Antitrust enforcement in the United States too often fails to deliver what it promises. The Justice Department and Federal Trade Commission have won historic cases—the breakups of Standard Oil and AT&T, and most recently the ruling against Google’s search practices—but such victories rarely enable commerce or bring benefits for consumers. The reason is simple: Antitrust enforcers are fighting the wrong battles. They focus on the moments they can easily see, such as present and past market shares, rather than on how industries evolve. By the time regulators finish their legal battles, the technologies and markets have already moved on.
Congress created antitrust laws to protect the ability of people and companies to engage in trade and commerce. But the laws’ most celebrated applications tell a more sobering story. In 1911, the Supreme Court broke Standard Oil into 40 companies, yet prices and profits hardly changed. That same year, the government divided the American Tobacco Trust into three firms, but the industry’s behavior remained the same. In 1984, AT&T was forced to split into eight parts—a long-distance company and seven regional phone monopolies. The breakup sparked years of litigation, billions in costs, and over a decade of confusion. When Congress finally put the industry on a path towards deregulation in 1996, the industry was able to reinvent itself, notably erasing the antitrust-imposed structure altogether.
What these cases share is not triumph, but misadventure. In each, antitrust authorities acted as if markets were static—like puzzles that could be rearranged by decree. But markets are dynamic, shaped by waves of innovation and investment. Standard Oil’s supposed monopoly power was already crumbling as new oil fields opened in the Midwest. The telecommunications industry was primed for revolution as fiber optics, wireless networks, and digital technologies emerged. Government officials mistook temporary structures and government-protected monopolies for market failure—and in doing so, hindered the very evolution that would have delivered innovation naturally.
The same mistake is unfolding again in the Google search case. The Justice Department viewed search as a market and froze that image in time, accusing Google of using contracts and default settings to maintain monopoly power. The court agreed in part, but even as the trial concluded, artificial intelligence was already transforming how people access information. Chatbots, voice assistants, and generative AI models are providing interactive and predictive tools that are changing how people find information and engage in commerce. In the remedy phase, the court acknowledged that AI is making the concept of search itself obsolete—a reminder that innovation, not litigation, is what truly reshapes markets.
Economies, much like ecosystems, evolve. In biology, change comes from random mutations that succeed or fail based on survival of the fittest; in markets, it comes from human creativity tested by innovations’ abilities to attract financing, business resources, and consumers. New products and processes emerge through experimentation. Investors and customers decide which survive, unless governments hold them back, as in the AT&T case. Governments can protect this process but too often contaminate it when they limit choice or dismantle firms based on theories about markets that are already passing away.
Antitrust should adapt to this reality. Instead of believing that business success at scale means that commerce is constrained, regulators should focus on the mechanisms that enable industries to evolve, namely processes that allow businesses, investors, and customers to choose the innovations that they find most valuable. The cognitive bias what-you-see-is-all-there-is too often leads regulators and judges—far removed from the information-rich markets that support valuable innovations and harshly punish errors—to impose their visions on others. The most enduring monopolies in American history have not come from businesses cheating, but from government misadventures. Those are the constraints that deserve scrutiny.
Standard Oil’s influence waned because entrepreneurs emerged. The Bell monopolies vanished because governments removed their protections. Search’s time has passed because information technologies are always evolving. Antitrust enforcers can claim victories, but it is innovation that creates valuable change. The challenge for policymakers is not to fight battles that are already past, but to let the future happen faster.
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