Jul 12, 2021 - Politics & Policy

Biden wages war on anticompetitive "moats"

Illustration of aviator sunglasses with waves reflecting from the lenses.

Illustration: Annelise Capossela/Axios

Three weeks after naming Lina Khan to FTC chair, President Joe Biden has made her pro-competition philosophy the centerpiece of a sweeping executive order.

Why it matters: Biden is promulgating Khan's vision of anticompetitive behavior across "more than a dozen" different agencies. The order does not have the force of law; instead, it has the force of narrative.

  • The aim is to entrench the idea that an anticompetitive "moat," as frequently extolled by the likes of Warren Buffett, is just a polite euphemism for ripping off consumers.

The big picture: Some legislators have already embraced this vision, at least when it comes to big technology companies, although few if any of their bills seem likely to pass.

  • The larger project, however, is to move the culture and solidify the new narrative more broadly. Where popular opinion goes, lawmakers and jurists will ultimately follow.

Context: A moat, in the eyes of Buffett, is a company's built-in competitive advantage; the best kind of moat is when a company has no competition at all.

  • Flashback: "Competition is for losers," Peter Thiel has said.
  • Between the lines: Thiel says that "capitalism and competition are opposites," since competition makes it much harder for capitalists to accumulate a fortune. Biden, by contrast, says that "capitalism without competition isn’t capitalism. It’s exploitation."

How it works: Biden's executive order is not aimed at all big business. Common targets of the left such as Walmart, ExxonMobil and Goldman Sachs are almost entirely untouched by it.

  • Instead, Biden is taking aim at companies engaged in anticompetitive behavior — firms that actively stifle competition by, say, insisting on having a monopoly on tractor repair, or by forcing consumers to go to a specialist before they can procure a hearing aid.

The bottom line: The success or failure of that project will ultimately be decided by judges, who tend to move extremely slowly. But jurists do tend to follow broader social trends.

  • If Khan's view of anticompetitive behavior becomes received opinion across the government broadly, that will inevitably show up in both legislation and jurisprudence eventually.

Go deeper: Biden takes aim at Big Tech, broadband with sweeping competition order

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