Think about innovation in a product category as familiar as soft drinks. Royal Crown, trying to find a way to compete with Coke and Pepsi, produced the first diet cola, the first caffeine-free soft drinks, and the first soft drinks in cans. Coke and Pepsi responded competitively by copying these new ideas and developing further innovations. Competition works just as powerfully to promote innovation in high-technology industries. IBM, for example, preserved its leading role in computing over decades, through many rounds of innovation, as the industry evolved from tabulating machines to mainframes, but famously lost its lead when innovation turned to personal computers.
Antitrust enforcement protects innovation competition in a number of ways.
The antitrust laws prevent mergers that would combine firms with competing research efforts, when other firms' research does not have as strong prospects for success and the combination does not promise efficiencies. The antitrust laws also prevent dominant firms from channeling innovation by unfairly excluding rivals who pose competitive threats. And there is little danger of chilling the innovative effort of a dominant firm with a strong research and development program of its own. Third, antitrust enforcement is as relevant and important in evolving markets where change is fast-paced as in more mature markets. This complaint misses the mark.