This past July, the House Antitrust Subcommittee summoned the CEOs of Google, Apple, Facebook, and Amazon to a hearing on monopolies in the tech industry. At times, it sounded like any other congressional hearing. There were grandstanding politicians, evasive witnesses, and a few moments of unintentional comedy (Republicans and Democrats alike demanded to know how their vital campaign emails had ended up in their constituents’ spam folders).
But the subcommittee chair, Rhode Island Representative David Cicilline, also struck a convincing note of urgency. “Prior to the COVID-19 pandemic, these corporations already stood out as titans in our economy. In the wake of COVID-19, however, they’re likely to emerge stronger and more powerful than ever before,” he declared. “Because these companies are so central to our modern life, their business practices and decisions have an outsized effect on our economy and our democracy.”
Barry C. Lynn, author and executive director of the Open Markets Institute, an antitrust advocacy group, has been sounding the alarm about monopolies for years. In his new book, Liberty from All Masters, he insists that monopolies are ultimately a political problem. As surely as Americans are citizens in a democracy, they are citizens in a political economy. But with their far-reaching and subtle powers, monopolies undermine our agency in the economic sphere of life. Indirectly, they threaten democratic self-governance, too.
Lynn champions what he calls “the American system of liberty.” This system, rooted in the founding generation’s ideas, insists on a mutually supportive relationship between economic and political liberty. More than freedom from government interference, this liberty is a positive “conception of the citizen as a producer, maker, thinker. The citizens’ primary responsibility, according to this line of reasoning, is to fight for the liberty to sell or otherwise share what she has created, without restriction, at fair market prices.” An open marketplace, Lynn thinks, is a genuine public space. It is a place where we gather as equals to buy and sell, learning valuable information about what we and our neighbors value in the process. It’s also a place where we might recognize “dangerous concentrations of economic and political power.”
A monopoly is a massive concentration of economic power. It occurs whenever a certain firm becomes inescapable, owning a vast share of the land, or crucial infrastructure (like a railroad), or technology (like a ubiquitous search platform). But the common denominator is its ability to dictate terms, to exercise arbitrary and unaccountable power over a market. Monopoly power has grown precipitously since the 1980s, and it possesses obvious dangers and some more subtle ones. “We are accustomed to thinking about the ways that monopolists harm us as buyers,” Lynn notes, “but the ways monopolists harm us as makers and sellers of things can be far more dangerous to us as individuals and as a society.”
Obviously, unregulated monopolies can be bad for buyers. The monopolist can raise prices without suffering an equal loss of demand and can also prevent products from coming to market, frustrating the public’s interest in new or improved goods. The big tech platforms are bad for buyers in less obvious ways, too. They seem to make everything available, but, as Lynn points out, they do not treat all buyers equally. On the contrary, a company like Uber uses “all of the data it collects on its riders and drivers . . . to set different prices or payments for the same service on a person-by-person basis.” American law has traditionally forbidden this kind of price discrimination when it comes to access to essential services like taxi fleets and phone networks.
Monopolies can also exercise power over sellers. Consider the plight of the modern chicken farmer. “Under the traditional system,” Lynn writes, “farmers raised and fed their own birds, then carried them to markets where they sold them.” A farmer could expect his prices to reflect his customers’ estimation of the birds. Not so today. Huge corporations like Tyson now stand between farmer and customer at every stage of the process. Tyson provides loans for barns, sells the chicks and feed to the farmers, and decides the price of the grown birds—on a farmer-by-farmer basis. The result, one farmer tells Lynn, is a “kiss-ass economy.” The sellers must please “the master, the boss, the foreman” instead of the public.
Americans have a long history of using antitrust and so-called common carrier laws used to forbid this kind of price discrimination, against both buyers and sellers. Legislation like the 1910 Mann-Elkins Act prevents telephone, telegraph, wireless, and pipeline companies from charging customers differently for using the same service. These laws were based on the idea that once a piece of infrastructure or technology becomes so ubiquitous that people need it to do business, that thing needs to be regulated such that whoever controls it can’t wield their power arbitrarily. For 200 years, Lynn marvels, “we used such laws to ensure that any corporation that controlled access to a vital service treated every person who depended on that monopoly the same.” Equal treatment mattered more than potential profits.
The Obama administration originally promised to revive antitrust law, in order to “help America’s [poultry] farmers get something like a fair shake.” In the face of Republican opposition, however, it dropped the issue. The monopolies that have the greatest reach, however, are the tech giants. Google, Amazon, and Uber are profitable in no small part because of their power to discriminate. They gather tremendous amounts of information about their users and then use that information to offer different users different deals depending on their individual habits. Uber’s price discrimination, for example, goes far beyond surge pricing: “Uber’s system is designed to carefully study your travel habits and shopping habits, your spending habits on Monday versus your spending habits on Friday, all so it can figure out how to charge you the maximum amount for any particular ride.” They would call this system efficient; Lynn calls it an “unprecedented power to control and manipulate individual companies and people, and the economy as a whole.”
Monopolies influence what gets made, too. As it grew from a local chain in the 1980s to a retail behemoth in the 2000s, Walmart not only dictated how companies should manufacture their products, it also decided what prices they could charge for items such as “jeans, pickles, bicycles, pet food, coolers, and other consumer goods.” Walmart may not just have been the only retailer around, but it and a few others also “enjoyed the power to essentially govern the production and distribution of everything from medical devices to office supplies,” according to Lynn. If you want to make it, the “supergiant” retailer has to approve it, before a customer ever sees it.
The tech giants have taken these strategies to a new level. They have captured huge shares of the retail market, making or breaking small producers with their policies. The way they undermine economic liberty, though, may go even deeper. Lynn traces American ideas about property back to 17th-century England, when liberal thinkers like John Locke defined “property as whatsoever a man might make or grow with ‘his labour.’ ” Locke imagined a yeoman farmer who owned nothing save his own body but, by mixing his labor with the earth, brought forth fruit that was his by right. Noticeably absent, of course, was the feudal landowner. Amazon, Facebook, and Google have, in a way, brought feudalism back. All of us, whenever we use their websites, create the data that makes these companies rich. We may make it unintentionally, and absentmindedly sign it over through user agreements, but we are nevertheless uncompensated producers whenever we are surfing the Internet.
Finally, monopolies also hold power over workers. Fewer firms mean fewer opportunities to leave one job for a better one, or to set up a bidding war for your services. “Wages across America today are 20 percent or more lower, relative to the economy as a whole, than a generation ago,” Lynn points out, and “the main reason for this decline is that the monopolists who captured control over our markets have exploited their power to drive these wages down.”
Lynn could take his point even further. Even smaller companies can curtail employees’ liberties in outrageous ways, and especially if they enjoy local monopoly. They can track your movement on the job and monitor your social media off the job; schedule your bathroom breaks and pressure you to donate to political candidates; require arbitration agreements, limiting your access to the courts, and enforce non-compete clauses, effectively making themselves an absolute monopoly in your chosen profession. Franklin Delano Roosevelt called monopolies “a kind of private government, a power unto itself—a regimentation of other people’s money and other people’s lives.” Today, even smaller firms act like private governments. That is, with arbitrary and unaccountable power.
But can’t the employees quit? Technically, yes, but the more powerful the monopoly, the fewer options they will have once they do. And if they can’t find a job, poverty awaits. Companies wield power over their employees not only because jobs are scarce, but also because there isn’t much of a social safety net anymore.
Concentrations of economic power have waxed and waned over the course of American history, but the recent consolidation has a pretty clear origin point: the jurisprudence of Robert Bork. Bork’s 1978 book, The Antitrust Paradox, revolutionized antitrust law. It existed, he argued, only to promote consumer welfare. So long as economic consolidation resulted in efficiencies (and therefore lower prices), firms didn’t run afoul of antitrust law, no matter how much market share they controlled. As Lynn points out, Bork replaced the traditional American citizen-as-producer with a citizen-as-consumer. Producers need an open market, a level playing field. Consumers want more stuff at lower prices. That requires manufacturing, distribution, and retail on an enormous scale, and so, asks Lynn, “who, ultimately, is the best friend of the consumer? The big monopolist.” Instead of checking monopolies, Bork’s antitrust interpretation encouraged them.
It would be hard to overestimate Bork’s influence. Reagan put Bork’s ideas into practice in the 1980s, and Democrats followed suit in the 1990s (with the notable exception of the Clinton administration’s antitrust suit against Microsoft). After 40 years of bipartisan Borkism, Lynn says, “never have Americans seen so much control in so few hands.” Yes, Lynn is casting a pox on both our parties’ houses, but his underlying message is that monopolies are not inevitable. He ends his book with a call for renewed civic engagement, with the end goal of bringing about more active antitrust enforcement, “structuring and regulating open markets designed to ensure an absolute liberty to share ideas and goods with one another, to protect our democracy through the careful distribution of power.” If monopolies result from decisions in the political sphere, they can be unmade there, too.
It’s especially important to combat monopoly in the political sphere, Lynn thinks, because concentrated economic power threatens democratic citizenship. The founding generation drew a tight connection between property and the powers of citizenship. If you had the former, you could exercise the latter. “The reasoning here is simple,” Lynn writes. “If citizens do not depend on any other person for sustenance, then they are able to think critically and speak freely in public. Only someone who never need beg anything of anyone . . . can be counted on to represent his own personal interests, and the interest of the public, at all times.” Perhaps the easiest thing to do is reinvigorate antitrust enforcement. A few zealous regulators on the Federal Trade Commission and in the Department of Justice could make a huge difference. If an administration wanted to go even further, it might consider universal basic income, universal basic capital (dividends from a sovereign wealth fund), or even demanding that we get paid for the information we create online (an idea endorsed by the tech wizard Jaron Lanier). A one-two punch of regulation and redistribution would go a long way toward creating economic independence and undoing the past 40 years of wealth concentration.
Many antitrust laws are still on the books, and federal agencies are supposed to be looking out for the public interest. Even so, monopoly power seems to make collective political action difficult. Much of the blame must lie with the tech giants themselves. They don’t just engage in massive discrimination, they micro-target us, dividing Americans into smaller and smaller groups until we’re all alone. Lynn fears that “as pricing and other forms of information are personalized for each individual . . . [citizens] are fast losing their ability to identify common interests.” For example, digital algorithms and news conglomerates treat us as news consumers, feeding us the stories and opinions we want to read (including the opinions we love to hate). This may be titillating on an emotional level, but it leaves us without the complicated information necessary for good decisionmaking in the public sphere.
Tech monopolies seem to offer amazing new freedoms. We can buy anything on Amazon, find any information on Google, or become friends with anyone in the world on Facebook. But they also make the rules, like private governments. They set prices and decide who can sell. During the House hearing, they routinely justified their practices as “good for consumers,” because to them, that’s what Americans ultimately are.
Increasingly, they hold power over our lives. What does that look like? In the middle of the House hearing, Georgia Democratic Representative Lucy McBath shared a story from a small bookseller. The bookseller’s business grew quickly until it started to eat into Amazon’s textbook market share. Then, without warning, Amazon started to restrict her sales. She, her employees, and their dependents faced sudden financial ruin. “We have contributed . . . much to your business,” she pleaded in an audio clip McBath played at the hearing. “We followed all the rules that were set by you. Please, just help us in owning our livelihood. We beg you, there are 14 lives at stake. Please, please, please help us get back on track.”
To his credit, Amazon CEO Jeff Bezos promised to get in touch with McBath’s office. He would make this right! McBath told him he was missing the point, and Lynn would probably agree. If American liberty means anything, it means you shouldn’t have to beg a rich man for your life and livelihood in the first place.