US Antitrust as an Anti-Competitiveness Weapon

U.S. antitrust policy has long assaulted and undercut American firms trying to compete in tough global markets. “Trustbusters” have historically shown no interest in whether U.S. firms can succeed internationally. Instead, their focus has been singular: fragment markets to drive down prices for consumers, regardless of the broader consequences.

No other non-Anglo economy would dare attack its own national champions the way American antitrust enforcers do. Just look at the aggressive lawsuits and investigations targeting the few remaining U.S. global tech leaders—Apple, Meta, Amazon, Microsoft, and Google.

And if the absurdity of these “anti-monopoly” zealots isn’t already obvious, consider this: our trading adversaries, like the EU, are lobbing antitrust ordnance at U.S. tech companies to give their own companies the upper hand.

There’s no better cautionary tale of self-sabotage than how the U.S. government single-handedly decimated American leadership in the copier business. Specifically, what it did to Xerox.

America invented the copier business. Through Xerox, it led the world in innovation, created tens of thousands of high-paying jobs, and ran a trade surplus in copiers. Xerox’s dominance was so complete that its brand name became a verb. That, as it turns out, was its fatal mistake.

Nothing draws the antitrust hounds like the scent of success. And so the government pounced, bringing down its prey and effectively ceding global leadership to Japan. Mission accomplished?

Xerox’s rise was classic American entrepreneurship. Once a start-up, it built its dominance with innovation and intellectual property—more than 2,000 patents—and modest profits. In 1970, Xerox PARC launched in Silicon Valley, which went on to develop many foundational technologies of the personal computing era (things we now take for granted). In 1968, its profit margin was just 11.1 percent, lower than the average U.S. corporate profit rate of 11.5 percent.

But none of that mattered. A gradual rise, modest profits, and no evidence of predatory behavior didn’t deter the trustbusters. In 1972, the Federal Trade Commission filed a suit against Xerox, accusing the firm of monopolizing the copier market. Three years later, Xerox settled the case by signing a consent decree. It was less a negotiation than a shakedown, similar to when a local store owner complies with the Mafia’s demand to turn over 10 percent of revenue for “protection.”

As former Boston Consulting Group consultants Mark Blaxill and Ralph Eckardt wrote: “Practically speaking, they [the FTC] forced Xerox to license their patents to the world.” As the key remedy, the company was forced to license any three of its patents for free, the next three for a maximum royalty of 1.5 percent, and the remainder of its portfolio for nothing. Even worse, Xerox was required to provide its Japanese competitors with written “know-how,” including detailed drawings, blueprints, and technical specifications for existing and future machines. An estimated 1,700 patents were handed over.

The FTC’s Bureau of Competition chief at the time openly said he would be “dissatisfied if Xerox’s market share isn’t significantly diminished in several years.” He got his wish. Within four years of the consent decree, Xerox’s U.S. market share collapsed from around 95 percent to less than 14 percent. Japanese competitors, such as Canon, Toshiba, Sharp, Panasonic, Konica, and Minolta, gained most of that ground. They must have thought they’d died and gone to heaven, or wondered how Americans could be so stupid.

Only in the United States would the destruction of a world-leading company be celebrated as a policy success. Talk about insanity.

Some argue the case boosted innovation. Maybe, but not in the United States. A recent working paper found that while U.S. antitrust action against Xerox did promote innovation, the gains accrued almost entirely among Japanese firms.

If your standard is consumer welfare, then sure, the Xerox case was a win. However, if your standard is national tech competitiveness and job creation, it was a disastrous mistake.

So, were the FTC enforcers just incompetent? Clearly not. But they were captured by a uniquely Anglo-American ideological affliction—one that says:

1. The government’s role is to enforce a “level playing field” by eliminating market power.
2. No industry is more important than another.
3. International competitiveness is a myth; countries don’t compete, only firms do.
4. The only thing that matters is short-term consumer welfare through lower prices.

With this worldview, of course it makes sense to fire antitrust shells at any company that succeeds, regardless of its strategic importance to the nation.

To make matters worse, U.S. enforcers have long been happy to play into the hands of jealous rivals. That Yelp convinced regulators in both the U.S. and EU to target and weaken Google wasn’t seen as rent-seeking or even problematic. Instead, it was framed—indeed, celebrated—as consumer advocacy. As Lenin supposedly said, “The capitalists will sell us the rope with which to hang them.” In this case, American firms are happy to turn their government against one another, even if it weakens the entire nation, so long as consumers claim some marginal, short-term benefits.

While these past assaults were destructive, at least the countries that benefited from our ideological naïveté were largely allies, like Japan. But today, the winner is Beijing. And that’s a whole different ball game.

The new left-right, neo-Brandeisian anti-corporate coalition has created a regime that threatens not just U.S. companies but the future of American technological leadership. This antitrust alliance risks jeopardizing the future of the republic in the service of an outdated, narrow, and short-sighted ideology.

If we keep this trend up, Chinese tech firms will dominate U.S. markets, while our own firms shrink and stop investing in innovation. But hey, at least we can say that consumers will have more choices. Oh joy.