Google, Standard Oil, and the monopoly myth — VOICES for REASON

Antitrust law is based on the idea that the economic power of successful companies is a danger to the competitive process and to consumers. We must reign in or break up the most dominant companies, we are told, in the name of preserving a genuinely free, competitive market. Now, it appears antitrust advocates have their sights clearly set on a new “monopolist”: Google.

Trial balloons are being floated in important places, such as TechCrunch, the New York Times, and the Boston Globe, suggesting that Google needs to be brought down to size. In an upcoming post, I will explain why I think that Google poses no threat to competition whatsoever. Initially, though, I would like to recommend that readers check out a recent lecture of mine that is very relevant to this case: “The Monopoly Myth,” now online at the ARC website.

“The Monopoly Myth” examines John D. Rockefeller’s Standard Oil, the most notorious “monopolist” in history, which supposedly strangled competition and jacked up consumer prices. In reality, it did nothing of the sort–and there was never any danger of it doing so. I think it’s important to know the story of Standard Oil because advocates of antitrust law use it as the textbook example of why we need to prevent successful companies from becoming too successful. To see how utterly false that is in the case of Standard Oil sheds a lot of light on the issue of antitrust more broadly.

For more on Standard Oil and antitrust, a more in-depth history and analysis of Standard Oil’s rise to dominance can be found in my essay “Vindicating Capitalism: The Real History of the Standard Oil Company”–published in The Objective Standard last year. The essay includes a lot of theoretical and historical material that’s not in the lecture, including: what’s wrong with traditional antitrust notions of “competition” and “market share”; how Rockefeller got involved in two attempted free-market cartels–and why these cartels had to fail; why the Supreme Court broke up Standard into 34 pieces even after acknowledging its incredible productivity and low prices.