On Wednesday, the House antitrust subcommittee will hear testimony from the CEOs of the Big Four tech firms: Amazon, Apple, Facebook, and Google. Aside from possibly bringing together more wealth than ever before assembled in a congressional hearing, the event marks a triumph for a nascent movement of antitrust scholars who have revived the debate about concentrated economic power in the United States. Members of Congress will be able to detail how large tech platforms abuse their position to invade user privacy, muscle out or buy up competitors, and gouge suppliers and partners—behaviors that ultimately damage innovation and exacerbate inequality.
These problems have only grown worse with the coronavirus pandemic, as smaller businesses succumb to the economic damage, and changing patterns in teleworking and retail accelerate in ways that make Americans more reliant on technologies produced by a few firms. Shares in the Big Four, along with Microsoft, Netflix, and Tesla, added $291 billion in market value in just one day last week. The dangers of Big Tech domination are more profound now than they were even a few months ago.
But the hearing may also have the unintended consequence of associating the problem of economic concentration with Big Tech alone. The truth is that, even if Congress somehow decreed the breakup of all four tech giants, the U.S. would still have an astounding number of industries controlled by a tiny number of firms. That’s because the structure of modern capitalism favors companies that operate at once-unimaginable scale, in the absence of a government will to prevent monopolies from forming.
Lawmakers and the public should be concerned about the surveillance networks by which Facebook and Google—which dominate the digital-advertising market—track users, build data profiles on them, and serve them customized ads. But millions of rural Americans cannot access the internet to begin with, in part because telecom companies harass, fight, and induce state legislatures to pass laws restricting municipal broadband. Across America, people send their kids to Starbucks parking lots to piggyback on the wifi and complete their homework.
Amazon’s rapidly expanding e-commerce empire—and the potential consequences for Main Streets and municipal tax bases across the country—is definitely worth worrying about. But among the other forces squeezing out small retailers are dollar stores, a market segment dominated by two firms that together have about six times more outlets in America than Walmart. Last summer in Marlinton, West Virginia, I saw a Dollar General right next door to a Family Dollar. Despite the pandemic, Dollar General still plans to open 1,000 new stores in 2020.
Software developers who want to sell apps to iPhone users must do so through Apple’s App Store, which spells out rules that they must follow and collects up to 30 percent of sales. This is little different from the situation of small farmers, who must raise livestock to the exacting specifications of the meatpacking giants and can lose their livelihoods on those companies’ whims. And just as Amazon sometimes undercuts the smaller third-party sellers that use its platform, Big Agriculture competes directly with smaller suppliers; the top four hog firms, which control around two-thirds of the market, typically own farms, slaughterhouses, warehouses, and distribution trucks, every step from the pig trough to the dinner table.
Whether you are shopping for pacemakers, sanitary napkins, or wholesale office supplies, you will find very few sellers. You think you have choices in grocery aisles or at car-rental counters, but the majority of consumer products come from a handful of companies. Competition is hardly stiff when even many store brands are just renamed versions of market-leading products; at Costco, the batteries come from Duracell and the coffee from Starbucks.
To focus the discussion of monopoly on the tech sector is to minimize the scope of a problem long in the making. Forty years ago, the government essentially stopped policing industry concentration. The conservative legal theorist Robert Bork—later a failed Supreme Court nominee—and his allies in the law-and-economics movement argued that any merger making businesses more efficient must be approved, and that a larger scale generally increases efficiency. Bork’s analysis gained enormous power in the courts and the Reagan administration. The lawyers and the bankers who handled mergers and acquisitions loved it.
All Americans suffer from the wave of corporate consolidation that followed. Workers have fewer bidders for their labor and cannot secure decent wages. The number of start-up businesses has plummeted since the late 1970s. Products and services grow worse, and companies with little competition have no incentive to improve them. Concentrated supply chains are more vulnerable to disruption, as the coronavirus crisis has shown. Fewer firms shovel more economic gains to smaller groups of executives. Politics becomes unbalanced as monopolists bend lawmakers and regulators to their will. In a variety of industries, the pandemic has added to the burden on small companies while heightening the advantages enjoyed by their larger rivals that can afford to wait the catastrophe out.
The unique challenges presented by Big Tech at least receive generous media coverage. But headlines about the damage non-tech behemoths have done are waiting to be written. Senators Elizabeth Warren and Cory Booker are investigating a budding scandal of large meatpackers using the coronavirus crisis to claim shortages at home while shipping record levels of pork to China. A decades-long consolidation of the banking industry was routinely justified in the name of consumer welfare, but millions of Americans are still unserved—a problem that became evident amid America’s fumbling delivery of stimulus payments to citizens. Market concentration is an underappreciated factor in the destruction of Black-owned businesses.
Prohibiting mergers and breaking up companies that contribute to such negative effects would allow America to be governed democratically, rather than by the corporate boardroom. Congress should scrutinize the concentration in internet search, social media, e-commerce, and telecom hardware. But to topple monopolies, lawmakers need to cast a wider net.