The backlash against tech companies has revived interest in antitrust.
Facebook, Amazon, Google, and Apple squirm under fresh scrutiny. Two weeks ago, the Senate probed whether Apple and Google use the iPhone and Android app stores to squash apps that could compete with their products. In late March, President Biden nominated Lina Kahn, a progressive antitrust scholar, for an open seat on the Federal Trade Commission. Weeks earlier, he tapped Tim Wu, a high-profile critic of Big Tech and a law professor at Columbia University, for the National Economic Council. (Trustbusters so inclined can buy a mug celebrating the nominations.) Bills to combat corporate consolidation are percolating in the House and the Senate. The Department of Justice, the Federal Trade Commission, and dozens of state attorney generals are bringing antitrust lawsuits against the largest tech companies.
Senator Amy Klobuchar was a proponent of antitrust long before the “techlash” made it cool. Now she’s the head of the Senate’s antitrust subcommittee. In her new book, Antitrust, she chronicles America’s history of combating monopolies. The former prosecutor explains how a lax approach to mergers from the late 1970s onwards has led to concentration in just about every market, from healthcare to caskets to online travel booking services. During our conversation, which has been edited for length and clarity, we discussed the harm monopolies cause, what the Senate can do about it, whether the Biden administration understands the issue, and the significance of Mark Zuckerberg’s emails.
So: Antitrust. Why should people who don’t make policies, or don’t run big companies, care about this?
Monopolies hurt everyone. If you wonder why your cable rates have been high for years, look at monopolies. If you wonder why, in some midsize cities, it costs so much to get airfares, or how come farmers have to pay more for fertilizer or seeds, or why we don’t have good privacy protections with tech, all of that points to monopolies because they don’t have the incentive to make changes or bring down rates.
One of the arguments you make is that monopolies aren’t just bad for prices they’re bad for workers.
Well, that’s one of the most interesting things. You may have a special area of expertise, and if there’s only one place to go use that expertise, then you have problems with wage negotiation. Probably the best example ended up in a lawsuit, where the tech companies actually had to pay major money out because they had agreed not to hire the employees of the other company.
Right, and you also highlight an example of hospitals colluding to keep nurses wages down as well.
Yeah, exactly. And I think a really important point to make is this isn’t just about tech. With babies’ heart valve drugs—one company [Ovation] cornered the market, and suddenly the prices go from $80 to $1,600 per treatment—that’s just outrageous. And so, I think making the argument to consumers, that yes, the tech part of it is important but it’s not just tech, it’s really important to make the case for insulin and EpiPens. People know when they don’t have a choice of stores, or they don’t have a choice of different products to buy. The hardest part right now is people often don’t know, online travel being the best example. They think they can price compare when 90 percent of [travel booking sites are] owned by two companies.
Right, you see a bunch of different online tools and they’re actually all owned by the same few companies.
Right.
You point out that labor was at the center of the first antitrust push in the U.S., but that monopolies-are-bad-for-workers faded from the antitrust conversation for decades. You write that “antitrust officials have made a major mistake by almost totally ignoring labor markets.” Why do you think that happened?
The conservative court, and the fact that it was really hard to bring cases like that. Antitrust became the province of economists and courtrooms.
Gradually, it got away from our politics, so you no longer had farmers with pitchforks or people marching for union rights, taking on monopolies. It went into 200-page filings about an economic theory and market share.
I think we need to start making the political case, the populist case, for why this hurts. And to me the privacy and the data being mined—yes, we should have federal privacy law—but even more than that, if we had allowed capitalism to really do its job and there’d been more intervention in some of these proposed mergers, we wouldn’t be in a situation where they, in the case of Facebook, bought every potential competitor. WhatsApp. Instagram. Every time they [faced a] real competitor, they bought them up. The words are best expressed by Mark Zuckerberg’s own email that was discovered by my friend [Democratic Congressman] David Cicilline where he said, these brands may be nascent but in the end they could be disruptive to us. That’s not an exact quote, but “disruptive to us,” is an exact quote.
Especially funny given how the tech industry prides itself on “disruption.”
Mmhmm.
To your point about building a political case, you note that the complexity of antitrust law makes that difficult. You quote Justice Breyer who wondered aloud, whether he could patent “a great, wonderful, really original method to teach antitrust law that kept 80 percent of students awake.” That does seem like a problem for trying to gather broad support for antitrust policies. How do you make that political case?
Well, I’m actually pleased that people like John Oliver devoted a whole half hour segment to this, and I tried to commend those that have taken this on. And that’s one of the reasons I wrote the book, and why I have over 100 cartoons. Look back to the founding of our country; the colonists were just mad that they had to buy from the East India Company, right, that was part of the reason they threw the tea in the harbor. And so, we need to harness the anger out there about everything from income inequality and wages, and put it not just into antitrust, but understand it’s related.
One of the cases you address is the breakup of AT&T. What do we learn from that?
AT&T gave us a whole bunch of good stuff; the telephone, being able to call people across the country and across the world. And then at some point, they just kept gobbling up everything in sight. So, they had a vertical monopoly over all of the equipment, and they had a horizontal monopoly over all of phone service. And pretty soon competitors just got shut out. And that’s when the government started to say, “Wait a minute, I bet we could get lower long-distance rates.” So, a major lawsuit ensued. We ended up winning—the government did—and that led to the breakup of AT&T, which even Bob Allen, the former chairman of AT&T, has said made the company stronger. And what happens? Long-distance rates go down, and the cellphone industry goes from being a big old cumbersome phone that was the size of a briefcase, to where we are now. That’s competition. That’s relevant because one of the remedies with companies like Facebook and Google is to divest some of their assets.
You lead the Senate antitrust subcommittee. What’s the most important thing the Senate could do in the near term to address the problems of consolidation that you outline in the book?
Well, that would be beefing up the agencies [the Federal Trade Commission and the Department of Justice’s antitrust division]. They’re a shadow of their former selves, from where they were under Ronald Reagan even, and he was not a fan of doing a lot within antitrust. And passing [Republican] Senator Chuck Grassley’s and my bill to change the fee structure for mega-mergers would put $130 million into agencies that they could use to hire lawyers and the like. You just can’t take on the biggest company in the world has ever known with duct tape and Band-Aids.There’s been big movement to try to get this done, it’s actually on the agenda of the Senate judiciary committee right now.
Got it.
And there’s all the bills we should enact to help news organizations so they can negotiate better, that’s kind of the issue we saw in Australia, that’s the bill [the Journalism Competition and Preservation Act] I have with [Republican] Senator [John] Kennedy. And there’s my major bill [the Competition and Antitrust Law Enforcement Reform Act] to look at exclusionary conduct and update the laws. And that’s what we should do next. Even if we break it into pieces—you know I don’t have a monopoly on good ideas—[laughs] that was a monopoly joke. And so, we can divide and conquer basically.
Do you have the Republican votes for those measures?
I believe I have the Republican votes for the Klobuchar/Grassley bill, yes. And I believe that—if push comes to shove and there was a vote—we would have the votes for newspaper negotiations. As per my bill, you know, I’m still pushing people but I think for pieces of it I definitely would.
Antitrust was not a big part of President Biden’s campaign, but he has tapped critics of Big Tech for important antitrust roles. Have you talked to the Biden administration about this issue? Does it seem like they get it?
Yes, yeah, I would say that they do. And I think that was exemplified by the fact that they put in someone as out-of-the-box thinker as Tim Wu in the White House and Lina Khan nominated for the FTC. I think they get we have a major monopoly problem and I especially think they understand the issues with tech.
