How competition forced Barbie to step into the 21st century

Mattel has produced a film in which it is happy to allow light criticism of the company and its Barbie brand — as long as the criticism is within the commercial pink profit-making box.

For decades, Barbie dominated the fashion doll shelves around the world. Now Mattel has made a blockbuster film, and Barbie continues to shape our imagination of womanhood, success, ambition, social hierarchy, beauty and possibility. The movie strategically threads the needle of continuing tight corporate control over what we as consumers think about Barbie while superficially leveraging years of critique of the brand and its messaging. 

The “Barbie” film focuses on the gender divide but doesn’t begin to touch the more damning, though connected, long history of the brand: anti-competitive practices, economic espionage, scorched earth litigation strategies and ​—​ tightly connected to its market dominance and its focus on preventing change​ — ​deaf ears on issues of race, ethnicity, sexuality, childhood, body image and global equity.  

With the movie’s caricature of Mattel executives as grown white men selling a hyper-sexualized plastic doll to little girls it may seem that Mattel is poking fun at itself, but the self-criticism is carefully curated, narrowly limited and unthreatening. Viewers are left with the illusion that they are free to reimagine Barbie, remix the message and contribute to our collective account of one of the world’s most recognizable cultural icons. 

What we don’t see is the less-known and more damning reality of how Mattel has dominated the doll industry and crushed remixing and innovation. In my book, “You Don’t Own Me: The Legal Battle that Revealed Barbie’s Dark Side,” I uncovered the rollercoaster battles between Mattel and its competitor — MGA Entertainment. MGA is the only competitor that managed​ — after five decades​ — to meaningfully compete with Barbie’s market share by developing a new fashion doll: Bratz. “You Don’t Own Me” is being developed into a mini-series by CBS. 

The 10-year legal battle between Mattel and the privately-held​, smaller, MGA began in 1998, when a former Mattel employee, Carter Bryant, dreamed up a bratty, contemporary, multiethnic doll. 

In court, Bryant described being inspired by a group of girls coming out of a school. (Some viewers interpret the four real girls Barbie encounters in the movie as a reference to the original Bratz quartet.) Bryant left Mattel, sold the idea of Bratz to MGA, and MGA developed a new brand with overnight success — a ​diverse ​group of fashion dolls and the first dolls to present a real market challenge to the Barbie brand in five decades. 

After Bratz became a success, Mattel sued both Bryant and MGA, claiming ownership over the competition. Mattel admitted to having no intention of developing a contemporary bratty doll that would compete with Barbie, but argued that the Bratz line belonged to Mattel because Bryant had signed a generic contract assigning “all inventions as defined, conceived or reduced to practice at any time in his employment.”  

In one internal memo, Mattel executives revealed the anti-competitive goal of their MGA litigation, describing the Bratz competition as a “rival-led Barbie genocide.” Fighting Barbie in court would be unimaginable for most competitors; Mattel’s estimated legal expenses exceeded $400 million. As a defendant, MGA spent nearly $200 million on legal fees alone. ​Bratz’s annual sales went from $800 million before the litigation began to a mere $50 million by the sixth year of the taxing legal disputes. Bryant lost his fortune and left the toy industry. 

The battle illuminates important issues about business, employment and intellectual property. Mattel’s history underscores the enormous power of corporate employers, the weaponized use of intellectual property to stifle innovation, the quick ways in which business ethics collapse, the draconian use of noncompete and nondisclosure agreements and pre-innovation assignment clauses to maintain dominance and power, as well as the unequal, and often devastating, playing field of the litigation process. 

As the ​Circuit Court of Appeal noted, ​Mattel appears in court regularly. The toy company has sued artists, musicians, competitors, inventors and their own employees since it was founded. 

Barbie and Ken were named after founder CEO Ruth Handler’s children: Barbara and Kenneth. But there is another Ken behind the story of Mattel’s market success: the Nobel laureate economist Kenneth Arrow. 

Like the tech industry, the doll industry follows Arrow’s predictions with precision. For decades, the dominant actor ​(​​Mattel​)​ had little incentive to innovate or to evolve with the times. Bratz offered innovation that the consumer market craved​​:​​ ​ethnic diversity and female empowerment​,​ two of the aspects where Barbie had lagged​.​ As a quasi-monopolist, Mattel had a steel interest ​in maintaining​ the dominance of its single best-selling product, not ​introducing​ more choices. ​As Arrow predicted​, Mattel was not willing to cannibalize Barbie once it dominated the market; in fact, the word cannibalization appears with striking repetition in Mattel’s internal memos.  

The more industries become concentrated, the greater incentive there is for the remaining players to weaponize the law and chill innovation rather than compete fairly in the market. One of Mattel’s tools in forestalling competition was to require its employees to sign restrictive covenants, including non-disclosure agreements and broad pre-innovation assignment contracts. These make entrepreneurship a highly risky business for anyone who, like Bryant, dreamt of leaving Barbie’s dream house and working in the industry. Research has shown that restrictive covenants chill talent mobility, reduce innovation and perpetuate inequality. 

Market competition and social diversity are intrinsically connected. While Mattel, as the dominant incumbent, attempted to crush competition, parody, critique and innovation from the outside, the company was ​incredibly slow in introducing its own change​ from within. Mattel persisted in its belief that new ideas — including ethnically diverse dolls and more realistic body dimensions — would cannibalize Barbie.  

New market entry keeps the incumbents fresh, and it is the consumer that wins. A startup culture has an outsized positive effect on innovation, job creation and economic growth. Without competition, corporations lack the incentive to innovate and regenerate. They become stagnant. 

It was only after the 10-year-long battle with MGA that Mattel began to innovate again. The company ​ousted its CEO​, replaced C-level leadership, introduced ​new body shapes​ to Barbie​, ​​included far more ethnic and cultural diversity​ in its doll line​ and produced the mega-hit “Barbie” movie. In other words, even the very limited corporate-sponsored self-reflection about Barbie as a brand that we see in the movie could not have happened without competitors, artists and consumers resisting Barbie’s market dominance and Mattel’s ownership over our collective play and imagination.  

What every industry needs is a competitive market in which companies use strategies that center around innovation and better products and services, not restrictive employee contracts and litigation to ward off competitors. This year, the Federal Trade Commission has announced a new rule that would nationally ban noncompetes, as well as “de facto non-competes” — contracts like the ones used by Mattel that overly define what is proprietary and confidential information. This is a crucial step in the right direction to fuel competition and innovation in all industries. 

Orly Lobel is the Warren Distinguished Professor and director of the Center for Employment and Labor Policy (CELP) at the University of San Diego. She is the award-winning author of “Talent Wants to be Free Why We Should Learn to Love Leaks, Raids and Free-Riding,” “You Don’t Own Me”  and “The Equality Machine: Harnessing Digital Technology for a Brighter, More Inclusive Future” (PublicAffairs).