Does Cyberspace Need Antitrust?
Eric P. Crampton and Donald J. Boudreaux
Somewhere in Canada, a shopper sat at home and ordered the latest bestseller from http://www.bn.com. While Canadian antitrust authorities pondered whether the Chapters chain of booksellers constituted a monopoly, our Internet shopper gave the lie to claims of monopolization. Early Internet enthusiasts claimed that “the Internet interprets censorship as damage and routes around it,” meaning that the distributed nature of the Web makes the policing of it rather difficult. DARPANET, the precursor to the Internet, was designed to withstand a nuclear strike against any of its nodes by routing information around the damage. Economists specializing in industrial organization theory could as easily quip that the Internet interprets local monopolies as arbitrage opportunities for careful shoppers, allowing them to route around the higher prices.
While our Canadian shopper waited for her new book to arrive, the European Commission deliberated whether MCI and WorldCom should be allowed to merge. Though neither company had a substantial presence in Europe, the Commission was able to ensure that MCI divested its Internet backbone infrastructure before the companies could consummate their merger. The Commission noted that the proposed merger “between two U.S. telecommunications companies would have worldwide effects. The Internet is global in nature; Internet access and service providers, Internet content providers, endcustomers, all demand universal connectivity to the World Wide Web.…The impact of this merger between these two U.S.companies affected not only U.S. consumers but also inter alia European Union consumers.” 1
The two examples highlight the double-edged nature of e-commerce and Internet applications for antitrust. While the Internet massively increases the size of the relevant market for a host of transactions, subverting would-be monopolists and encouraging