University o --- New Hampshire University o --- New Hampshire Scholars' Repository University o --- New Hampshire – Franklin Pierce Law Faculty Scholarship School o --- Law 2024 Antitrust Law --- or Blockchain Technology Seth C. Oranburg University o --- New Hampshire School o --- Law, seth.oranburg@law.unh.edu Follow this and additional works at: https://scholars.unh.edu/law_ --- acpub Part o --- the Antitrust and Trade Regulation Commons Recommended Citation Seth C. Oranburg, Antitrust Law --- or Blockchain Technology, 49 J. Corp. L. 379 (2024) This Article is brought to you --- or --- ree and open access by the University o --- New Hampshire – Franklin Pierce School o --- Law at University o --- New Hampshire Scholars' Repository. It has been accepted --- or inclusion in Law Faculty Scholarship by an authorized administrator o --- University o --- New Hampshire Scholars' Repository. For more in --- ormation, please contact sue.zago@law.unh.edu. Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM Antitrust Law --- or Blockchain Technology Seth C. Oranburg* Applying traditional antitrust law to the modern world wide web could break the internet. Lina Khan, the FTC’s current chair, is pushing --- or enhanced antitrust en --- orcement to break up Big Tech, seemingly based on the assumption that antitrust law is the right tool --- or ensuring a --- ree and equitable internet. This assumption may be in error, and this Article seeks to explain why. Antitrust doctrine originally developed --- rom a law enacted 130 years ago to deal with monopolist “robber barons” like Standard Oil. Since 1890, the structure o --- markets has changed. Today’s in --- ormation markets through the internet are much di --- --- erent --- rom the railroad and oil markets o --- more than a century ago. This Article illuminates --- undamental distinctions between commodities markets in the late 19th century and in --- ormation markets in the mid-21st century so that lawyers, regulators, academics, and—most importantly—judges apply the doctrine correctly. INTRODUCTION The Federal Trade Commission (FTC), America’s antitrust watchdog agency, is currently run by Lina M. Khan.1 Kahn and her supporters, sel --- -described “Neo-Brandesian” and regulatory radicals, strongly identi --- y with the concept o --- “antimonopoly.”2 Khan is especially --- ocused on breaking up Big Tech,3 which is common parlance --- or the dominant --- irms in the market --- or in --- ormation.4 Khan is putting the --- ull --- orce o --- the FTC behind her objective to reshape antitrust law and policy --- or the in --- ormation age.5 Un --- ortunately, America’s sworn de --- ender o --- the World Wide Web (WWW) is --- undamentally mistaken about its structure. Ironically, Khan writes that her antitrust theories are based on economic structuralism;6 but, as this Article will show, she lacks a * Seth Oranburg, Associate Pro --- essor o --- Law, University o --- New Hampshire Franklin Pierce School o --- Law. 1. Commissioners, F ED . T RADE C OMM ’ N ., https://www. --- tc.gov/about- --- tc/commissioners- sta --- --- /commissioners [https://perma.cc/67DL-WZ56]. 2. See, e.g., Lina Khan, The New Brandeis Movement: America’s Antimonopoly Debate, 9 J. EUR. COMPETITION L. & PRAC. 131, 131 (2018) (putting --- orth that “Antimonopoly” is a part o --- the New Brandeis Movement and is a “key tool and philosophical underpinning --- or structuring society on a democratic --- oundation”). 3. Dara Kerr, Lina Khan Is Taking Swings at Big Tech as FTC Chair, and Changing How it Does Business, NAT’L PUB. RADIO (Mar. 9, 2023), https://www.npr.org/2023/03/07/1161312602/lina-khan- --- tc-tech [https://perma.cc/SF9F-U7EF]. 4. Big Tech re --- ers to the dominant --- irms in the market --- or in --- ormation. At the time o --- this publishing, the --- ive largest --- irm, also known as the “Tech Giants,” are Alphabet (Google), Amazon, Apple, Meta (Facebook), and Microso --- t. Big Tech, WIKIPEDIA (Aug. 29, 2023), https://en.wikipedia.org/wiki/Big_Tech [https://perma.cc/N574-VFH5]. 5. Lina Khan Brings a Chance to Reshape Antitrust Policy, F IN . T IMES (June 20, 2021), https://www. --- t.com/content/e95ad9 --- 5-d9b9-49ec-a71e-8650da5e7 --- --- 2 [https://perma.cc/9NU2-WSNL]. 6. Lina M. Khan, Note, Amazon’s Antitrust Paradox, 126 YALE L.J. 710, 718 (2017) (“[E]conomic structuralism rests on the idea that concentrated market structures promote anticompetitive --- orms o --- conduct.”) Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 380 The Journal o --- Corporation Law [Vol. 49:2 clear understanding about the structure o --- the market --- or in --- ormation on the WWW. Rather than reiterate other objectors’ arguments, this Article aims to establish the --- allacy o --- her position and the error o --- her policy direction.7 Khan’s antitrust theories --- ocus on purported analogies between the oil and railroad markets in 1890 and the market --- or in --- ormation in 2020.8 Her clever rhetoric ignores the critical --- act that antitrust developed as a solution to centralized power in the markets --- or oil and railroads, while the market --- or in --- ormation is decentralized and distributed. There are many other distinctions between the two markets, o --- course, and many other criticisms o --- Khan’s antitrust theories.9 This Article will set those critiques aside, as it sets aside concerns regarding the non-neutrality o --- executive agencies like the FTC10 and problems that arise when someone who, as a law student, has already --- ormed a judgment to destroy a company will sit as its purportedly neutral arbiter.11 This brie --- Article will --- ocus on Khan’s erroneous understanding o --- the structure o --- the internet, and it attempts to correct this error. I --- policymakers and judges realize that the WWW is increasingly a decentralized-distributed structure, then they can begin to articulate antitrust policy that --- acilities technological growth and competitive online markets. (citing J OE S. B AIN , I NDUSTRIAL O RGANIZATION (2d ed. 1968); D ONALD F. T URNER & C ARL K AYSEN , A NTITRUST P OLICY : A N E CONOMIC AND L EGAL A NALYSIS (1959); Joe S. Bain, Workable Competition in Oligopoly: Theoretical Considerations and Some Empirical Evidence, 40 AM. ECON. REV. 35, 36‒38 (1950)). 7. Others have already shown why a price theory approach is superior to an economic structure approach. See, e.g., ROBERT H. BORK, THE ANTITRUST PARADOX: A POLICY AT WAR WITH ITSELF 110 (1978) (“[The price theory approach], which views consumers as a collectivity, does not take [critical --- actors] into account.”). 8. Khan’s popular student Note relies on drawing analogies. First, Khan makes an analogy between Amazon’s current pricing model and the seminal predatory pricing case: Standard Oil v. United States. Khan, supra note 6, at 722–23. Second, Khan makes an analogy between Amazon’s vertical integration strategy and the challenged merger between Brown Shoe’s acquisition and the G. R. Kinney shoe company in Brown Shoe Co. v. United States. Id. at 732. More recently, while working --- or the House Subcommittee on Antitrust, Khan helped write a report which stated Big Tech companies “have become the kinds o --- monopolies we last saw in the era o --- oil barons and railroad tycoons.” SUBCOMM. ON ANTITRUST COM. & ADMIN. L., COMM. ON THE JUDICIARY, 117 CONG., INVESTIGATION OF COMPETITION INTO DIGITAL MARKETS pt. 1, at 2 (Comm. Print 2022). 9. E.g., Robert D. Atkinson & Michael R. Ward, The Flawed Analysis Underlying Calls --- or Antitrust Re --- orm: An Assessment o --- Lina Khan’s Amazon’s Antitrust Paradox, 68 ANTITRUST BULL. 205 (2023) (arguing that Khan “ignored or misapplied the economics o --- two-sided markets, mischaracterized competitive conditions, and did not consider the pro-competitive e --- --- ects o --- Amazon’s conduct”); Jenni --- er Cascone Fauver, A Chair with No Legs? Legal Constraints on the Competition Rule-Making Authority o --- Lina Khan’s FTC, 14 WM & MARY BUS. L. REV. 243 (2023) (arguing that Khan’s interpretation o --- the FTC Act “ --- ails under both modern methods o --- statutory interpretation and on constitutional grounds”); Brianna L. Alderman & Roger D. Blair, Preserving Potential Entry Is Not the Holy Grail in Vertical Merger En --- orcement, 36 ANTITRUST 42, 47 & 48 n.43 (2022) (using Khan’s position relating to vertical mergers as an example o --- not understanding “something” and using “monopoly explanation[s]” to explain it); Victor Glass & Timothy Tardi --- --- , Analyzing Competition in the Online Economy, 68 ANTITRUST BULL. 167, 190 (2023) (identi --- ying the di --- --- erences between online and brick-and-mortar economies). 10. See Khan, supra note 6, at 727 (explaining how the FTC abandoned en --- orcement o --- the Robinson- Patman Act under the Reagan administration). 11. See Andrew Ross Sorkin et al., Lina Khan Raises the Heat on Amazon, N.Y. TIMES (June 22, 2023), https://www.nytimes.com/2023/06/22/business/dealbook/ --- tc-lina-khan-amazon.html [https://perma.cc/SS2J- NLLJ] (discussing Khan’s accusations that Amazon tricks customers into signing up --- or Prime); David Streit --- eld, Amazon’s Antitrust Antagonist Has a Breakthrough Idea, N.Y. TIMES (Sept. 7, 2018), https://www.nytimes.com/2018/09/07/technology/monopoly-antitrust-lina-khan-amazon.html [https://perma.cc- /K6BT-3AEM] (describing Khan’s interest in taking down Amazon). Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 2024] Antitrust Law --- or Blockchain Technology 381 Khan’s error hinders the continued development o --- the internet by preventing competition via innovation. This Article illustrates how Khan’s regulatory philosophy could rein --- orce dominant --- irms by preventing entry by presenting a simple example o --- a distributed organization named “Duber” that could o --- --- er a Web3 alternative to a presumptively dominant --- irm, Uber. This illustration shows how Khan’s strategy may back --- ire, even when applied to --- irms with market dominance. The unintended negative consequences o --- this strategy multiply in the real world, where market dominance is hard to measure with certainty. This Article hopes to add to the literature by ensuring that antitrust plainti --- --- s bear their burden o --- proo --- by plausibly showing,12 not nakedly claiming, or simply assuming, that Big Tech is like the robber barons o --- more than a century ago. To do this, antitrust plainti --- --- s, including the FTC, would need to convince courts not only that structuralism matters but also that the structure o --- the in --- ormation market on the internet re --- lects a monopoly or, at the very least, an oligopoly. The next part o --- this Article should cast doubt on whether Big Tech really is as dominant as some claim. ANTITRUST & THE WORLD WIDE WEB Khan purports to show Amazon’s global dominance by evidencing its “sheer scale and breadth.”13 However, her statement may not necessarily be true. A quick scan o --- Barret Lyon’s visualization o --- the web tells a di --- --- erent story. Lyon’s Opte Project o --- --- ers a snapshot o --- the WWW by tracing Border Gateway Protocol (BGP) routes.14 Neighboring BGP routes are called peers, and these peers --- orm a network --- or the propagation o --- code-based in --- ormation that switches relationships based on automated route-selection processes. The result o --- these processes is the pathway upon which in --- ormation travels throughout the WWW. Thanks to the Opte Project’s snapshot o --- these routes, we can see what the WWW looks like at any given time. 12. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545 (2007) (“An allegation o --- parallel conduct and a bare assertion o --- conspiracy will not su --- --- ice.”); Ashcro --- t v. Iqbal, 556 U.S. 662, 682 (2009) (stating the pleading stage’s plausible grounds standard). 13. See Khan, supra note 6, at 715. 14. About, THE OPTE PROJECT, https://www.opte.org/about [https://perma.cc/64A9-VRB7]. Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 382 The Journal o --- Corporation Law [Vol. 49:2 Figure 1. Partial map o --- Web2 generated showing its branching decentralized structure. Credit The Opte Project (Jan. 1, 2021), CC-A 2.5 open-source license Figure 1 highlights how structural concentration can appear di --- --- erently depending on the perception in which it is viewed: broadly or narrowly. A substantial portion o --- the internet is shown in the center o --- the image. The small call-out image in the lower right shows an enhanced view o --- one o --- its nodes. The more detailed picture makes one central address appear dominant—all local in --- ormation must pass through that node, giving it seemingly total power over that in --- ormation network. As one zooms out, however, one sees a multitude o --- alternative branches that could also provide this access. On a large scale, the once --- ormidable central --- irm becomes an insigni --- icant, and almost undistinguishable, part o --- a much larger system. Yet, --- or such a large system, it is incredibly easy --- or one part to access any other. For example, Hungarian physicist Albert-László Barabási discovered in 2013 that it would take at most 19 clicks to navigate --- rom any o --- the one trillion websites to any other.15 However, this static picture cannot show how the links dynamically change over time—an apparently dominant --- irm today could be negligible tomorrow. The WWW changes in response to economic, political, and technological --- actors by quickly growing new branches and cutting o --- --- old ones. Unlike rail lines laid in the 19th century, which 15. Stephanie Mlot, Every Webpage is Connected in 19 Clicks or Less, PCMAG (Feb. 19, 2023), https://www.pcmag.com/news/every-webpage-is-connected-by-19-clicks-or-less [https://perma.cc/Z2HS- 9SPT]. Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 2024] Antitrust Law --- or Blockchain Technology 383 were so di --- --- icult to move that economists coined the term “sunk costs” to describe them, internet links are incredibly --- ickle. Dominance on the web may be dominance --- or just a day, which, to many, is not really dominance at all. It is there --- ore not analogous to compare the structure o --- the internet, which changes on a minute-to-minute basis, to the structure o --- the railroads that prompted antitrust scrutiny, where those rail lines o --- ten remain in the same place and belong to the same structure --- or dozens o --- years or more. Antitrust law was created and developed to address centralized power in classical commodities markets that look completely di --- --- erent than how the market --- or in --- ormation looks today.16 Antitrust doctrine was developed in response to speci --- ic concerns about centralized power, especially Standard Oil’s power to set oil prices.17 Figure 2 below shows how Standard Oil centralized control o --- virtually all o --- America’s oil production and distribution, while its power was concentrated in the hands o --- its chair, John D. Rocke --- eller. Figure 2. How Big Would Standard Oil Be Today? - American Money Management (amminvest.com) 16. See Alexandra Twin, Antitrust Laws: What They Are, How They Work, Major Examples, INVESTOPEDIA (Jan. 31, 2023), https://www.investopedia.com/terms/a/antitrust.asp [https://perma.cc/6QHE-LXB9] (explaining the basics o --- antitrust laws and their usage today). 17. E LIOT J ONES , T HE T RUST P ROBLEM IN THE U NITED S TATES 80 (1921). Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 384 The Journal o --- Corporation Law [Vol. 49:2 Figure 3. Political cartoon titled “Next!” depicting Standard Oil as an evil octopus. Credit J. Ottmann Lith, Co. (Sept. 7, 1904). Public domain work, Library o --- Congress No. LC-DIG-ppmsca-25884 Figure 3, a popular 1904 political cartoon depicting Standard Oil as an octopus whose large central body captured various people and institutions through its many tentacles, illustrates contemporary concerns about this company’s centralized power.18 Standard Oil --- amously --- ormed stock voting “trusts” as end runs around state laws prohibiting ultra-big businesses.19 State legislatures determined that Standard Oil’s chair, John D. Rocke --- eller, accrued too much control --- or any private person to wield, and in 1890 the anti-monopoly advocates succeeded in pushing the Sherman Antitrust Act through --- ederal Congress.20 Antitrust law thus evolved mainly as a bulwark against centralized market power and corporate control.21 The modern in --- ormation market on the WWW is radically di --- --- erent and easily distinguishable --- rom a classic commodities market such as oil. The WWW began as a decentralized network and now includes distributed network architecture, but it never appeared as centralized as the industrial conglomerates o --- more than a century ago.22 Moreover, the railroad industrial magnates controlled prototypical hard assets, meaning physical or tangible assets that have --- undamental long-term value, like steel tracks, iron cars, oil dirks, and coal mines; whereas WWW so --- tware are prototypical so --- t assets, meaning intangible resources that are di --- --- icult to quanti --- y and cannot be measured directly, 18. Next!, L IBR . OF C ONG ., https://www.loc.gov/item/2001695241/ [https://perma.cc/NM5H-JYRY]. 19. Standard Oil Co. o --- New Jersey v. United States, 221 U.S. 1, 46 (1911). 20. Paul Sabin, Overview: Antitrust and Monopoly, YALE UNIV., https://energyhistory.yale.edu/antitrust- and-monopoly/ [https://perma.cc/AH69-2U6P]. 21. See ELEANOR M. FOX & DANIEL A. CRANE, CASES AND MATERIALS ON U.S. ANTITRUST IN GLOBAL CONTEXT 10–11 (4th ed. 2012) (explaining the initial history o --- the Sherman Act). 22. The Complete History o --- the World Wide Web (From Web1 to Web 3), DOCK BLOG (Aug. 8, 2022), https://blog.dock.io/the-complete-history-o --- -the-world-wide-web/ [https://perma.cc/7EES-HAX2] (detailing the changes o --- the world wide web’s network system). Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 2024] Antitrust Law --- or Blockchain Technology 385 like brand goodwill, patent port --- olios, licensing rights, and employees’ skills. Thus, neither the structure nor the nature o --- the WWW bear obvious resemblance to the classical monopolies upon which antitrust jurisprudence was --- ounded. Recent FTC lawsuits --- iled under Khan’s direction indicate how her notions on WWW competition poorly --- it within antitrust doctrine. In order --- or a market to be dominated or controlled, there must --- irst be some market to dominate or control. The FTC itsel --- acknowledges this on its website.23 To construct a lawsuit against Amazon.com, however, the FTC invented a new market called “online superstore.”24 Then, the FTC asserts that Amazon dominates this market.25 But what is this market? What is the di --- --- erence between Khan’s new concept o --- an “online superstore” and the dot.com era concept o --- “e- commerce”?26 The antitrust di --- --- erence is, o --- course, that Amazon captures less than 30% o --- US e-commerce sales,27 so Khan could never prevail in an abuse-o --- -dominance lawsuit against Amazon unless she de --- ines a new market --- or it to dominate. The --- act that Khan can, and did, invent a new market to pursue her theory undermines her claim: i --- the WWW is so ephemeral that new markets emerge and disappear with great --- requency, then they are hyper-competitive; and i --- they are hyper-competitive, then there is no need --- or FTC antitrust action. Courts should not only question Khan’s market de --- inition o --- “online superstore” but should also push back on whether e-markets are di --- --- erent --- rom conventional ones. I --- Khan can invent a concept called “online superstores,” then perhaps the whole concept o --- “e-commerce” is too vague --- or antitrust scrutiny. A --- ter all, what makes e-commerce so --- undamentally di --- --- erent --- rom retail more generally? Unlike oil, which is an essential “hard” good with a scienti --- ic de --- inition,28 online superstores, e- commerce, and retailers are “so --- t” descriptions o --- --- uzzy concepts that are context dependent. Even i --- the FTC could de --- ine consistent and cogent relevant e-markets based on static models o --- what happens on the WWW in any given instant, then it still must answer the question o --- whether the dynamic nature o --- the WWW makes any purported dominance too ephemeral --- or antitrust law to address. A very brie --- history o --- the structure o --- the WWW illuminates the --- undamental di --- --- erences that make wholesale application o --- anti- monopolist antitrust law inappropriate to market power on the modern web.29 The WWW developed in three stages, but was never centralized.30 The --- irst stage o --- the WWW, known retronymically as “Web1,” developed in the 1990s as technologies, 23. Markets, FED. TRADE COMM’N, https://www. --- tc.gov/advice-guidance/competition-guidance/guide- antitrust-laws/mergers/markets [https://perma.cc/5K9Y-CBAN]. 24. Complaint at 44–48, FTC v. Amazon.com, Inc., No. 23-cv-01495 (W.D. Wash. Sept. 26, 2023). 25. Id. at 43. 26. See, e.g., E-Commerce, in RUTH A. WIENCLAW, BUSINESS REFERENCE GUIDE: E-COMMERCE & RETAIL MERCHANDISING 18 (Salem Press eds., 2014) (“E-Commerce is the process o --- conducting business on-line through such transactions as sales and in --- ormation exchange.”). 27. Lina Khan Is Wrong About Amazon, WASH. POST (Oct. 3, 2023), https://www.washingtonpost.com/business/2023/10/03/lina-khan-is-wrong-about-amazon-and-antitrust/ca/01 --- 2- 3c-61ea-11ee-b406-3ea724995806_story.html [https://perma.cc/8E3J-9P5G]. 28. Chemical Constitution o --- Crude Oil, PENN STATE UNIV., https://www.e- education.psu.edu/ --- sc432/node/5 [https://perma.cc/J4LG-C7TJ]. 29. See in --- ra notes 30–34 (discussing the starting structure o --- the WWW). 30. See Charles Silver, What is Web 3.0?, F ORBES (Jan. 6, 2020), https://www. --- orbes.com/sites/ --- orbestechcouncil/2020/01/06/what-is-web-3-0/?sh=3 --- ca7a --- e58d --- [https://perma.- Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 386 The Journal o --- Corporation Law [Vol. 49:2 such as hypertext markup language (HTML), enabled web browsers, such as Netscape Navigator and Internet Explorer, to display visual content --- rom web servers.31 Web1 was decentralized, meaning that it --- eatured many nodes but no central governing body.32 The nodes hosted content that was mostly read-only in the --- irst iteration o --- the WWW as an open-source library. Decentralized Web1 in the 1990s thus looked very di --- --- erent --- rom centralized Standard Oil in the 1890s. In --- act, WWW was named “web” because it structurally resembled a web woven by a spider on cocaine33 and not an octopus.34 Web2, or the “social web” identi --- ies the second version o --- the WWW. Web2 was powered by technologies like JavaScript that made it easy --- or users to generate web content—unlike Web1.35 Instead o --- creating content as Web1 publishers did, Web2 plat --- orms like Facebook and YouTube leveraged search, tags, and extensions to connect social media users to content creators.36 Web2 plat --- orms are substantially based on in --- ormation distribution, not in --- ormation creation.37 cc/SU3Q-8LMF] (“Web 3.0 will bring us a --- airer internet by enabling the individual to be a sovereign. True sovereignty implies owning and being able to control who pro --- its --- rom one’s time and in --- ormation.”). 31. Web 3.0 Explained, Plus the History o --- Web 1.0 and 2.0, INVESTOPEDIA (Oct. 18, 2023), https://www.investopedia.com/web-20-web-30-5208698 [https://perma.cc/3UCL-JWZM]. 32. The Complete History o --- the World Wide Web ( --- rom WEB1 to WEB3), supra note 22. 33. For images o --- webs woven by spiders on various drugs, including cocaine, see Christopher Ingraham, Quiz: What Drugs Were These Spiders on When They Made Their Webs?, WASH. POST (Apr. 10, 2015), https://www.washingtonpost.com/news/wonk/wp/2015/04/10/quiz-what-drugs-were-these-spiders-on-when- they-made-their-webs/ [https://perma.cc/38WP-9428]. 34. See What Is a Web Crawler? How Web Spiders Work, CLOUDFARE, https://www.cloud --- lare.com/learning/bots/what-is-a-web-crawler/#:~:text=The%20Internet%2C%20or%20at%- 20least,real%20spiders%20crawl%20on%20spiderwebs [https://perma.cc/46KA-RNLE] (“The Internet, or at least the part that most users access, is also known as the World Wide Web—in --- act that’s where the ‘www’ part o --- most website URLs comes --- rom. It was only natural to call search engine bots ‘spiders,’ because they crawl all over the Web, just as real spiders crawl on spiderwebs.”). 35. See Heather Hall, Web 2.0 Explained: Everything You Need to Know History, HIST. COMPUT. (Aug. 7, 2023), https://history-computer.com/web-2-0/ [https://perma.cc/V3FA-K7JD]. 36. Id. 37. The computer science literature takes the distributed-in --- ormation nature o --- Web2 as a given starting point --- or academic analysis on question such as how the distributed nature o --- Web2 in --- ormation presents technical challenges --- or web crawlers. See Andreas Ju --- --- inger et al., Distributed Web2.0 Crawling --- or Ontology Evolution, 2 2ND INT’L CONF. ON DIGIT. INFO. MGMT. 615 (2007). Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 2024] Antitrust Law --- or Blockchain Technology 387 Figure 4. Structure o --- the WWW showing its autonomous systems (AS) connected to each other and via internet exchange points (IX) in a decentralized “web.” Credit BWenk (Nov. 7, 2018). CC A-S 4 open-source license Figure 4, an image o --- the Opte Project, accurately illustrates WWW decentralization in its Web2 era as a branching architecture resembling images o --- the biological neural network in the human brain.38 Web2 is clearly distinguishable --- rom the octopus model o --- market power in the industrialist era.39 Web3 represents an emerging architecture --- or a distributed WWW based on distributed ledger technology (DLT) or replicated journal technology (RJT) that became popular in the 2010s.40 Although Web3 is sometimes described as the decentralized web, it is more accurately described as the distributed web or the distributed-decentralized web due to its de --- ining technology.41 DLT uses consensus algorithms that reliably replicate in --- ormation across an entire peer-to-peer computer network.42 Unlike heterogeneous in --- ormation networks such as Web1 (where di --- --- erent in --- ormation that users can access is stored on various servers) or Web2 (where di --- --- erent in --- ormation created and accessed by users is maintained in various plat --- orms), Web3 --- eatures homogenous in --- ormation maintained identically throughout its various nodes.43 The most common --- orm o --- DLT is the blockchain, which uses proo --- -o --- -work consensus algorithms.44 The most common 38. Barrett Lyon, The Internet 1997–2021, OPTE PROJECT, https://www.opte.org/the-internet [https://perma.cc/V32N-9DDA]. 39. Id. 40. JP Vergne, Decentralized vs. Distributed Organization: Blockchain, Machine Learning and the Future o --- the Digital Plat --- orm, ORG. THEORY, Oct.–Dec. 2020, at 1, 9. 41. Id. 42. Id. 43. Id. at 4. 44. Id. Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 388 The Journal o --- Corporation Law [Vol. 49:2 blockchain today is used by Bitcoin to veri --- y and record cryptocurrency transactions.45 Web3 also supports non- --- ungible tokens (NFTs)46 and smart contracts.47 Note that Web3 looks nothing like the octopus representation o --- centralized control that re --- lects how concerns about industrial conglomerates like Standard Oil prompted original antitrust concerns.48 Figure 5. Simpli --- ied visualization o --- a cryptocurrency transaction using Web3 distributed ledger technology. Credit Mikael Häggström (Feb. 2, 2019), CC0 1.0 public domain dedication As you can see, the WWW does not even remotely resemble the market structure that gave rise to antitrust law in America.49 This does not mean that the Web is immune to market power; rather, it means that solutions to market power that worked in a prior era --- or a di --- --- erent market structure will not necessarily do the same work in this era with regard to 45. The Most Popular Blockchain Networks, KRIPTOMAT, https://kriptomat.io/blockchain/most-popular- blockchainnetworks/#:~:text=Identi --- ying%20the%20Top%20Blockchain%20Networks,blockchain%20is%20th e%20most%20popular [https://perma.cc/6FWT-QKYA]. 46. See Robyn Conti, What Is an NFT? Non-Fungible Tokens Explained, FORBES ADVISOR (Mar. 17, 2023), https://www. --- orbes.com/advisor/investing/cryptocurrency/n --- t-non- --- ungible-token/ [https://perma.cc/2JWQ- 7MUH] (explaining that NFTs are digital assets in the --- orm o --- art, music, videos etc. that can be bought and sold online usually with cryptocurrency). 47. See Stuart D. Levi & Alex B. Lipton, An Introduction to Smart Contracts and Their Potential and Inherent Limitations, HARV. L. SCH. F. ON CORP. GOVERNANCE (May 26, 2018), https://corpgov.law.harvard.edu/2018/05/26/an-introduction-to-smart-contracts-and-their-potential-and- inherent-limitations/ [https://perma.cc/5Q3U-4J9E] (explaining that smart contracts re --- er to computer code that automatically executes all or parts o --- an agreement and is stored on a blockchain-based plat --- orm). 48. Bobby Allyn, People Are Talking About Web 3. Is it the Internet o --- the Future or Just a Buzzword?, NAT’L PUB. RADIO (Nov. 21, 2021), https://www.npr.org/2021/11/21/1056988346/web3-internet-jargon-or- --- uture-vision [https://perma.cc/NJX4-EQKR]. 49. The markets in the years immediately leading up to Congress’s passage o --- the Sherman Antitrust Act in 1890 were notable --- or remarkable consolidation in the --- orm o --- “trusts” that rapidly centralized pricing power in commodities markets. See William L. Letwin, Congress and the Sherman Antitrust Law: 1887–1890, 23 U. CHI. L. REV. 221, 234 (1956) (“That year [1887] saw the --- ormation o --- the Sugar and Whisky Trusts . . . [as well as] the Envelope, Salt, Cordage, Oil-Cloth, Paving-Pitch, School-Slate, Chicago Gas, St. Louis Gas and New York Meat trusts . . . trust-making was the ‘tendency o --- the times’ . . . .”). Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 2024] Antitrust Law --- or Blockchain Technology 389 the market --- or in --- ormation on the internet.50 The visual dis-analogies and illustrations o --- distinctions in this Article serve as a warning to caution lawyers and judges --- rom applying antitrust law as it historically existed to modern issues o --- market power on the WWW. Anyone who seeks to use the economic structuralist approach to antitrust must --- irst determine how this approach applies to the --- luid, interconnected, decentralized structure o --- Web2 and, second, how to map antitrust principles onto the replicated, distributed- decentralized structure o --- Web3. The core value o --- Web3 arises --- rom its distributed- decentralized nature,51 such that antitrust tools developed to prevent centralized monopolists --- rom extracting social wel --- are may be --- undamentally inappropriate --- or Web3 economies. Figure 6. Comparison o --- centralized, decentralized, and distributed network structures Figure 6 illustrates how the hallmark o --- monopoly structures (one --- irm at the center o --- a network with connections to every other node) is harder to evaluate in decentralized Web2 structures (where some nodes have more connections than others, but the superconnectors each have similar numbers o --- connects to each other). And that challenge arises --- rom a static model. Imagine identi --- ying the structure o --- market power in a dynamic image o --- Web2, where the nodes constantly shi --- t their linkages. Finally, the image o --- Web3 shows no apparent concentration whatsoever, as every node has the same number o --- connections. Now imagine the Web3 network dynamically growing, shrinking and changing. Imagine the dynamic Web3 network is also connected to other Web3 networks 50. Robin Mansell, New Visions, Old Practices: Policy and Regulation in the Internet Era, 25 J. MEDIA & CULTURAL STUD. 19, 21 (2011). 51. Joe Onisick, Realizing the Value o --- Web3, FORBES (Feb. 14, 2023), https://www. --- orbes.com/sites/ --- orbestechcouncil/2023/02/14/realizing-the-value-o --- -web3/?sh=7b54984a29b1 [https://perma.cc/2N8Z-9V95] (“The core value o --- Web3 is its decentralization, which is enabled by the cheap, readily available trust that blockchain technology delivers.”). Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 390 The Journal o --- Corporation Law [Vol. 49:2 in a distributed-decentralized dynamic superstructure. Where is the structural market power? The essence o --- this thought experiment is to illustrate how the economic structural basis --- or antitrust is hard to apply in Web2 and impossible to apply in Web3. Without some sensible way o --- applying structural antitrust theories to the WWW, lawyers and judges should return to the --- irst principles o --- why antitrust law exists and seek to apply those principles to new market structures. ANTITRUST & BIG TECH Now that we have established how the structuralist approach to antitrust provides ambiguous results, let us consider alternative approaches that could lead to prescriptions about what to do, i --- anything, about Big Tech. Big Tech does not own railyards and oil rigs like Standard Oil, but Big Tech companies such as Amazon may have established some dominance on one o --- the decentralized nodes o --- the vast internet.52 Whether market power over one or more nooks amid the entire WWW gives rise to antitrust liability is beyond the scope o --- this brie --- Article. The prior section shows such liability should not be built on the --- aulty assumption that Big Tech --- irms in general are like the robber barons o --- more than a century ago, because the structure o --- the market --- or in --- ormation on the WWW in the 21st century is not like the structure o --- the market --- or oil or railroads in the 19th century. This Part presents some ideas about how antitrust could apply to Big Tech. Perhaps a use --- ul and unbiased approach to this question is to identi --- y the --- irst principles o --- antitrust and then build the application --- rom there.53 Antitrust law is most --- undamentally based on the economic notion o --- utility.54 Utility is the total satis --- action or bene --- it derived --- rom consuming a good or service.55 Economic theories based on rational choice usually assume that consumers will strive to maximize their utility.56 The total amount o --- utility existing --- or everyone at any given time is identi --- ied as social wel --- are.57 Two people can each gain utility --- rom a mutually bene --- icial trade.58 When two people gain utility without reducing anyone else’s utility, that process 52. See Chris Alcantara et al., How Big Tech Got So Big: Hundreds o --- Acquisitions, WASH. POST (Apr. 21, 2021), https://www.washingtonpost.com/technology/interactive/2021/amazon-apple- --- acebook-google- acquisitions/ [https://perma.cc/67YT-X9TD] (describing Amazon’s vast acquisitional history). 53. See R ICHARD A. E PSTEIN , SIMPLE RULES FOR A COMPLEX WORLD 53–54 (1995) (attributing “simple rules” that laws should seek to protect); see also R ICHARD A. E PSTEIN , FORBIDDEN GROUNDS: THE CASE AGAINST EMPLOYMENT DISCRIMINATION LAWS 15–27 (1992) (employing this approach). Others point out the limits o --- this approach. See Jerry L. Mashaw, Against First Principles, 31 SAN DIEGO L. REV. 211, 212 (1994) (“My basic argument is that the broad principles that underlie most such discussions can get us only so --- ar in our analysis o --- appropriate public policy.”). This Article introduces this debate only to justi --- y the use o --- the --- irst principles approach as a --- oil to Lina Khan’s approach. 54. James Chen, Understanding Antitrust Laws, INVESTOPEDIA (May 2, 2022), https://www.investopedia.com/ask/answers/09/antitrust-law.asp [https://perma.cc/22QM-6TC4]. 55. Utility in Economics Explained: Types and Measurement, INVESTOPEDIA (Sept. 25, 2023), https://www.investopedia.com/terms/u/utility.asp [https://perma.cc/7FHU-MDZR]. 56. Id. 57. Wel --- are Economics Explained: Theory, Assumptions, and Criticism, INVESTOPEDIA (Sept. 28, 2023), https://www.investopedia.com/terms/w/wel --- are_economics.asp [https://perma.cc/W35B-WB6U]. 58. When two people can both gain --- rom trade without hurting anyone else, we call that situation Pareto e --- --- icient. Pareto E --- --- iciency Examples and Production Possibility Frontier, INVESTOPEDIA (Aug. 3, 2023), https://www.investopedia.com/terms/p/pareto-e --- --- iciency.asp [https://perma.cc/YQ3E-Y79F]. Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 2024] Antitrust Law --- or Blockchain Technology 391 increases social wel --- are.59 Lawyers generally agree that increasing social wel --- are is good social policy, while economists generally agree that well-ordered and competitive markets produce optimal increases to social wel --- are. Securities law regulates certain markets to ensure they are well-ordered, while antitrust law regulates markets to ensure they are competitive. The goal o --- antitrust law can thus be summarized simply as “protecting competition.”60 Antitrust law protects competition by prohibiting certain kinds o --- “un --- air” competition and --- acilitating more desirable “ --- air” competition.61 Protecting competition is a worthy goal --- or law because competition bene --- its society: by incentivizing the sellers to increase quality or reduce the price o --- products and services, competitive pressure encourages activities that increase social wel --- are.62 Social wel --- are increases regardless o --- whether a dominant --- irm, its runner-up incumbent competitor, or some new start-up builds the proverbial better mouse trap or determines how to sell an existing good or service more e --- --- iciently. Economics recognizes that start-ups o --- ten --- ace higher costs than incumbent --- irms do when bringing the proverbial better mousetrap to market.63 By protecting the competitive process, law antitrust protects society --- rom certain excesses o --- capitalism known as monopolies and --- rom their close cousins, monopolization and collusion.64 Antitrust law accomplishes its goal by requiring that antitrust plainti --- --- s prove, --- irst, that there is some dominant --- irm who has market power, and, second, that entry barrier make it di --- --- icult --- or newcomers to enter that market and dilute market power.65 But no legal doctrine can survive as a simple statement o --- abstract goals or economic principles. The substantive prohibitions against collusion in the original Sherman Antitrust Act o --- 1890 is only 31 words long.66 Its prohibition against monopolization is only 43 words.67 Yet over the last 130 years, antitrust law developed its various doctrines, rules, standards, guidelines, and en --- orcement methods, such that the most recent edition o --- the leading treatise o --- the subject68 is over 5950 pages long.69 This process o --- growth --- rom 59. See Utility in Economics Explained, supra note 55 (describing the concept o --- social wel --- are and how social wel --- are can be increased). 60. See Mission, U.S. DEP’T OF JUST. (Sept. 14, 2023), https://www.justice.gov/atr/mission [https://perma.cc/RS88-YYD6] (describing what a competitive market is and how a monopoly can destroy competition). 61. See id. (describing what un --- air competition is, such as a monopoly). 62. Abbott B. Lipsky, Jr., Protecting Consumers by Promoting Competition, FED. TRADE COMM’N (Mar. 6, 2017), https://www. --- tc.gov/en --- orcement/competition-matters/2017/03/protecting-consumers-promoting- competition [https://perma.cc/87XE-T3F4]. 63. GEORGE J. STIGLER, THE ORGANIZATION OF INDUSTRY 67–70 (1968). 64. Alexandra Twin, Antitrust Laws: What They Are, How They Work, Major Examples, INVESTOPEDIA (Jan. 31, 2023), https://www.investopedia.com/terms/a/antitrust.asp [https://perma.cc/G9NR-ZJNY]. 65. Daniel E. Lazaro --- --- , Entry Barriers and Contemporary Antitrust Litigation, 7 UC DAVIS BUS. L.J. 1 (2006). 66. Sherman Act o --- 1890 § 1, 15 U.S.C. § 1 (“Every contract, combination in the --- orm o --- trust or otherwise, or conspiracy, in restraint o --- trade or commerce among the several States, or with --- oreign nations, is declared to be illegal.”). 67. Id. § 2 (“Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part o --- the trade or commerce among the several States, or with --- oreign nations, shall be deemed guilty o --- a --- elony . . . .”). 68. PHILLIP E. AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW: AN ANALYSIS OF ANTITRUST PRINCIPLES AND THEIR APPLICATION (5th ed. 2020 & Supp. 2023). 69. Id. Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 392 The Journal o --- Corporation Law [Vol. 49:2 simple standards into complex rules happens --- requently in the American legal system o --- civil law based on precedent, and much has been written elsewhere about the virtues and vices o --- this process o --- law writ large.70 Here is how substantive antitrust law grew under 100 statutory words to a nearly 6,000-page treatise. Congress passed the Sherman Antitrust Act o --- 1890 to bust trusts.71 Trusts meant manu --- acturing conglomerates like Standard Oil, who grew large not by creating better products but by purchasing competitors and then raising prices. Congress, courts, and the Federal Trade Commission busted these trusts through law that precluded “unreasonable” restraints on trade.72 What constitutes an “unreasonable” restraint is the subject o --- the 5,950-page treatise and cannot be resolved by this short Article. Notably, the de --- inition o --- “unreasonable” --- ound in those pages results --- rom 130 years o --- traditional antitrust en --- orcement in a conventional business world consisting o --- well-de --- ined business entities.73 Antitrust law evolved coextensively with increasing economic understanding o --- organizations, business, and markets.74 In 1937, Ronald Coast recognized that business entities exist because these “ --- irms” (businesses) have advantages over the market.75 As --- irms’ advantage over markets increases when --- irms’ centralized governance proves more e --- --- icient than markets, --- irms grow.76 This is good --- or society because, as economics pro --- essor E.J. Mishan explained, e --- --- iciency increases social wel --- are.77 A --- irm’s growth may reduce social wel --- are i --- its growth is the result o --- --- irm managers contracting, colluding, or otherwise using market power to create “unreasonable” restraints on trade, instead o --- through entrepreneurial skill or dumb luck. For most o --- modern corporate history, the theory o --- the --- irm and antitrust doctrine developed coextensively by promoting entrepreneurial risk-taking and skill, while prohibiting ne --- arious sel --- -dealing and protectionist cabals.78 For example, in 1999, the Swiss pharmaceutical giant Ho --- --- man- La Roche, Ltd. pled guilty to --- orming a vast conspiracy with other vitamin manu --- acturers and distributors to --- ix, increase, and maintain prices by allocating sales volumes and geographic markets among the co-conspirators.79 The corporation agreed to pay a 500- 70. See Peter H. Schuck, Legal Complexity: Some Causes, Consequences, and Cures, 42 DUKE L.J. 1, 9 (“The legal system as a whole exhibits a marked tendency to become more complex, a --- eature that it appears to share with other systems, physical and social.”). 71. Sherman Anti-Trust Act (1890), NAT’L ARCHIVES (Mar. 15, 2022), https://www.archives.gov/milestone-documents/sherman-anti-trust-act [https://perma.cc/U4M5-HVED]. 72. The Antitrust Laws, F ED . T RADE C OMM ’ N ., https://www. --- tc.gov/advice-guidance/competition- guidance/guide-antitrust-laws/antitrust-laws [https://perma.cc/DE4K-XZ2M].. 73. Id. 74. Id. 75. See R. H. Coase, The Nature o --- the Firm, 4 E CONOMICA 386, 390–94 (1937) (emphasizing Coase’s claim that business entities exist because it gives the organization an advantage over the market). 76. See id. at 393 (explaining how --- irms grow when their centralized governance is more e --- --- icient than the markets). 77. See generally E.J. MISHAN, ECONOMIC EFFICIENCY AND SOCIAL WELFARE: SELECTED ESSAYS ON FUNDAMENTAL ASPECTS OF THE ECONOMIC THEORY OF SOCIAL WELFARE (1981) (explaining the connection between e --- --- iciency and social wel --- are and how e --- --- iciency and social wel --- are are, mathematically, the same thing; while an increase in e --- --- iciency does not necessarily mean social justice, economic equality, or any sort o --- equity, it does re --- lect an overall increase in social resources that means humans are using inputs more e --- --- iciently). 78. Modern Antitrust En --- orcement, YALE SCH. OF MGMT., https://som.yale.edu/centers/thurman-arnold- project-at-yale/modern-antitrust-en --- orcement [https://perma.cc/RUY8-G329]. 79. F. Ho --- --- man-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 159–60 (2004). Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 2024] Antitrust Law --- or Blockchain Technology 393 million-dollar --- ine --- or its misdeeds.80 The DOJ secured this large --- ine in part because the corporation’s conspiracy reduced competitive pressures and e --- --- ectively gave co- conspirators a monopoly it did not earn.81 The upshot --- rom these principles o --- antitrust is that antitrust law protects competition because competition drives --- irms to be more e --- --- icient and thus tends to increase social wel --- are.82 There --- ore, the point o --- antitrust is to increase social wel --- are. When evaluating any antitrust doctrine --- or its applicability to any perceived market --- ailure, the question should be, is this rule likely to increase social wel --- are in this market? Un --- ortunately, Khan’s antitrust theory does not take this approach. Rather, she adopts antitrust as she perceives it to be in the 1960s, when antitrust en --- orcement was more vigorous. She does not arrive at this point on the history o --- antitrust timeline because it --- lows --- rom her --- irst principles o --- antitrust. Rather, she declares her desire to break up monopolies and --- inds this time to be when courts were most willing to do so. For illustration, Khan celebrates Brown Shoe83—a case showing one o --- the --- ew times that a court was willing to block a vertical integration. It so happens that, just as this Article went into its --- irst round o --- editing, the United States District Court --- or the Northern District o --- Cali --- ornia decided that the FTC could not enjoin a merger between Meta and Within Unlimited, who makes VR games.84 Because Judge Edward J. Davila articulated why Khan’s theory --- ails when applied to Web2 --- irms like Meta, I need not repeat that here. The key takeaway is that antitrust courts are not in the Brown Shoe era --- or good reasons i.e., blocking vertical integrations o --- ten causes signi --- icant harm to e --- --- iciencies while producing little to no protection to competition. By citing Davila’s opinion and the emerging literature developing --- rom it, instead o --- speculating on the merits o --- FTC v. Meta Plat --- orms, this Article maintains valuable space that it will use to in --- orm the application o --- Khan’s structuralist theories to Web3 companies. What i --- Khan wanted to enjoin some vertical integration between two Web3 distributed organizations instead o --- between two Web2 corporations? The next section demonstrates why her theories are inapplicable to the distributed structure o --- Web3. ANTITRUST & WEB3 Vertical integration occurs when a --- irm takes ownership o --- surrounding stages o --- its supply chain.85 For an example o --- vertical integration, imagine a --- irm that makes shoes. Upstream on its supply chain are the rubber, leather, and cloth used in the shoemaking process. Downstream on its supply chain are the shoe retailers where customers try on and 80. Press Release, U.S. Dep’t o --- Just., F. Ho --- --- mann-La Roche and BASF Agree to Pay Record Criminal Fines --- or Participating in International Vitamin Cartel (May 20, 1999). 81. See Herbert J. Hovenkamp, A Primer on Antitrust Damages 57–59 (Mar. 1, 2011) (unpublished manuscript) (on --- ile with author) (discussing the current antitrust rule on a right to contribution). 82. See id. (justi --- ying antitrust laws as being --- or the greater good o --- society). 83. Brown Shoe Co. v. United States, 370 U.S. 294, 345–46 (1962). 84. David McCabe & Sheera Frenkel, Judge Is Said to Let Meta’s Virtual Reality Deal Move Forward, N.Y. T IMES (Feb. 1, 2023), https://www.nytimes.com/2023/02/01/technology/meta-within-deal- --- tc.html [https://perma.cc/YML8-BHXS]. 85. Adam Hayes, Vertical Integration Explained: How It works, with Types and Examples, INVESTOPEDIA (May 30, 2023), https://www.investopedia.com/terms/v/verticalintegration.asp#:~:text=Vertical%20integration%20is%20the%2 0business,control%20over%20the%20production%20process [https://perma.cc/L5DT-A367]. Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 394 The Journal o --- Corporation Law [Vol. 49:2 buy shoes. A shoe company will engage in vertical integration i --- it purchases its rubber supply company or its retail store partner. Compare this with horizontal integration, where a --- irm purchases its competitors. For an example o --- horizontal integration, imagine a --- irm that re --- ines oil in Cleveland, Ohio. Such an oil company would engage in horizontal integration i --- it purchases another --- irm that re --- ines oil in New Jersey. Vertical integration cases generally do not merit as much antitrust scrutiny as horizontal ones because vertical integration alone cannot immediately increase market power, whereas horizontal integration can.86 For example, imagine that there are three major publishers o --- legal education casebooks—call them “Carolina,” “West,” and “Thompson”—with equal market shares o --- 1/3 each. I --- West purchases Thompson, West- Thompson now has 2/3 market share, which shows a clear increase in market power. However, i --- Carolina purchases the book retailer Barnes & Nobles, then nothing immediately changes in the market --- or publication o --- casebooks. The --- ear is that Carolina might then prevent Barnes & Nobles --- rom selling West or Thompson books in its stores. But that --- ear should be o --- --- set by hope --- or e --- --- iciencies gained --- rom this transaction. Accordingly, the doctrine regarding vertical integration is notoriously vague.87 And while section 7 o --- the Clayton Act does allow antitrust law to prevent vertical mergers,88 scholars and economists concluded that the alleged harm --- ul e --- --- ects o --- vertical mergers are so implausible, and e --- --- iciency gains so likely, that vertical mergers should be deemed virtually per se law --- ul.89 Despite the economic consensus that vertical mergers are --- ar more likely to be bene --- icial than harm --- ul, Khan proposes “prophylactic bans on [Amazon’s] vertical integration[,] . . . thereby --- orcing it to split up its retail and Marketplace operation.”90 Despite her rhetoric, substantially, her proposal goes well beyond prophylactics by preventing mergers: she would a --- --- irmatively break up existing entities, even ones that became integrated organically and not via mergers. Setting aside the --- act that Khan’s prophylactic ban on vertical integration ignores law and economics and noting that the FTC already lost cases where it attempted to argue --- or a prophylactic ban on horizontal integration,91 her proposal is especially inapplicable to Web3. 86. U.S. DEP’T OF JUST. & FED. TRADE COMM’N, HORIZONTAL MERGER GUIDELINES 19 (2010). 87. PHILLIP E. AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW: AN ANALYSIS OF ANTITRUST PRINCIPLES AND THEIR APPLICATION ¶ 1000a, at 141 (4th ed. 2016) (“Identi --- ying and measuring the probability o --- anticompetitive e --- --- ects --- rom vertical mergers is di --- --- icult, and thus --- ormulating reasonably precise and administrable rules is di --- --- icult as well.”). 88. Id. (“There is no doubt about statutory coverage, --- or an explicit purpose o --- the 1950 Celler-Ke --- auver amendments to §7 was to assure proscription o --- vertical and conglomerate mergers, as well as horizontal mergers, on an appropriate showing o --- anticompetitive e --- --- ects.”). 89. E.g., R OBERT H. B ORK , T HE A NTITRUST P ARADOX 245 (1978; rev. ed. 1993); Herbert Hovenkamp, Robert Bork and Vertical Integration: Leverage, Foreclosure, and E --- --- iciency, 79 ANTITRUST L.J. 983 (2014) (discussing the advantages o --- vertical integration). 90. Khan, supra note 6, at 797. 91. See FTC v. Meta Plat --- orms, Inc., No. 22-CV-04325, 2023 WL 2346238, at *1–2 (N.D. Cal. Feb. 3, 2023). In this case, the FTC tried to enjoin Meta --- rom purchasing a VR --- itness so --- tware company because Meta publishes a game called Beat Saber that could, theoretically, be used --- or cardiovascular --- itness. The court denied the motion --- or preliminary injunction because “Within and Supernatural had not even entered the relevant market at the time o --- this presentation. Consequently, this cannot be evidence o --- a direct e --- --- ect within the VR dedicated Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 2024] Antitrust Law --- or Blockchain Technology 395 The key thing to understand about Web3 is it --- eatures distributed organizations. The term “organization” derives --- rom the Latin word “organ,” meaning part o --- a body. An organization, being comprised o --- organs, is a collection o --- subparts.92 According to computational biology, an organization is de --- ined by at least three parameters: --- irst, it has some initial structure; second, it has some reliable --- unction over time; and, third, it has redundancy that tends to maintain its structure and --- unction.93 For an organization to --- unction as such, it must have some coordinated communication and decision-making system that are endemic to the organization (and not speci --- ic to each organ).94 This implies that all organs that comprise an organization must be somehow connected to each other. The way the organization’s organs connect de --- ines that organization as centralized, decentralized, or distributed. A distributed organization is an organization whose parts (organs) connect with each other, rather than to only one or even just a --- ew switching points.95 The distributed organization creates redundancy so that in --- ormation and decision- making can occur even when some o --- the nodes are destroyed, because the system can --- lexibly delegate decisions to alternative nodes.96 Such --- lexible systems are markedly di --- --- erent --- rom centralized industry, and antitrust concepts like sunk costs and entry barriers are not obviously applicable to such --- lexible systems. The --- undamental di --- --- erent in organizational structure quickly leads to more complicated and technical distinctions in organization operations. Distributed organizations possess distributed knowledge and distributed intelligence.97 Distributed intelligence, in turn, is a type o --- dynamic intelligence in motion that comes to li --- e through the --- unctioning o --- a system.98 Web3 distributed organizations and “dApps” govern autonomously through economic incentives written into their code. Such “tokenomics” o --- ten provide incentives --- or users to participate in governing the distributed organization. These concepts are di --- --- icult to explain in nontechnical ways, but an example o --- their operation can show why these concepts require regulators to rethink antitrust and not merely to assume the antitrust o --- centralized industry applies to distributed organizations. Web2 Uber Competes with Web3 dUber You do not have to understand all the details o --- these cutting-edge concepts to recognize that this is very di --- --- erent --- rom a corporate organization, which is based on shareholders appointing board members who delegate authority to o --- --- icers. A simple --- itness app market.” Id. at *32. This appears to reject Khan’s theory o --- prophylactic bans on horizontal mergers, which are scrutinized more heavily than vertical mergers, and thus it implicitly rejects Khan’s prophylactic ban o --- vertical mergers as well. 92. See Peter de Jong, Structure and Action in Distributed Organizations, ACM SIGOIS BULL. (ASS’N FOR COMPUTING MACH., New York, N.Y.), Mar. 1, 1990, at 1, 1 (“An organization is a distributed collected o --- subparts.”). 93. H. Atlan, On a Formal De --- inition o --- Organization, 45 J. THEORETICAL BIOLOGY 295–304 (1974). 94. J.P. Vergne, Decentralized vs. Distributed Organization: Blockchain, Machine Learning, and the Future o --- the Digital Plat --- orm, ORG. THEORY, Oct.–Dec. 2020, at 1, 5. 95. PAUL BARAN, RAND CORP., RM-3420-PR, ON DISTRIBUTED COMMUNICATIONS, (1964). 96. Vergne, supra note 94, at 4. 97. Richard N. Zare, Editorial, Knowledge and Distributed Intelligence, SCIENCE, Feb. 21, 1997, at 1047. 98. Aditya Vishwanath & Roy Pea, Distributed Intelligence, INT’L SOC. OF LEARNING SCIS., https://www.isls.org/research-topics/distributed-intelligence/ [https://perma.cc/JA66-74GP]. Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 396 The Journal o --- Corporation Law [Vol. 49:2 example o --- a hypothetical Web3 technology-based entrant can illustrate how Web3 presents competitive challenges to Web2 corporate dominance. Uber leveraged Web2 technology to launch a new kind o --- service: in 2009, Uber e --- --- ectively created the ridesharing market.99 Ridesharing apps connect people who want a ride --- rom one place to another with people who want to o --- --- er such rides.100 This market is distinguishable --- rom typical taxi services --- or several reasons, but one major economic reason --- or ridesharing’s success is it encouraged more drivers to enter the marketplace when demand spiked by having dynamic pricing.101 Unlike pre-Web taxi corporations, Uber’s use o --- Web2 technology allowed it to see demand instantaneously and locally, and it used that same technology to alert and incentivize drivers to go to those locations.102 Putting this into the language o --- antitrust economics: Uber leveraged technology to enter a market that would have otherwise been di --- --- icult or impossible to enter due to regulatory barriers.103 Uber enjoyed considerable success in the ridesharing business and became the overwhelming leader in this new market: according to how you de --- ine the ridesharing market, Uber accounts --- or 74% o --- that market share.104 In traditional antitrust measures, this makes Uber dominant in this marketplace.105 It has only one major competitor, Ly --- t, so this market is highly concentrated.106 A recent litigation claims that Uber and Ly --- t maintain their duopoly by violating antitrust laws.107 In particular, the class-action complaint alleges that the dominant --- irms maintain their dominance by preventing drivers --- rom having autonomy over pricing, which results in higher --- ees --- or consumers and lower pay --- or drivers.108 The complaint alleges that the surge pricing model prevents competitors --- rom entering the market.109 The complaint ignores the --- act that a new entrant, especially one using more modern Web3 technology, could enter the market relatively easily by mimicking the dynamic 99. Adam Volle, Uber, BRITANNICA (Sept. 15, 2023), https://www.britannica.com/topic/Uber [https://perma.cc/8DH3-9XT2]. 100. Chonce Maddox Rhea, What is Rideshare?: Everything You Wanted to Know About Rideshare & More, R IDESHARE G UY (Oct. 21, 2020), https://therideshareguy.com/what-is-rideshare/ [https://perma.cc/S96M- 52CR]. 101. Jessica Phillips, How Uber’s Dynamic Pricing Model Works, UBER BLOG (Jan. 21, 2019), https://www.uber.com/en-GB/blog/uber-dynamic-pricing/ [https://perma.cc/77WD-TNAV]. 102. Id. 103. See generally Seth C. Oranburg, Encouraging Entrepreneurship and Innovation Through Regulatory Democratization, 57 SAN DIEGO L. REV. 757 (2020). 104. Michal Kaczmarski, Uber vs. Ly --- t: Who’s Tops in the Battle o --- U.S. Rideshare Companies, BLOOMBERG SECOND MEASURE (Aug. 9, 2023), https://secondmeasure.com/datapoints/rideshare-industry-overview/ [https://perma.cc/7BP6-BFNK]. 105. Most antitrust authorities use the Her --- indahl-Hirschman index to calculate market concentration based on the squared sums o --- market share o --- each --- irm in that market. According to this metric, a market is high concentrated when the HHI exceeds 2,500 points. See U.S. DEP’T OF JUST. & FED. TRADE COMM’N, supra note 86. 106. Id. 107. Class Action Complaint at 2, Gill v. Uber Techs., Inc., No. CGC-22-600284 (Cal. Super. Ct. June 21, 2022). 108. Id. 109. Id. ¶ 162. Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 2024] Antitrust Law --- or Blockchain Technology 397 pricing model.110 Moreover, Web3 technology could allow entrants to do this more e --- --- ectively. Imagine a new distributed organization called dUber, a name that re --- lects a distributed organization version o --- Uber. dUber employs Web3 technology such that anyone who downloads the dUber code connects to its ever-growing network o --- riders and drivers. The dUber code, which is publicly available and auditable, builds a model --- or demand pricing: when more drivers enter the network, price goes down such that more riders take rides, and when more riders enter the network, price goes up such that more drivers o --- --- er rides. The system can operate in the same manner as Uber or Ly --- t, but without any centralized organization. The Web3 code, which is distributed to all participants, acts autonomously, without any central involvement. The result could be more e --- --- icient than Uber because there would be no need --- or an Uber o --- --- ice building, high-paid Uber executives, and no Uber legal department. In --- act, it’s hard to see how dUber would be subject to antitrust remedies at all. Who, exactly, would claimants sue? They cannot sue the code. Meanwhile, without a central organization to organize concerted actions, who is taking the illegal actions? The riders and drivers are simply responding to in --- ormation. With dUber, instead o --- having a highly concentrated market with two major corporate players, you have a market consisting o --- millions o --- drivers and riders, which would by de --- inition be so unconcentrated that any antitrust cabal would be theoretically impossible and thus any legal action would be --- undamentally implausible. The --- inal step in this thought experiment is to consider what happens when the antitrust authorities and private plainti --- --- s begin to succeed in antitrust litigation against Uber. That would surely raise Uber’s costs and increase its risks o --- doing business. The result o --- those increased costs is not likely to be some third entrant into the Web2 ride- sharing market, because a new but similar entrant would --- ace the same risks without lesser scale and scope and thus less ability to a --- --- ord these costs. Rather, given new Web3 technology, we might see a new entrant in the --- orm o --- distributed code. Such code would be impervious to antitrust challenge and may not be subject to law at all. For a real-world example o --- how di --- --- icult it is to regulate distributed code, simply look to the government’s inability to regulate cryptocurrency. Bitcoin launched in 2009, and, as o --- 2022, the Biden administration continues to struggle to understand the risks and opportunities o --- digital assets, while executive agencies appear unable to meaning --- ully regulate them.111 Pundits analogize the Biden administration e --- --- orts to regulate cryptocurrency to a global game o --- “whack-a-mole,” where the resilient, distributed nature o --- cryptocurrency networks makes it virtually impossible --- or regulators to target any given node in an e --- --- ort to shut down the system.112 110. C --- . Matthew T. Wansley & Samuel N. Weinstein, Venture Predation, 48 J. CORP. L. 814, 841 (2023) (noting how non-unique Uber’s and Ly --- t’s apps are and that many companies could emulate their plat --- orms). 111. Katie Rogers & Ephrat Livni, Biden Takes Step Toward Regulating Cryptocurrencies, N.Y. TIMES (Mar. 9, 2022), https://www.nytimes.com/2022/03/09/us/politics/crypto-regulation- biden.html#:~:text=The%20president%20signed%20an%20executive,opportunities%20presented%20by%20di gital%20assets [https://perma.cc/DB5C-NM9D]. 112. Eric Geller, Global ‘Whack-a-Mole’: Why It’s So Hard --- or the U.S. to Go A --- ter Hackers’ Digital Wallets, POLITICO (Aug. 14, 2021), https://www.politico.com/news/2021/08/14/crypto-hackers-ransomware- --- ight- 504460 [https://perma.cc/E9NB-CBLK]. Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 398 The Journal o --- Corporation Law [Vol. 49:2 The point o --- this illustration is to tell a cautionary tale. Seemingly dominant Web2 --- irms like Uber may quickly lose their dominance when centralized organizations become costlier than distributed organizations. The result may be more competition --- rom Web3 distributed organizations who mimic centralized --- unctions, but it is not clear that these Web3 solutions will result in increased social wel --- are. Instead, we might --- ind ourselves in a world where unregulated and unregulatable new --- orms o --- distributed business operations come to dominate the landscape. This is not to say that we should protect Web2 incumbent --- irms --- rom Web3 entrants. However, our antitrust analysis should consider how this new technology could become economically viable precisely because we ignore how Web2 dominance is subject to changing technology.113 I --- we only look at Big Tech as i --- it were static, then we may over- apply antitrust remedies, and that, in turn, could result in arti --- icially disadvantaging traditional organizations in --- avor o --- non-traditional distributed organizations. We currently lack understanding o --- distributed organizations and have little to no comprehension o --- how to e --- --- ectively regulate them as a matter o --- law. We should there --- ore be care --- ul be --- ore taking --- urther antitrust action against Big Tech. Web3 Competition in General The illustration above shows how a new distributed organization could compete with a traditional centralized organization. Analysis o --- that illustration shows how we are unprepared to regulate distributed organizations, which may be judgment-proo --- under current law. This concern is also relevant to the antitrust o --- vertical integration, which governs the merger o --- two separate corporations, usually where one purchase all the stock o --- its upstream supplier or downstream distributor. How could we apply this rigid concept o --- vertical integration to the --- luid --- orm o --- Web3 distributed organizations? Web3 distributed networks are similar to what biology calls superorganisms, like colonies o --- termites. There is no clear boundary where the superorganism stops and starts. When one organism dies, leaves, joins, or is born, the colony itsel --- does not --- undamentally change, yet the superorganism adapts.114 For example, the Cathedral Termite Mound is the home --- or the superorganism known as a colony o --- the Nasutitermes triodiae termites.115 Individual termites live --- or about one to two years,116 yet the Cathedral Mound re --- lects at least 50 years o --- collective colonial 113. See Bobby Allyn, Hard Times are Here --- or News Sites and Social Media. Is This the End o --- Web 2.0?, NAT’L PUB. RADIO (Apr. 28, 2023), https://www.npr.org/2023/04/28/1172599212/web-buzz --- eed-vice-gawker- --- acebook-twitter-media-news [https://perma.cc/NU3N-DD3N] (explaining that Web2 dominance is already showing signs o --- crumbling which raises --- urther doubts about whether FTC e --- --- orts to break up big tech are necessary or appropriate). 114. For a discussion on superorganisms and group adaption, see Andy Gardner, Adaptation o --- Individuals and Groups, in FROM GROUPS TO INDIVIDUALS: EVOLUTION AND EMERGING INDIVIDUALITY 99 (Frédéric Bouchard & Philippe Huneman eds., 2013). 115. Daej A. Arab et al., Parallel Evolution o --- Mound-Building and Grass-Feeding in Australian Nasute Termites, BIOLOGY LETTERS, Feb. 2017, at 1, 1–2. 116. Termite Li --- espan: How Long Do Termites Live?, ORKIN, https://www.orkin.com/pests/termites/li --- e- cycle/how-long-does-a-termite-live [https://perma.cc/8K52-5D2M]. Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 2024] Antitrust Law --- or Blockchain Technology 399 development. Biology117 and, more recently, mathematics118 recognize how these superorganisms exist beyond the li --- espans o --- their constituent parts. Figure 7. Cathedral Termite Mound, the home o --- a colonial superorganism. Credit J. Brew (2009). CC A-S 2.0 license 117. Je --- --- rey Gordon et al., Superorganisms and Holobionts, 8 M ICROBE 152, 152 (2013). 118. Ed Yong, Mathematical Support --- or Insect Colonies as Superorganisms, NAT’L GEOGRAPHIC (Jan. 18, 2010), https://www.nationalgeographic.com/science/article/mathematical-support- --- or-insect-colonies-as- superorganisms#:~:text=The%20mighty%20insect%20colonies%20o --- %20ants%2C%20termites%20and,cannot .%20That%E2%80%99s%20more%20than%20just%20an%20evocative%20metaphor [https://perma.cc/SG9T- ZNKE]. Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 400 The Journal o --- Corporation Law [Vol. 49:2 Moreover, superorganisms organically experience vertical integration as a natural part o --- their processes. Termite colony superorganisms, --- or example, integrate “upstream” with monocultures o --- the --- ungus Termitomyces.119 When the termite colony brings their --- ood source in-house, it is super --- icially similar to when, --- or example, a hotel corporation purchases its catering --- ood supplier.120 But the huge di --- --- erence is, obviously, the termite colony acquired its new capacity in --- ood procurement through subtle organic processes, whereas the hotel acquired its new capacity in --- ood procurement through well-de --- ined legal processes. I --- this analogy seems like science --- iction, consider that Web3 mergers already happened. For example, on December 15, 2022, Futureverse announced that its technology, 121 which it describes as a metaphor --- or an operating system,122 technologically connects eight virtual metaverses.123 This merger occurred without FTC scrutiny because it did not involve a traditional merger o --- entities through legal process. Rather, this was a merger via the rule o --- code. Futureverse created so --- tware that allows users to traverse between worlds.124 The result is a merger o --- these worlds into a larger virtual multiverse. Mergers in Web3 superorganisms are more likely to look like termite colonies symbiotically raising --- ungus than like hotel corporations purchasing the stock o --- catering corporations. Given the vast di --- --- erences in --- orm and --- unction, courts should be very skeptical be --- ore extending Khan’s radical theories even --- urther. CONCLUSIONS Antitrust law is experiencing a revival o --- sorts, with a particular --- ocus on using archaic antitrust law to break up Big Tech.125 These e --- --- orts are misguided when they are based on economic structuralism because antitrust tools were designed to operate on power structures --- ound in classical industries, not in decentralized market structures with distributed organizations. In particular, Web3 --- irms do not --- eature single-minded pro --- it- maximizing controllers like John D. Rocke --- eller, whose consolidation o --- Standard Oil led to the --- irst American antitrust laws more than a century ago. This does not mean that the 119. Margo Wisselink, Duur K. Aanen & Anouk van’t Padje, The Longevity o --- Fungus-Growing Termites and the Stability o --- Symbiosis, 11 I NSECTS 527, 534 (2020), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7469218/pd --- /insects-11-00527.pd --- [https://perma.cc/P8EY- PBEQ]. 120. See Pyramid Global Hospitality Closes Acquisition o --- Provenance Hotels’ Operating Division, HOTEL ONLINE (Dec. 19, 2022), https://www.hotel-online.com/press_releases/release/pyramid-global-hospitality- closes-acquisition-o --- -provenance-hotels-operating-division/ [https://perma.cc/EU6X-T2RH] (detailing the Pyramid Hotel group acquiring the operating division o --- Provenance Hotels). 121. Dean Takahashi, Futureverse Mergers 8 Web3 Companies to Create an Open Metaverse Ecosystem, GAMESBEAT (Dec. 15, 2022), https://venturebeat.com/games/ --- utureverse-merges-8-web3-companies-to-create- an-open-metaverse-ecosystem/ [https://perma.cc/A5RN-F83W] (describing how Futureverse merged with eight metaverse companies). 122. Id. (“‘The idea o --- the operating system is more o --- a metaphor than the traditional notion o --- an operating system technically,’ [co- --- ounder Aaron] McDonald said. ‘But these are the core components that we think are the most important things that will --- orm the layer o --- what we would say is the metaverse. And by that I mean the metaverse exists at the data layer, primarily, not in some super app.’”). 123. Id. 124. Id. 125. See, e.g., Khan, supra note 6, at 790–92 (explaining how traditional antitrust principles can be used as an approach to improve Amazon’s distress). Oranburg_PostMacro (Do Not Delete) 1/5/24 10:26 PM 2024] Antitrust Law --- or Blockchain Technology 401 internet is --- ree --- rom antitrust concerns; rather, the upshot o --- this Article is that we may need new tools to understand and address whatever antitrust concerns arise in Web2 and Web3. Antitrust law was not established to address decentralized power, and antitrust emerged and developed one hundred years be --- ore distributed networks were technologically plausible. As new business entities such as Decentralized Autonomous Organizations and new models o --- distributed corporate governance become increasingly dominant, antitrust law’s traditional toolkit will increasingly struggle to protect competition. But, be --- ore we make new tools that adapt the --- irst principles o --- antitrust law to the new machinations on the WWW, we should con --- irm that there really is a problem worth solving. Even i --- some static model o --- the market --- or in --- ormation on Web2 shows that Big Tech should be broken up, then the antitrust bar should recognize how Web3 competes with Web2. In other words, be --- ore concluding that the web is broken and captured by durable monopolists, consider whether a dynamic picture including new technology shows that dominance will likely erode. I --- new DLT and distributed organizations per --- orm internet --- unctions more e --- --- iciently than the current titans o --- e-commerce, then Web3 plat --- orms will erode Web2 --- irms’ market power. An unintended consequence o --- increased antitrust pressure on Web2 --- irms is to tilt the cost-bene --- it analysis --- urther in --- avor o --- Web3 plat --- orms. Scholars should challenge whether currently dominant Web2 --- irms like Alphabet (Google), Amazon, Apple, Meta (Facebook), and Microso --- t can maintain their market power while the internet adopts Web3 technology and changes its --- undamental structure. As President John F. Kennedy said, “There is nothing more certain and unchanging than uncertainty and change.”126 (Ironically, Kennedy was paraphrasing Heraclitus, who allegedly wrote the same sentiment in 500 B.C.E., that “change is the only constant in li --- e.”127 It seems that our aphorisms about change do not themselves change very much.) In our rapidly changing times, on our rapidly evolving internet, we should be skeptical that Big Tech’s market dominance is lasting. I --- the distributed web is as power --- ul as it promises to be, then it will undermine seemingly dominant power structures like a giant octopus crushed under its own immense weight. I --- scholars can recognize this emerging problem, we can collaborate on resolving it, and so this Article hopes to jumpstart that collaboration by identi --- ying and explaining the problem o --- antitrust and Web3. 126. John F. Kennedy, President, United States, State o --- the Union at the House o --- Representatives (Jan. 11, 1962). 127. JOHN BARTLETT, FAMILIAR QUOTATIONS 62 (16th ed. 1992).