America’s cops on the competition beat have grown lazy. They are not enforcing antitrust laws passed during the first Gilded Age to level a playing field tilted by powerful corporations for their own benefit; that’s why America is stuck in a second Gilded Age of economic inequality.
These officials have been lulled to sleep by decades of corporate-funded pseudo-economics. Democratic and Republican appointees alike at the Justice Department’s Antitrust Division and the Federal Trade Commission have acted like laws passed to stop lawless corporate monstrosities like Standard Oil and the railroad trust from strong-arming competitors don’t apply in the 21st century. As a result, companies like Facebook, Apple, Amazon and Google remain unchallenged while growing ever larger.
Senator Elizabeth Warren’s technology platform reflects a common sense populist rejoinder to that failed bipartisan consensus. If big corporations elbow the little guy, there is probably a rational reason for their corporate violence and it probably isn’t to benefit consumers or the broader economy. (Unless, of course, you like having your data stolen and traded like a commodity, believe start-ups should have no aspiration other than to be absorbed by a bigger company, or think small business is un-American and passe.)
American antitrust law is built upon the timeless insight that the ability of dominant corporations’ to sustain dominance unfairly threatens our economic and political liberty. Since unfettered corporations can entrench themselves unfairly, competition regulators should block both mergers and corporate practices that allow already powerful corporations to stifle would-be competitors.
Regulators have failed that critical task. Did Amazon grow “naturally” from a plucky online bookseller to a trillion dollar behemoth due primarily to brilliant innovation? No. As technology publication Wired demonstrated conclusively, Amazon grew via a two-decade long acquisition spree, buying up competitors in an incredibly wide array of fields from media, robots and energy to logistics, groceries and artificial intelligence.
Europe’s antitrust regulators have issued three massive fines totaling nearly $10 billion in the past two years against Google for exploiting its dominance to illegally injure competitors. Europe is outstripping the United States in its energetic law enforcement. That might be because, in America, a revolving door of Google employees went in and out of the Obama administration while the Republican Party actively opposes reining in corporate bad behavior.
That backdrop of technology companies cheating competitors while buying bipartisan political influence helps make the scope of Warren’s vision clear. The Warren “administration would appoint regulators committed to reversing illegal and anti-competitive tech mergers.” That means a Warren administration would undo the deals that allowed Google, Amazon and Facebook to “buy” the appearance of innovation while actually preventing fair competition from flowering.
Second, Warren would prevent future tech behemoths from forming by requiring “large tech platforms to be designated as ‘Platform Utilities’ and broken apart from any participant on that platform.” That means companies cannot manipulate to their own advantage any other platforms they run. It’s as if small market NBA playoff teams had to play every game on the road game and the home team got to hire the referees. If that’s unfair competition in basketball, why is it OK in the “free” market?
Can Warren’s plan work? History shows it can. Senator Richard Blumenthal reminds us that, ironically, Microsoft’s success was largely the consequence of antitrust litigation by the U.S. government against once-dominant IBM. When Microsoft itself became an abusive monopolist 20 years ago, antitrust litigation against it led to the next generation of tech giants. Blumenthal notes it “is a cruel irony that the immediate beneficiaries of the Microsoft antitrust case — namely, Google, Facebook and Amazon — have now become behemoths themselves. But this is how the innovation cycle works: It creates room for saplings to grow into giants, but then prevents the new giants from squashing the next generation of saplings.”
Warren has a plan to rein in too-powerful tech giants and restore competition raising the question of how will Warren’s competitors in the Democratic presidential primary respond to her plan?
Jeff Hauser is director of the Revolving Door Project, a project of the Center for Economic and Policy Research. Its purpose is to increase scrutiny on executive branch appointments and ensure that political appointees are focused on serving the public interest rather than personal or professional advancement.
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