TECHNOLOGICAL MONOPOLIES, INNOVATION, AND THE PERSONAL FREEDOM TO FORM BUSINESSES: LIKE OIL AND WATER?

By Christopher K.L. Young¹

I. INTRODUCTION

In 2022, the California legislature passed Assembly Concurrent Resolution No. 95 authorizing the California Law Revision Commission to study potential revisions to California’s state antitrust law.²Among the topics the CLRC is studying is whether California’s antitrust law should be revised in the context of technology companies such that analysis of antitrust injury in that setting reflects competitive benefits such as innovation and permitting the personal freedom of individuals to start their own businesses and not solely whether such monopolies act to raise prices.³

The Cartwright Act is California’s primary state antitrust law. It was passed in 1907 and appeared to be an express attempt to rein in the cartels that were rampant in the state at that time.⁴ The text of the Cartwright Act is reflective of the threats to competition that were prevalent at the time of its passing: given that cartels dominated industry, the Cartwright Act targeted multi-firm conduct and contained no explicit provision targeting single firm conduct analogous to Section 2 of the federal Sherman Act.⁵ Now, over one hundred years later, California is again facing serious competition-related issues. Rather than multi-firm cartels, the threat now comes from single-firm conduct by large sprawling technology companies.⁶ The largest technology firms are wielding their dominance to entrench their market power. Indeed, reports by federal legislative bodies such as the House Judiciary Committee have documented anticompetitive practices by technology companies such as acquiring nascent competitors and capitalizing on their role as gatekeepers to maintain their market power. The California antitrust laws should certainly be stiffened in response to the growing prevalence of these practices and, in particular, to account for single-firm conduct by large technology firms.