Brian Albrecht delivers a necessary correction to the modern antitrust playbook, arguing that we have been obsessing over the wrong metric for decades. While regulators count firms and measure concentration, Albrecht insists the real engine of the economy is the violent, messy churn of innovation that makes market structure an outcome, not a cause. For busy professionals watching the economy stagnate, this piece offers a radical reframing: the problem isn't that markets are too concentrated, but that we are actively breaking the mechanism that allows new winners to displace old ones.
The Illusion of Static Markets
Albrecht begins by dismantling the standard industrial organization model inherited from the 1960s, which assumes that more firms automatically equal better outcomes. He writes, "The standard antitrust framework inherited from 1960s industrial organization focuses on market structure. Count the firms. Measure concentration. Assume that structure determines conduct, which determines performance." This mechanical view is deeply embedded in current policy, particularly in the U.S. Merger Guidelines which rely heavily on the Herfindahl–Hirschman index (HHI) to block deals based on simple math.
The author argues this approach misses the fundamental nature of how economies actually grow. Instead of a static snapshot, the economy is a dynamic process of "creative destruction." Albrecht notes that while aggregate GDP looks smooth, the micro-level reality is turbulent. He points out that in a single quarter, the U.S. economy can create 8 million jobs while destroying 7 million. "Creative destruction is violent and discontinuous in any given market," he writes, citing how Netflix collapsed Blockbuster or the iPhone erased BlackBerry's dominance overnight. This evidence is compelling because it forces us to accept that turbulence is not a bug in the system; it is the feature that drives progress.
"Market structure is an outcome of this competitive process, not just a cause of competitive behavior."
Critics might argue that focusing on long-term innovation ignores the immediate pain of job losses and business failures that communities face when incumbents collapse. Albrecht acknowledges this churn but insists that without it, we face stagnation. The key insight here is that the monopoly power enjoyed by a firm like Netflix is temporary; it is the carrot that motivates the next innovator, while the threat of being displaced is the stick that keeps them moving.
Profits as a Signal, Not a Crime
Perhaps the most provocative part of Albrecht's analysis is his defense of high profits. In the traditional antitrust view, high markups are presumptive evidence of market power that must be broken up. Albrecht flips this script, suggesting that in a healthy, innovative market, high profits are the necessary reward for risk-taking. "Something that will not sit well with people who see the world through an antitrust lens is that growth comes via serial monopoly—firms take turns being monopolists as each innovation displaces the last," he explains.
He argues that the policy response must distinguish between two types of concentration. One is the result of a firm winning through superior innovation; the other is the result of barriers that prevent new entrants. "Concentration doesn't just fall from the sky. It's an outcome of competitive processes," Albrecht writes. If a regulator breaks up a company that grew large because it was simply the best, they risk destroying the very incentive structure that drives R&D. This distinction is crucial for policymakers who are currently under pressure to target big tech, as it suggests that size alone is not a reliable indicator of anti-competitive behavior.
Contestability Over Concentration
The article culminates in a call to shift the focus from structural thresholds to "contestability." Albrecht argues that the critical question for the executive branch and agencies like the FTC is not how many firms exist, but whether new innovators can challenge incumbents. "What matters is whether potential innovators can challenge incumbents," he states. "Can new firms enter with better products? Can today's market leaders be displaced if they stop innovating?"
He warns against mechanical rules like the HHI thresholds, noting that an industry might be highly concentrated precisely because the most innovative firm won. "Forced deconcentration in that case might reduce the incentives for innovation, without increasing actual competition," Albrecht writes. He uses the examples of Google, Microsoft, and Amazon to illustrate that persistence in market leadership does not necessarily mean competition has failed. If these firms are still investing billions in R&D and improving their products, they are likely maintaining their position through innovation, not exclusion.
"The threat of displacement provides the stick that keeps everyone innovating. Without exit and displacement, you get stagnation."
A counterargument worth considering is that in digital markets, network effects can create "winner-take-all" dynamics that make true contestability nearly impossible, regardless of R&D spending. Albrecht touches on this by distinguishing between a temporary monopoly and an entrenched one protected by barriers to entry, but the line can be blurry in practice. However, his insistence on case-by-case analysis over bright-line rules remains a robust defense against regulatory overreach that could inadvertently harm the very dynamism it seeks to protect.
Bottom Line
Albrecht's strongest contribution is reframing business dynamism not as a side effect of growth, but as growth itself, driven by the reallocation of resources from low-productivity to high-productivity firms. The argument's biggest vulnerability lies in the difficulty of enforcement: distinguishing between a firm that is winning through innovation and one that is gaming the system requires deep, resource-intensive analysis that regulators may struggle to perform at scale. The takeaway for the reader is clear: if we want a thriving economy, we must stop fearing concentration and start protecting the right of new challengers to displace the old guard.