominance, rendering the breakup ineffective in altering profits or prices.
The government’s decision to split AT&T into eight companies in the 1980s, creating seven regional “Baby Bells,” was premised on a belief that the Bells would have government-protected monopolies and AT&T’s long distance telephone service would be dynamic and competitive. The government failed to recognize that the emergence of digital technologies and cellular telephony had already set the stage for major disruption. Long distance did not survive as a distinct market and the monopoly franchises fell apart. The breakup led to nearly two decades of costly legal and regulatory battles before the industry restructured itself under the new economics of broadband and the internet.
These historical lessons seem to have been overlooked by the current administration.
The Federal Trade Commission (FTC) and DOJ’s antitrust actions against major tech firms like Alphabet, Amazon, Apple and Meta are predicated on the belief that breaking up these companies will benefit consumers and markets. However, the reality is that these companies have thrived because of consumer choices. No one forced users to prefer Google’s search engine, Amazon’s e-commerce platform, or Apple’s products; if the government breaks them apart, customers will put them back together.
The case against Live Nation is just as troubling. Live Nation has become the world’s leading provider of live concerts, ticket sales and related services. Its success stems from innovative integration across multiple business lines, a structure that its competitors want to replicate, according to the DOJ. The agency contends that this integration is hard to duplicate, so it stifles competition and innovation. Yet this very structure has driven substantial value for consumers and investors. The only beneficiaries of breaking up Live Nation would be those less effective competitors who struggle to match its innovations.
The DOJ has concerns that warrant investigation, namely potential collusion to divide markets and about anti-competitive tying practices. But these issues, if proven true, should be addressed through fines and criminal prosecution, not through dismantling the company. The broader economic context, marked by rapid technological changes in content creation, distribution and ticketing, demands a more thoughtful approach. A static, simplistic view of antitrust enforcement risks undermining the very innovation and economic value that integrated companies like Live Nation bring to the market.
The Biden administration’s antitrust strategy, exemplified by its cases against Live Nation and Big Tech, fails to account for the dynamic and complex nature of modern markets. Rather than pursuing breakups as a one-size-fits-all solution, regulators should adopt a humbler approach, recognizing that market forces are more adaptive and better informed than antitrust agencies and courts.
Market incentives, not regulatory overreach, are the true architects of competition.
Mark Jamison is a nonresident senior fellow at the American Enterprise Institute, where he works on how technology affects the economy and on telecommunications and Federal Communications Commission issues.