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as digital platforms. This possibility cannot be lightly discounted, considering the tremendous market power of these firms and their market cap, with the top five firms of the U.S. market (Apple, Microsoft, Amazon, Tesla, and Alphabet) responsible for 23.5 percent of the market cap of the S&P 500 index in early December 2021.

The questionable predictive power of traditional economic theory was illustrated when, after a much-heralded investigation, antitrust regulators appointed by former President Barack Obama declined to sue Google in January 2013 for anticompetitive behavior. The FTC spent 19 months investigating Google over allegations that the search giant was violating antitrust laws by favoring its own products over those of rival content providers, including eBay, Yelp, TripAdvisor, Facebook, and Amazon. The probe focused on Google’s control over online search and search advertising, as well as the company’s growing dominance in mobile phone software.

According to documents uncovered in press reports,”” the FTC’s economists successfully argued against initiating antitrust action against the company. This decision was based in large part on a series of predictions that the agency’s staff economic experts made. These predictions turned out to be wrong in several respects. For instance, according to press accounts, these economic experts saw only “limited potential for growth” in ads that track users across the web—now the backbone of Google parent company Alphabet’s $182.5 billion in annual revenue. Relying on theory, the experts downplayed the importance of mobile search, believing that search would continue to be conducted primarily on desktop computers—and thereby underestimating the effect of Google on Android systems. The experts predicted that Microsoft, Mozilla, or Amazon would offer viable competition to Google in mobile search. This decision, of course, occurred in a political environment of close relationships between the Obama Administration and Silicon Valley.

Just as traditional economic theory seems inadequate to the job of understanding Big Tech and predicting its behavior, empirical evidence is very difficult to come by. This is particularly troublesome. Beyond the fact that most user data are proprietary, online markets change so quickly that econometric conclusions are often difficult to make because even if the data are available, they do not exist for long enough time horizons. Yet, a pattern of highly concentrated firms—with occasional dropout and replacement by another successor firm with vast market power—seems to be emerging.

The policy implications of this quandary are not clear, but for the conservative movement, some believe that some type of policy response is necessary. The dominant internet platforms have disrupted democratic deliberation, as is evidenced by the Hunter Biden laptop story. They have a propensity to collude with government to advance political goals, as documents unearthed by the Missouri and Louisiana AG suits concerning the COVID response demonstrate. And they play a pivotal role in our economy.