2019 was a good year for Hollywood. The top 10 global box office made more than 12.7 billion combined. Eight of those crossed 10 figures. Avengers: Endgame even became the fifth movie to ever cross 2 billion on its way to become the highest grossing movie in history. But some people aren’t happy. Of those 10 movies, 8 were Disney movies– including the entire top 6. Some people think Disney is having too much success– how dare Disney make movies people enjoy watching.
As part of the rising anti-monopoly sentiment in the United States, there is growing support for using anti-trust laws to break up the magic kingdom. In a time of bad installments to dead franchises, why not add bad installments to dead bad ideas?
Trust busters have four arguments. Monopolies harm consumers, harm workers, harm competition, and they just don’t like how big they are. Let’s take a look at each individually.
First, trust busters argue monopolies harm consumers. While this is their best argument, it is obviously false. Microsoft in the late 1990’s is the most famous modern example of a monopoly. Their crime was bundling additional programs into their windows operating system. Similarly, Standard Oil is the most famous trust of the Gilded Age. At its peak, it had 90% market share because it was able to offer consumers more affordable and more diverse products than its competitors could. Today, Disney is one of many companies that has gained the ire of trust busters– but– like Microsoft and Standard Oil– Disney isn’t harming consumers. Like most monopolies they gained their monopolistic status because consumers freely choose to watch their movies.
Next, busters say breaking up monopolies will help workers but there is no reason to think that. It’s bigger businesses that benefit workers the most. Of the top 10 highest paying companies, eight of the ten have more than ten of thousand of employees. When you think of a company paying over six figures, it tends to be a company with size. Oh, and the average income of a Disney employee is over $82,000. The median American makes less than $34,000. How exactly would breaking up Disney cause those workers to earn more? The reality is, companies with size tend to pay workers the most.
Then they say monopolies harm competition. That is obvious enough. By definition they have 100%– or close to it– market share. But so what? Why should more successful companies be busted so less successful companies can benefit? Disney doesn’t dominate the box office because of unfair competition. They dominate because they make better movies. Movie watchers don’t want to see another movie from a dead franchise (Terminator: Dark Fate or The Predator) or a gender swap of a classic hit (Ghostbusters 2016). They want to see good and interesting movies. When non-Disney studios produce good movies that consumers want to see– Joker, Dunkirk, Deadpool, or It –people flock to see them. The problem isn’t Disney but the other studios. A policy tantamount to corporate welfare for bad businesses isn’t the solution. It’s overriding the revealed preferences of consumers in favor of the preferences of those with political power.
At this point, trust busters are left with their most honest argument: they just don’t like business that big. It’s an arbitrary preference. They believe smaller businesses are better and they are free to have that belief. The problem is they want to enforce their preferences on everyone else. They don’t like big businesses like Disney, Wal-Mart, Amazon, or Facebook so everyone else has to live in their world. It’s egotistical and authoritarian.
Big businesses and monopolies aren’t inherently good, but they also aren’t inherently bad. Their virtue– or lack of therefore– is determined by making others better or worse off. Once they stop making others better off, they will shrink and eventually fail if they don’t adjust. The future of companies like Disney shouldn’t be determined because some people don’t like them and they happen to have political power. It should be determined by the market.