The Department of Justice has presented its framework of sweeping potential remedies in the Google antitrust case, including “behavioral and structural” changes that go far beyond the specifics of the court’s findings.
But government antitrust regulators should be wary about disassembling one of America’s engines of growth. The information sector — of which Google is an important contributor — has performed amazingly well in recent years, accounting for more than a quarter of all private sector growth since 2019. Over the same stretch, the information sector also benefited customers by lowering prices while the rest of the economy was going through an inflationary surge.
Equally important, tech firms are America’s technological leaders in an increasingly competitive world, filling in the gap left by a lack of government funding for research and development. Over the past ten years, inflation-adjusted U.S. R&D spending has risen by more than 60%. Virtually none of that increase in real R&D spending came from government. Ironically, the competitiveness-enhancing R&D gains have been almost totally driven by businesses such as Google, which invested a stunning $45 billion in R&D in 2023, more than triple a decade earlier.
In a 2022 report from PPI’s Innovation Frontier Project, “American Science And Technology Leadership Under Threat: Restrictive Antitrust Legislation And Growing Global Competition,” co-authors Sharon Belenzon and Ashish Arora of Duke University argue that:
“Antitrust regulations that reduce the size and limit the scope of tech firms weaken their incentives to make the large-scale, long-run investments in science and technology, vital for national security and economic prosperity….At a time when the United States critically depends on a handful of firms to pursue large scale research projects, such proposals would play into the hands of foreign rivals.”
They further went on to conclude that:
“There is a close relationship between the incentives to invest in research and the scale and scope of the firm. Without the leadership of firms with substantial scale and scope, the full potential of general-purpose technologies may not be realized.”
Antitrust regulators may be tempted to “fix” America’s engines of growth by disconnecting parts deemed to be unnecessary. But remember: The rest of the world looks enviously at the U.S. tech sector, which is running fast and investing for the future.
