Who Wants Weak IP Laws? An Economic Analysis

On April 11, 2025, Twitter (now X) co-founder Jack Dorsey tweeted, “Delete All IP Laws.” Senior Advisor to the President Elon Musk retweeted, “I agree.” Commentators have already called the exchange destructive, especially in light of an all-of-government call to reduce anticompetitive regulations (of which, some consider those pesky IP rights to be one). This article explores why someone would want to “delete” all IP laws.

In their simplest form, IP laws confer certain exclusive rights to creators – copyright holders enjoy control over their works for their entire lives (plus seventy years), while inventors generally enjoy 20 years of exclusive control over their patented inventions. Often it is said that IP laws confer “monopoly” rights by granting creators the right to prevent imitation by others (although “monopoly” applies to a market, not an exclusive right, and most exclusive rights are not exercised in monopolized markets).

Why would someone – anyone – want to forgo the power conferred by this exclusive right? One answer is that they can already exclude by other means – for example, by possessing a market monopoly.

Forms of Monopoly

The most common forms of technology monopoly in the United States arise through a combination of network effects and/or economies of scale. On the demand side, consumers prefer larger to smaller networks because larger networks provide greater opportunities for interaction. On the supply side, average cost per unit of output declines as the scale of output increases. When a network firm initially becomes much larger than potential rivals, its network and cost advantages effectively foreclose rival entry. The widespread consumer adoption of such technologies (such as Uber and Lyft in the rideshare market, Google Chrome in the browser market, and Microsoft Windows in the operating system market) allows their providers to enjoy what textbooks call a natural monopoly (although there is nothing inherently “natural” about it).

Another common form of monopoly is a legal one – a government or legal fiat grants monopoly rights to an individual or a firm. In certain markets (say, a breakthrough cancer drug), the right to exclude (using IP laws) may convey a legal monopoly. Last, a monopsony (a market with only one buyer) may contractually buy from one (or few) sellers, effectively granting the seller monopoly power. An example of such a monopoly would be standard development organizations (SDOs), which are monopsonists in the acquisition of patent rights for use in standards. The government can also exercise monopsony power, for instance, in space exploration (the recent United States Space Force contracts with SpaceX, whose founder and CEO is Advisor Musk, conveys certain monopoly powers to the vendor).

When Innovators Block Innovation

Generally, innovative firms that achieve a critical mass of adoption are best positioned to monopolize the market. The Apple iPhone was a first-mover in the next generation of smartphones, helping the iPhone gain mass adoption; similarly, Eli Lilly’s Mounjaro and Novo Nordisk’s Ozempic are first-movers in the next generation of weight-loss medication, which helps them gain mass adoption.

Two things are true about innovative incumbents: (1) mass adoption comes with cost advantages because the high fixed costs of R&D and production can be spread across the many units being sold, which increases a rivals’ barriers to entry; and (2) an incumbent whose monopoly power constantly remains under threat (from the invention of a future “leapfrogging” technology) is incentivized to keep innovating and stay ahead of any rival invention.

Instead of innovating, less-innovative firms that enjoy monopoly power – whether obtained by network, scale, fiat, or first-mover advantages – often use that power to maintain their monopoly through various (sometimes illegal) schemes, thereby undermining consumer welfare. For example, the illegal maintenance of monopoly is the Plaintiffs’ central allegation in the “Google Search” case. [Discliamer: Dr. Ratib Ali worked for Plaintiffs in the “Google Search” case].

Patents Protect the Weak

Because the threat of obsolescence comes from the invention of a superior product, weakened IP rights increase an innovator’s barriers to entry by making it harder for an innovative competitor to commercialize their invention. Strong IP laws protect smaller competing rivals, which is good for competition; weak IP laws protect the incumbent enjoying monopoly power through other means. Once innovators (whose claim to fame is inventing a “leapfrogging” technology that bypassed the traditional ways of doing business) have established their (de facto or de juris) exclusivity in a line of business, they are then incentivized to weaken IP rights to prevent future leapfrogging innovation.

Advisor Musk once rightly said, “Patents are for the weak” – they protect “weak” new entrants from being crushed under the weight of an existing monopoly, which can replicate an entrant’s innovation at scale. In short, advocates for weaker IP rights are not trying to revolutionize anything – they are most likely attempting to protect their existing monopolies from future competition.

Image Source: Deposit Photos
Author: iqoncept
Image ID: 61369901