Are We Not Taking Innovation Seriously? A Discussion of the 2022 Howard Taft Lecture

Abstract

A growing body of research papers, speeches, and litigation challenges focused on innovation competition suggests that antitrust practitioners are taking innovation seriously. This paper provides an overview of the innovation debate, with a commentary on a proposed policy framework to promote competition in high-technology or big-technology industries described by Professor David Teece in his 2022 Taft Lecture. Experts agree that conduct involving harm to innovation competition and mergers that focus on an overlap of future products that do not currently exist cannot easily be understood, if at all, with traditional analyses of historical prices, output, and margins for existing products. The hard part is figuring out what to do instead. Recent cases that focus on harm to innovation competition highlight the need to understand business capabilities and the frontier of new technology in the pled markets. Recent decisions demonstrate that courts are not necessarily swayed by structural presumptions involving large firms in highly concentrated markets as measured by today’s output; instead, courts understand that large dominant firms can be competitive, because of their desire to maintain their lead position. These cases also provide guidance on how to prove (or disprove) a theory of harm involving potential competition.