A recurring claim among a certain breed of would-be antitrust reformers—most recently given voice by Sen. Josh Hawley (R-Mo.) during a June hearing of the Senate Judiciary Committee’s antitrust subcommittee—is that “big is bad.”

The claim suffers first and foremost from conceptual ambiguity. Big in what sense? Market share? Revenue? Headcount? Asset size? Geographic scope? Each of these measures captures something different about a firm.

A company might employ thousands but hold only a modest market share, or it might have huge revenues while operating in a highly fragmented sector. Proponents of the “big is bad” sentiment tend to lump each of these together, as if they had the same causes and consequences for the economy, when in reality they point to different competitive dynamics and policy implications.

Big Is Sometimes Good

More fundamentally, a firm may be “big” because it is good at what it does, such as delivering better products, lowering costs, or scaling operations more efficiently than rivals. As Nobel laureate Robert E. Lucas explained in his seminal work, trends toward larger firms are a natural consequence of economic development—not necessarily monopoly power. Thus, policy preferences either to promote consolidation in small economies or breaking up big firms in large economies may be misguided.

Consider Amazon, for example. Its vast logistics network and economies of scale enable same-day delivery in many cities. That is not a bug; that is a feature. To call this bigness “bad” without examining its effects is to confuse scale with harm. 

Similarly, Walmart, long been reviled for the size of its retail empire, is now emerging as a formidable competitor in e-commerce. According to a recent Wall Street Journal report, it matches or even outpaces Amazon in same-day delivery in regions where it has a strong physical footprint. Consumers benefit from both the “bigness” of these firms and their rivalry. The fact that commerce gravitates toward these platforms does not make them harmful. It reflects a preference for convenience and efficiency. 

Moreover, in the United States, online retail still accounts for less than 17% of total retail sales, suggesting that consumers continue to favor brick-and-mortar shopping. Amazon accounts for an estimated 6.6% of total retail sales. Scale, in this context, does not eliminate choice; it expands it.

To be clear, bigness can coincide with market power and/or anticompetitive behavior. But this is, to a large extent, true of small firms too. 

Small Can Be Bad, Too

Consider the Montana Paving Incident, in which two small firms attempted to monopolize the market for highway crack-sealing services by dividing the state into exclusive territories. Or the Generic Cartel Conspiracy, where a group of generic pharmaceutical companies (smaller firms in the generics sector) colluded to artificially raise prices and allocate customers for certain generic medications. 

In Iowa, executives from several small concrete suppliers secretly agreed to fix the price of ready-mix concrete and to rig bids on contracts, rather than compete fairly. From at least 2006 until 2009, the conspirators met and coordinated annual price increases and agreed on who would win certain bids for supplying concrete—thus ensuring higher prices and an allocation of customers among themselves. Similarly, in Connecticut, Langan Insulation, a small contractor, conspired with another firm to rig bids and allocate jobs for installing insulation around pipes and ducts in public and private projects (including hospitals, schools, and universities). 

Finally, consider the Amazon DVD Sellers Conspiracy. For nearly two years, a handful of small e-commerce companies selling DVDs and Blu-ray discs on Amazon agreed to coordinate and maintain higher prices, rather than compete. They communicated to raise and fix the prices of these media products sold through their Amazon storefronts, cheating consumers who relied on the online marketplace for low prices.

The point is that size is neither necessary nor sufficient to cause anticompetitive harm. And this is why it is, rightly, insufficient for liability under U.S. antitrust law. As the Supreme Court noted in United States v. Grinnell Corp:

The offense of monopoly under §2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.

In other words, it is the misuse of market power, not its mere possession, that is condemned under antitrust law.

Bigness in Dynamic Markets

But the story doesn’t stop there. Indeed, not only is size often not harmful, but large firms can also play a pivotal role in furthering innovation. Some of the most beneficial innovations in American history have come from firms with significant scale. AT&T’s Bell Labs, then part of a telephone monopoly, was responsible for inventing the transistor, the laser, and information theory—cornerstones of the digital age. IBM’s investment in R&D helped to standardize computing. More recently, Google’s massive investment in artificial intelligence (AI) has spurred both commercial and academic progress globally. 

The presence of large firms may also spur smaller rivals to innovate and differentiate themselves. There is empirical evidence to back up this intuition. A recent study found the AI market to be “dynamic, with a steady influx of new entrants across all segments, leading to more than 1,000 foundation models currently available from nearly 100 different developers across different AI modalities.” Other studies show that AI has continuously trended towards lower prices and higher quality (see here and here).

Much of this is encapsulated by the concept of dynamic competition: incumbents cannot simply rest on their laurels, but must compete with startups and other firms that are competing for the market by improving and differentiating themselves. This evokes the debate between economists Joseph Schumpeter and Kenneth Arrow over whether innovation thrives through monopoly profits or competitive pressure. In truth, those views are not mutually exclusive; the real world often reflects elements of both.

All of this is difficult to reconcile with the simplistic claim that scale inherently suppresses innovation or competition. As noted above, the current AI landscape is highly competitive, despite regulatory authorities bending over backward to render it otherwise (see here, here and  here). 

The Moral Calculus of Size

There is also a philosophical danger in demonizing size per se. Antitrust law is not devoid of moral considerations. It rightly reflects values like accountability, merit, and legitimacy. But it is not—and should not become—a moral tribunal whose purpose is to punish firms merely for being large or successful. This may help to explain why, despite the popularity of the “big is bad” view, many are reluctant to fully embrace it. They may instinctively recognize that its broader implications could be problematic. 

Even prominent members of the so-called “neo-Brandeisian” movement sometimes acknowledge these tensions within the movement’s own philosophical commitments. In a piece titled “The New Brandeis Movement: America’s Antimonopoly Debate,” former Federal Trade Commission Chair Lina Khan outlined several of the movement’s core tenets. In Tenet 3, she writes that “Antimonopoly does not mean ‘big is bad,’” clarifying that this refers to natural monopolies. But Tenet 4 states that “[a]ntimonopoly must focus on structures and processes of competition, not outcomes.” Of course, that effectively undermines the prior caveat. 

Competition is, by its nature, a rivalrous process with winners and losers. We cannot call on firms to compete vigorously and then fault them for doing so. To quote the late Justice Antonin Scalia in Trinko:

The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system. The opportunity to charge monopoly prices, at least for a short period, is what attracts business acumen in the first place; it induces risk taking that produces innovation and economic growth. To safeguard the incentive to innovate, the possession of monopoly power will not be found unlawful unless it is accompanied by an element of anticompetitive conduct.

Conclusion

The idea that “big is bad” has gained traction in certain circles, where a growing skepticism toward corporate scale has been observed. But we do not instinctively say small is bad, even though smaller firms are also capable of engaging in collusion, deception, or exclusionary tactics. The proper focus of antitrust law is not size in itself, but harms to consumers or to competition.

In practice, the existing antitrust framework already gives significant weight to size: market definition and market power analysis often turn on market shares, and merger review relies on revenue thresholds. The key, however, is that these are starting points, rather than endpoints. Size should be relevant, but it is not—and should not become—determinative.

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