The New Monopolists

In their Sunday Review, the New York Times published an op/ed titled “Is It Time to Break Up Google?” The author made a thoughtful argument that the massive growth of Big Tech (he names Google, Facebook and Amazon by name) has resulted in several “natural monopolies” that stymie innovation and competition in the global economy, broadly threaten consumers’ privacy, contribute to inequality and are hurting democracy.

One thing that seems clear to me is that the vocabulary we use in these debates is inadequate to the task. Our dominant idea of “monopoly” is mired in history and doesn’t work in the present context. Neither Google nor Apple are really comparable to Standard Oil or the Northern Securities Company or even Ma Bell. They haven’t cornered the market in any raw materials, nor bought up essential infrastructure to exert rents. For the most part, the companies of Big Tech simply conquered their respective markets the old-fashioned way, by building and acquiring product ecosystems that their users generally like and find pretty difficult to leave (even if they wanted to).

Yet we forget at our peril: monopolies are, on balance, harmful to a society, whatever silliness Peter Thiel is peddling today. The capitalist imperative itself leads monopolies to suppress competition, stifle innovation and force consumers to pay higher prices, and history is replete with examples of this. But as they relate to digital platforms, the real harms of monopoly are more subtle, and less appreciated, precisely because they are brand new to us. Our very identities, relationships, exercises of citizenship and the culture itself are all increasingly mediated on the internet, primarily on walled-garden private platforms built and engineered specifically to control and manipulate users in order to deliver advertising profits to shareholders. Indeed, that is literally their foundational business model.

The figures about the overwhelming dominance of Google, Facebook, Apple and Amazon in their respective markets are far from irrelevant, of course, but let’s put them aside for a sec. What is more troubling is the amount of power that each company holds with its data. Google wields tremendous influence on nearly all touchpoints of every human being’s interaction with the internet. Facebook does too, and has the doubly pernicious effect of actively manipulating the attention of large swaths of the population — in order, say, to swing elections. Apple makes its own public policy about which companies to allow on its App Store and what data it will share upon legitimate requests from law enforcement. Amazon is both eating the entire retail industry and positioning itself as a fundamental part of the internet’s infrastructure.

In other words, the new monopolies won’t look like Standard Oil and U.S. Steel, so stop pattern-matching for them. Instead, the new monopolies of our current Gilded Age will rely on data, digital platforms and the seductive illusion of consumer choice.

The new monopolies of our current Gilded Age will rely on data, digital platforms and the seductive illusion of consumer choice.

Personally, this is an issue that I have come around on over the last few years. I credit Zeynep Tufecki, Maciej Cegłowski, Tyler Cowen, Nicholas Carr and a lot of reading about American history to get me to this point, where I have begun to be persuaded that individual privacy, the hegemony of Big Tech and the broader challenges our society and political system are encountering are all interconnected. On this issue, and increasingly on others, I find my opinions challenged and sharpened much better by longform reading (in books, magazines and blog posts) than on twitter — especially, I hate to say, tech twitter.

As Maciej points out in this excellent talk, we are building ourselves into an era of “surveillance capitalism” that chills free expression, suffocates upstart competition and has deeply negative political consequences. I oppose monopolies because I am a capitalist, but I distrust them also because the extreme concentration of economic power in one sector breeds arrogance, bad behavior and moral blindness.

Because today’s monopolies are unlike those of a century ago (when most of the controlling anti-trust legislation was passed), regulatory remedies will also be new. It probably wouldn’t make sense to break Google or Facebook into many different companies.

I do think that more closely scrutinizing acquisition strategies, mandating the leasing of company patents, and/or instituting an EU-style “right to be forgotten” for individual users would each be very meaningful steps in limiting their power.

That said, I am pessimistic that anything will change.

Unfortunately, almost none of these steps are likely to come to pass.

Our political institutions in the United States and Europe today are weaker than they’ve been in many, many decades, and I don’t see them strengthening anytime soon. The political environment is choked with culture war and is probably incapable of weighing serious and complex economic and socio-political issues like these (a point that Cowen makes very well in his latest book, The Complacent Class). Instead, Big Tech has taken to political lobbying in a big way. In 2016, Alphabet spent more on lobbying than Comcast, Lockheed or ExxonMobil. Contrary to the hopes of the #resistance, Big Tech’s royalty came when summoned by the president right after his election. Facebook, Apple, Amazon and many others are dramatically ratcheting up their lobbying spending in a manner that you may differentiate from bribery however you wish.

In the absence of any serious regulatory challenge to their hegemony, the new monopolists of Tech will wield their hammers selectively, but firmly. In many cases, due to dual-class shares at companies like Google or Facebook, even company shareholders themselves will get little say in how the tech monopolies operate — if Larry or Sergey or Mark want a thing done, it will be done.

Eventually, the pendulum may swing back. But I wouldn’t place any bets on that happening anytime soon. In the meantime, it will be a good time to be a big, successful tech company — and a bad time to go compete against one.