How To Deal With Corporate Wokeism | Opinion

To be woke or not to be woke, that is the question facing corporate America. The right answer is simple—deliver what people want. Offer wokeness bundled with a product (a "woke bundle") when doing so will improve the bottom line, and don't bundle when it won't. Figuring out when it will and when it won't is what will separate winners and losers.

But there are limits to acceptable woke bundling, and existing laws will need to be adjusted to deal with those limits. Before addressing reforms that may be needed, though, it is important to understand the basic economics at play.

When Michael Jordan refused to endorse a black candidate running against Jesse Helms for Senate in 1990, he quipped: "Republicans buy sneakers, too." He probably surmised that Nike didn't want to alienate half its customer base. Now fast-forward. In 2019, Nike planned to celebrate Independence Day with a shoe emblazoned with the Betsy Ross flag, but killed it when former NFL quarterback Colin Kaepernick complained.

What changed? In short, consumer tastes.

Companies themselves have not changed. Then and now, companies exist to serve the needs of their customers. If we are looking for explanations for Nike's reversal, we should look, as Shakespeare said, not toward the stars, but within ourselves.

Every product or service serves some purpose. That purpose is sometimes simple—protect a foot. But often, the product has a dual purpose. Sometimes, this is obvious: An Apple watch tells time and checks your heart rate. Other times, the bundling is subtler. A Louis Vuitton suitcase carries clothes, but it also signals status.

Increasingly, brands are bundling their products with social messages that convey information about the owner's identity and membership in certain groups. Not surprisingly, as society changes, so too will the messages bundled with products. Today, something as mundane as a shoe can signal one's political persuasion.

Michael Jordan's comment is unthinkable now, because a vocal and powerful segment of the public demands their products be bundled with moral statements about various causes, from Black Lives Matter to gun rights. Accusing companies of "pandering" is missing the point: Companies exist to give us what we ask for, not what they want to produce or what they think we should want.

Most companies try to please everyone. Chevy offers both the Suburban and the Volt. But no company can be on both sides of a social justice war. As Michael Jordan predicted, pleasing Democrats might mean upsetting Republicans, or vice versa. Accordingly, companies will be put to the choice of what they think is the profit-maximizing route.

Nike shoes in San Francisco in 2018
Nike shoes in San Francisco in 2018 Justin Sullivan/Getty Images

Specialization is ordinarily not a problem. Tesla only sells electric cars; if a person wants a gas car, go to Ford. What about the customer that wants Nike's new foam soles, but without Black Lives Matter messaging? Go buy New Balance. This is not necessarily problematic—customers face similar tradeoffs in lots of markets. If there is sufficient demand, a competitor will offer people what they want.

What if there are no ready alternatives? When a company is a near-monopoly, like the NFL or Facebook, choosing sides on social issues harms consumers. It forces some customers to pay an extra price for its products—the social cost of signaling something they don't want to convey. But as long as the company did not acquire its monopoly illegally, we tolerate bad product choices by firms. Consider the long-standing consumer complaints about the lack of innovation in Microsoft Office: No court has brooked such legal claims.

Which brings us to Parler. As customers fled Twitter's supposed political bias, Apple and Google blocked the leading Twitter alternative from their app stores. (Apple recently restored Parler.) Then, Amazon barred Parler from using Amazon Web Services, its dominant online storage and computing platform. Amazon did so on the ground that some Parler users were engaged in speech the company did not like. But, in selling this social identity bundle, Amazon created an anti-competitive barrier to entry. This feature separates the Parler case from our earlier examples.

Current antitrust law offers little remedy. Squelching Parler is not favoring an Apple or Google product, the traditional monopolist's motive. Whatever goodwill these companies gained was monetized via other products and hard-to-measure factors that befuddle the corpus of antitrust law.

A better lens to view the Parler affair is the judge-made doctrine of tortious interference with economic opportunity. When a third party engages in conduct for the purpose of disrupting commerce, it may be liable for the loss, even if the third party does not offer a competing product. The goal of this doctrine is simple: Businesses and customers should mind their own business, so to speak.

Despite this intention, the doctrine also falls short. It only condemns interference that is independently "illegal," due to fear that broader rules could disrupt legitimate competition. What Apple, Google and Amazon did hindered Parler, but their conduct was not otherwise illegal. At the same, it was not the sort of legitimate competition that judges seek to protect.

Political proxy wars among consumers disrupt commerce, and commerce helps bind society by giving us a common interest in our prosperity. Before businesses become regular mercenaries in such wars, perhaps we should expand the doctrine of tortious interference to cover actions that serve no direct and legitimate commercial purpose. Apple, Google and Amazon weren't competing for Parler's customers—they were just trying to deny Parler's service. A well-crafted reform to the doctrine of tortious interference could be used to address similar future business disruption, whether it is platforms blocking products catering to conservatives or protesters blocking entrances to abortion clinics.

M. Todd Henderson is professor of law at the University of Chicago Law School.

The views expressed in this article are the writer's own.