So Big Tech is finally about to face an antitrust reckoning, both from Trump administration regulators and the Democratic-controlled House? I’ll believe it when I see it.
Microsoft spent its “lost decade” in the barrel when antitrust enforcement was slightly more energetic than today. Now it’s bigger than ever. Microsoft is even revered as a statesman-like elder among technology giants, unlike bad bad Amazon, Apple, Google and Facebook.
Unless something fundamental changes, this will mostly turn into the Lawyers’ Full Employment Act of 2019. Worse, the exercise won’t get to the real issue: Gigantism across the economy.
It’s not as if Big Tech doesn’t deserve to be broken up and face effective regulation (I wrote about this more than a year ago).
One big example: Facebook was intimately involved in the disinformation campaign during the 2016 presidential contest, when between 78,000 and 80,000 votes decided the Electoral College. Facebook wants to “own” the news but doesn’t follow accepted standards of journalism.
Closer to home, Amazon has clear-cut the brick-and-mortar retailers thanks to its convenience, selection, speed, pricing power over producers — and early advantage in tax avoidance.
Privacy is a big issue. But who should be surprised that these giants would monetize your personal information?
And the enormous concentration of market power by the tech giants attracts criticism. This will be a focus of Rep. David Cicilline, D-Rhode Island, who heads the House subcommittee on antitrust.
Yet this is a problem across the economy, as the Open Markets Institute, an anti-monopoly think tank, illustrated in a report last year. It laid out the rising domestic concentration of 32 industries in recent years.
For example, in 2017 the three largest drug-store chains held 67 percent of market share. In 2002, the top three accounted for only 37 percent.
Airlines’ Big Four controlled 76 percent of market share last year, compared with 38 percent in 2005.
According to the Federal Deposit Insurance Corp., 9,144 commercial banks did business in America in 1997, before deregulation. By 2017, the number had fallen to 4,918. But that’s not the worst of the problem (most of these are small institutions with small market share).
JPMorgan Chase, Bank of America, Citigroup and Wells Fargo control half of U.S. bank assets, a much larger concentration than 20 years ago.
With the repeal of the Glass-Steagall Act in 1999 (Republican Congress, Democratic president), big banks roamed into areas of finance once deemed too risky. They “engineered” exotic financial derivatives, whose danger was little understood until the subprime meltdown triggered a cascading panic in 2008.
The big institutions all played varying roles in the crisis — but they ended up even bigger. And with the Trump rollback of many modest regulations from the Obama years, the big banks are still dangerous.
You get the idea. The monopoly and cartel problem is not confined to Big Tech.
Data on industry concentration was once compiled by the Federal Trade Commission, but the practice ended in 1981 as the pro-merger Reagan administration took control. Since then, Wall Street has profited mightily from the garage sale of American business and industrial power that it took a century to create.
Gigantism by its nature stifles competition. This leaves customers with fewer choices, most cities and towns hollowed out with fewer local institutions, and workers with fewer job options having weaker bargaining power.
Monopolies and cartels are linked to slower growth because they stifle new business formation. They increase inequality because of the effects of less competition and business dynamism on labor markets, as economists Jason Furman and Peter Orszag observed.
These giants also have an outsized role in politics thanks to the Citizens United decision, which essentially makes corporate money “free speech” that can’t be regulated. Today’s Supreme Court is even more “conservative” than the one that decided that landmark case. This would be among the hurdles that trustbusters would face.
This doesn’t mean the fight isn’t worth it. But don’t stop with Big Tech.