Not 'big is bad' but 'closed is bad': Reviewing The New Goliaths by James Bessen

In his book The New Goliaths, James Bessen argues that across industries in the U.S., leading firms have achieved and sustained their dominance through investments in proprietary software. Smaller firms have neither the means nor capabilities to keep up with such investment. The result is a slowdown in innovation. To reverse this trend, Bessen suggests opening up proprietary software systems. In this review, we take an in-depth look at Bessen’s argument, based both on his book and on an interview we conducted with the author. Our review is written from a specific vantage point—that of dynamic competition. As such, we are especially attentive to the argument that proprietary software investment has changed the nature of competition (complexity is now one of the main parameters) and that antitrust enforcement needs to adapt. The review proceeds as follows. In Section 1, we describe the most salient points of Bessen’s book: the shift towards complexity competition (Section 1.1) and the regulation of that complexity (Section 1.2). In Section 2, we offer our own take on Bessen’s arguments: we concretize his suggestions for use in the EU policy sphere (Section 2.1) and fit his narrative within the broader dynamic competition framework (Section 2.2).