Economist Michael Noel Challenges How Regulators Police Big Tech

Consolidation reshapes industries of every size, from manufacturing to retail to digital markets.

For the past several years, Big Tech has become the most visible battleground for debates over market power and competition.

In an interview with Competition Policy International (CPI), a PYMNTS company, Michael Noel, professor of economics and competitive strategy at Texas Tech University, said the concerns surrounding Big Tech consolidation often overlook economic fundamentals and the historical record.

Negative Views of Concentration Often Ignore the Economics

Policymakers and the public have developed an instinctive fear of concentrated industries, Noel said.

However, “there are tens of thousands of mergers that take place in the U.S. every year, and they get virtually no attention,” he said.

The focus tends to land on a small set of large firms, especially in high tech. It remains appropriate to take a closer look at concentrated sectors, but “it’s very important to remember that it’s not necessarily true that just because you’re concentrated that there’s actually a problem,” he said.

Many highly concentrated industries “are also the most competitive,” he said.

Consolidation as a Natural Evolution

Consolidation is a normal and expected byproduct of economic maturation, Noel said.

Learning by doing, for example, expands scale and lowers costs.

If you go back 150 years, if “there was a guy stitching a shoe, it would cost you a week’s wages,” he said. Today, shoes can be produced for a fraction of that because firms have learned, grown and improved.

“As the scale gets bigger, they can get better and better at what they do,” Noel said.

Over time, industries mature, inefficient firms shake out, and larger competitors deliver better products at lower prices. This same logic applies to digital markets.

Consolidation Is Not Necessarily Negative

Despite these observations, Noel said consolidation is still frequently treated as a warning sign. Regulators should not conflate size with harm and remember that efficiencies matter even for dominant platforms.

“Even a firm that’s big, even a Google, is looking for ways to get bigger and better,” he said.

A major challenge lies in how agencies interpret exclusionary conduct. Agencies increasingly classify ordinary competitive behavior as exclusionary once a firm reaches scale.

“Something that a firm would do when it’s small would cause no problems whatsoever,” Noel said. “Once they get big, all of a sudden, that’s exclusionary.”

Google’s contract with Apple to be the default search engine is an example, he said. Regulators treated the agreement as improper largely because Google is large.

“There’s no reason why when a firm gets big, they’re supposed to stop trying and start helping their competitors,” he said.

Even as firms grow, the economic forces that make consolidation beneficial do not disappear, Noel said. Efficiency gains continue to drive innovation, quality and consumer welfare. Viewing large firm behavior as inherently suspect risks discarding these benefits.

Regulators are increasingly losing sight of this balance, he said.

Thousands of Mergers Proceed While Agencies Fixate on a Few

More than 99% of mergers in the United States proceed without challenge, and “the vast, vast, vast majority” present no competition concern, Noel said.

Yet enforcement agencies still devote resources to headline-driven cases, which leads to enforcement actions “that are probably not worth it,” he said, adding that regulators “should focus on the economics and not necessarily the sexiness of the firms that are involved.”

Agencies Must Recognize How Quickly Incumbents Can Be Displaced

One of the greatest blind spots in tech enforcement is the failure to appreciate how quickly innovation reshapes markets, Noel said, pointing to IBM in the 1960s, Microsoft in the 1990s, and now Google and Apple as examples.

“Authorities are very good at missing the future,” he said.

Even firms with high market share face pressure from new technologies that can upend competition.

Courts Have Been More Accommodating

Recent court decisions reflect this shift.

In the Google default search case, the judge presiding over the case acknowledged he could not predict the future because artificial intelligence was not on the horizon when the lawsuit began, Noel said.

Similarly, last month’s rejection of antitrust claims involving Meta’s acquisitions showed courts that integration can improve consumer value. Noel said the decisions are “refreshing” because judges acknowledged that fast-moving markets make speculative future-harm theories unreliable.

Looking at Exclusionary Behavior the Right Way

The core test for exclusionary conduct should be whether a firm has stopped innovating, raised prices and blocked competition, Noel said. None of the Big Tech cases meet that standard. Instead, agencies have treated high performance as a breach.

Telling firms to “tap the brakes” so rivals can catch up is “literally attacking competition,” he said.

Regulators need to rethink market definitions and recognize the dynamics they overlook, he said.

“It’s all fixable,” Noel said, but only if agencies reconnect with economic fundamentals rather than reacting to firm size alone.

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