The Hidden Costs Of Untimely Antitrust Enforcement
By Asheesh Agarwal | RealClear Markets | April 28, 2025
Businesses need legal and regulatory certainty to invest and innovate. Across the economy, legal predictability allows companies to allocate risk, to invest resources for the long term, and, with luck, one day to reap the rewards of successful new products.
Unfortunately, an ongoing federal lawsuit threatens to undermine that certainty for large swaths of the business community. In a trial that began last week, the Federal Trade Commission (FTC) seeks to unwind two deals that closed more than a decade ago, Meta’s (then Facebook’s) acquisitions of Instagram in 2012 and WhatsApp in 2014. Although the FTC carefully reviewed and raised no objections to either deal at the time, the agency now speculates that, but for the deals, those companies could have grown into viable separate businesses. But the hidden costs of this “retroactive regulatory revisionism” are high – undermining capital formation, innovation, and growth.
Imperiled Investment and Innovation
Setting aside the suit’s merits, the case could damage the nation’s innovation ecosystem by discouraging companies from investing in startups and smaller firms out of concern that, years later, the government could attempt to unwind those deals. Such investments often promote competition by providing small companies with critical financing and technical expertise, while allowing larger companies to bring new products to market more quickly.
In the early 20th Century, for example, John Deere sold planters and buggies, but its tractors flopped in the marketplace. To satisfy its customer base, in 1918, Deere purchased a smaller company that had developed the first successful gasoline tractor. This investment benefited consumers: in its first year, Deere’s distribution network and marketing expertise roughly tripled the tractor’s sales and over time Deere’s investments turned its green tractors into global icons.
Other examples abound. In 1926, General Motors purchased an auto body company to secure its supply chain. In 1928, Boeing Air Transport purchased a west coast airline to expand its national reach. In 1987, Microsoft purchased Forethought, the creator of PowerPoint, to integrate into its software suite. And in 2006, Google purchased YouTube, which had started as a dating app that paid women $20 to upload videos, as an investment in user-generated content. In every instance, the acquiring company invested significant resources to improve and expand delivery of the acquired company’s products, and in every instance, consumers benefited from increased output and innovation.