Decentralization and Antitrust Laws: Strategies for "Coexistence" in an Era of Power Imbalance

As Vitalik Buterin points out in his latest commentary, modern society faces complex power structures that cannot be adequately addressed solely through legal frameworks like antitrust laws and cartel prevention. While the rapid growth of large corporations, big governments, and civil society has occurred, the mechanisms that check and balance these forces are weakening. In the past, geographic distance and organizational inefficiencies naturally limited the concentration of power, but digitalization and automation have eliminated these constraints.

The Threat of Large Corporations and Cartels: Why Economies of Scale Lead to Power Concentration

The reason antitrust laws exist is straightforward. When companies reach a certain size, they can eliminate competition through market manipulation and cartels, forcing consumers to accept unfair value.

As demonstrated by 20th-century America, economies of scale indeed drive progress. However, they also act as a double-edged sword. Small resource differences at early stages can exponentially widen over time. A company with twice the resources can achieve more than double the progress—potentially even more.

Today, we witness phenomena like “soulless corporations” across many industries. Initially motivated by passion, these companies, as they grow, prioritize profit maximization above all else. The video game industry has shifted from “fun” to “gambling-like mechanisms,” and early idealistic crypto projects have turned into financial exploitation. Underlying these changes are the concepts of “motivational identity” and “organizational structure identity.”

While all companies are driven by profit motives, when multiple large entities pursue the same goals with weak mechanisms for restraint, cartel-like behaviors inevitably emerge. This is precisely what antitrust laws target, but in modern contexts, laws alone are no longer sufficient.

Limitations of Antitrust Laws: Current EU Regulations and US Policies

The European Union enforces the strictest antitrust regulations. Efforts such as standardizing USB-C, fining platform companies, and enforcing interoperability through the Digital Markets Act intentionally promote “diffusion.” These are strategies not just for price competition but for dismantling technological exclusivity itself.

The US takes a different approach. Banning non-compete agreements forces companies to disclose “tacit knowledge.” When employees leave, being able to apply skills learned elsewhere accelerates innovation diffusion.

However, these policies are still outpaced by technological advances. Automation and cloud computing enable large firms to complete global tasks with minimal staff, rendering the old concept of “diseconomies of scale” obsolete. Simultaneously, the proliferation of proprietary software and hardware has blocked natural processes like reverse engineering and knowledge sharing.

Forced Diffusion Mechanisms: Technology Transfer and Mandated Interoperability

To counteract power concentration, more proactive strategies are necessary. The first is “forced diffusion.”

Governments can design new tax mechanisms—for example, taxing products based on their degree of proprietary control, and offering tax reductions or exemptions for companies that share technology via open-source methods. This approach draws on the logic of carbon border adjustment mechanisms, guiding markets similarly to environmental regulations.

The second is “adversarial interoperability.” This involves enabling users to develop and use alternative clients, browser extensions, and compatible services without permission from existing platforms. Such strategies allow users to bypass platform value extraction mechanisms while remaining within the ecosystem.

The third is the “principle of pluralism,” as proposed by Glen Weyl and Audrey Tang. This concept promotes “cooperation among differences.” When diverse actors with varying opinions and goals can communicate and collaborate more effectively, large-scale groups can enjoy efficiency without succumbing to a single goal-driven entity.

Multipolar Power in the Cryptocurrency Community

These strategies are directly connected to discussions of decentralization within the crypto space. Blockchain and DeFi protocols inherently embody “forced diffusion” through technology. Open-source smart contracts, decentralized governance with multiple independent validators, and interoperable protocol designs all serve as mechanisms to prevent power centralization.

With the rise of decentralized exchanges like Gate.io, users can reduce bottleneck risks associated with centralized financial systems. This is a form of “adversarial interoperability,” functioning as a counterbalance to existing financial power structures.

Balancing Power and Commercial Viability

A key insight is that decentralization and commercial viability are not mutually exclusive. In fact, healthy competition fosters long-term innovation. Antitrust laws and cartel prevention frameworks maintain market vitality, and the coexistence of multiple actors is essential for sustainable progress.

The challenge of the 21st century is to develop not only regulatory measures but also technological and institutional mechanisms that actively diffuse power. Combining forced diffusion, adversarial interoperability, and the principle of pluralism can realize the ideal that “decentralization does not sacrifice commercial viability and can ‘coexist’ within a balanced rights framework.”