Two-Day Shipping isn’t All Rainbows and Sunshine: A Response to Tim Wu’s The Curse of Bigness, Antitrust in the New Gilded Age
America’s political climate as of late is a powder keg waiting to explode, supercharged with tension that hasn’t been seen in a very long time. With widespread scapegoating and gaslighting, and renewed sentiment of xenophobia, racism, and nationalism, Americans are constantly fighting but never getting to the root of these problems. On the left: a summer of rioting. On the right: an angry mob storming Capitol Hill. America has always been politically divided, but this is a whole new level of polarization, indicative of some greater underlying issue.
So what’s the big change behind the recent wave of political conflict in America? In The Curse of Bigness, Antitrust in the New Gilded Age, policy advocate and professor of law Tim Wu asserts that many facets of today’s explosive and extremist political climate can be attributed to the return of concentrated economies and private power. This in turn leads Americans to demand change, supporting populist leaders that promise to stand for the everyday citizen, while blaming innocent demographics for our problems. By walking the reader through the history of American antitrust and the lessons we should have learned, Wu argues that antitrust law has lost sight of its original goals and has failed in its core mission of protecting democratic rule, and he proposes initiatives that will reinvigorate it and restore a check on private power.
Tim Wu’s account of antitrust makes a strong argument as to why we should avoid repeating past mistakes. He outlines how the first antitrust law, the Sherman Act, emerged as a response to the first massive wave of economic consolidation during the Gilded Age, with the rise of industrial titans such as John D. Rockefeller and J.P. Morgan. The story continues with the development of the big case tradition, in which “trustbusters” throughout the years would spearhead the prosecution and breakups of monopolies. This approach, as well as the interpretation of antitrust law, would morph over the years until it almost completely lost its teeth during the Bush administration. Enforcement of antitrust law shifted to Robert Bork’s standard of consumer welfare, specifically examining price effects, which Wu believes to be a weak interpretation of the Sherman Act that strays away from its intended purpose. With antitrust at its lowest point and the emergence of the internet, new tech monopolies were allowed to form using the same tactics as those in the Gilded Age. Based on the ideas of Louis Brandeis, Wu outlines a Neo-Brandeisian agenda to restore antitrust law to its former glory.
Wu makes a concise yet compelling argument for the breakup of the modern tech monopolies regarding the private power that threatens the democratic process, but he leaves the reader to determine their own perspective on wealth inequality. Wu himself admits that “it would be an exaggeration to suggest that antitrust provides a full answer to either inequality or other economic woes,” directly stating that his book does not intend to target wealth inequality. This is not a flaw of his writing; he intentionally limits his scope to portray antitrust as a check on private power while other benefits are secondary. Regardless, Tim Wu does an excellent job of arguing the angle he chooses to focus on, but he failed to fully convince me from a more personal stance why I should be supporting antitrust, leaving me to find more information on my own.
Wu’s case against the consolidation of private power is virtually self-explanatory, but it is almost as if he fears the potential of what it could lead to, rather than what it is now. Today’s tech trusts have consolidated using similar methods to the original trusts, but their current behavior appears far different in an almost benevolent way. Without further elaboration, a reader would likely overlook the most heinous actions of the tech trusts that take place behind the scenes. At first glance, these trusts have actually made life better. It is easier than ever to stay connected with friends and family around the globe, we have all the information we need at our fingertips, and we have a convenient online retailer that sells everything we need with excellent customer service.
With our lives being so reliant on the products of these tech monopolies, how would these big breakups affect our everyday lives? Would we even benefit? John Oliver, TV host and political commentator, supports Wu’s perspective with his belief that “ending a monopoly is almost always a good thing” since it fosters competition that can lead to innovation. Oliver also speculates on the implications of breakups regarding Google, Amazon, and Apple (Guardian staff). Oliver notes that Google and Apple currently control app distribution, taking large cuts from developers’ earnings and deciding who gets to put their apps on the market. Google also holds a near-monopoly on search engines, in which their service prioritizes its own properties and gives direct answers without making people click on links. Meanwhile, Amazon has grown to encompass 65–70% of online marketplace sales in the US, taking a cut from third-party sellers forced to sell on the platform to maximize exposure. While this is happening, Amazon also produces in-house knockoffs based on private seller data informing them on popular products (Guardian staff). Government intervention to force breakups of these companies would ironically lead to the greater practice of free market principles, under which the fate of independent software developers and online sellers would not be subject to the will of the tech giants. Oliver does not address the effects of Meta ruling over social media, but Wu already covers this, stating that there were no clear social efficiencies granted by mergers such as combining Facebook and Instagram, but increased competition from a breakup can result in improvements in privacy protection and reduced concentration of the power of speech. One example of this is the Cambridge Analytica scandal, in which Facebook sold data that ended up being used by a former Trump aide to build voter profiles (Confessore). If all the data currently held by Facebook was split into multiple smaller pools, it would be much more difficult for one company to abuse access to private information to influence an election. Although many of these changes might take place behind the scenes, they would still benefit the majority of Americans in one way or another.
Of course, as with any controversial issue, there are multiple sides to the argument. Peter Thiel, co-founder of numerous companies including Paypal, and the first investor in Facebook, is one of America’s most vocal proponents of monopolies. Thiel argues that there are two extremes of an economy: “perfect competition” and monopolies. Under perfect competition, when supply and demand are in equilibrium, companies are forced to sell products at market value and end up unprofitable. Meanwhile, under monopolies, a company controls the price of its product and is profitable, driving overall economic growth. He continues on to claim that monopolies are temporary, lasting only until another company eclipses it in technology, therefore motivating a monopoly to innovate. His views contain several outstanding flaws. For one, today’s tech monopolies have proven themselves mostly permanent. Rather than being forced to innovate or risk being destroyed by superior competitors, tech trusts prefer to buy out competitors, copy their ideas, or otherwise aggressively remove them from play. This was best demonstrated by Microsoft in the 1990s, when Bill Gates was on track to monopolize web browsers, operating systems, and applications by using these very tactics but was halted by government intervention (Wu).
As far as overall economic growth is concerned, Thiel is technically correct. The economy has vastly grown since the rise of the tech trusts, but the problem lies in how this new wealth is distributed. At first glance, the tech monopolies have created job opportunities for many Americans. However, a closer look reveals that these favorable job opportunities are only for those with a specialized skill set, such as software engineers who have gotten a college education. Meanwhile, less skilled workers are forced to take physically exploitative jobs, as made notorious by Amazon warehouses. The growth of jobs in the tech industry favors those who already have gotten ahead in life. Those born with a silver spoon or otherwise gain an early advantage can afford to go to college, learn the necessary skills, and earn a degree that makes them a candidate for jobs in the tech industry. However, those that cannot afford college or lack the resources to learn a specialized skill set are forgotten in an overall growing economy. In one study by the Georgetown Center on Education and the Workforce, it was concluded that being born rich was more favorable than being born smart and talented, as research indicated that being born wealthy was a better indicator of success than high academic performance. As the tech industry continues to consolidate wealth and power, it feeds the long-standing narrative of the rich getting richer while the poor get poorer.
This concentration of wealth can be visualized geographically, with higher incomes becoming concentrated in regions dominated by the tech industry. Maryann P. Feldman, a professor of public policy at Arizona State University, has analyzed the changing geography of wealth alongside the rise of tech trusts. According to Feldman’s maps, pictured below, Detroit, Michigan was home to the highest earners in 1980, potentially due to the automobile industry, but wealth was not notably concentrated in any other particular region. Wealth inequality did exist, but it was nowhere near the scale of today’s distribution. Feldman’s 2016 map shows that while regions surrounding Silicon Valley, Washington D.C., and New York City have concentrated their wealth, the areas that were already poor have become even poorer.
1980: Share of employed persons earning above the 80th percentile of the national distribution (typically, 0.20) (Feldman)
2016: Share of employed persons earning above the 80th percentile of the national distribution (typically, 0.20) (Feldman)
Should the tech trusts be broken up, we would, in time, likely see another shift in geographic wealth distribution. Newly independent companies from breakups, as well as entrepreneurs taking the opportunity to start their own businesses, would find themselves able to relocate wherever they want, leading to more job opportunities in currently less wealthy areas. Over time, this redistributed wealth would trickle down through society, leading to positive changes in crime rates, education levels, drug abuse, incarceration, domestic violence, and physical and mental health, all of which will benefit Americans on a broad and long-term scale. However, as Tim Wu mentioned, antitrust is not a single solution to wealth inequality, so all this conjecture would only manifest under ideal conditions, but if we were to break up the tech trusts today, we would at least be on track to change the status quo.
Despite my long-winded additions to Tim Wu’s arguments in The Curse of Bigness, Antitrust in the New Gilded Age, the book achieves what it sets out to accomplish. Wu deliberately limits his scope of the issue to ensure he provides a strong argument in a text short enough to hold the attention of even the most casual readers. The fact that I was prompted to research the implications of antitrust outside of Wu’s scope speaks to an even greater success in writing. Wu does not dive in-depth into how big breakups would benefit each of us as individuals, nor does he address the ins and outs of wealth inequality, but he gives just enough to prompt the reader to form these questions and search for answers on their own, which I would consider to be a great success for Wu as an author.
Works Cited
Confessore, Nicholas. “Cambridge Analytica and Facebook: The Scandal and the Fallout so Far.” The New York Times, The New York Times, 4 Apr. 2018, https://www.nytimes.com/2018/04/04/us/politics/cambridge-analytica-scandal-fallout.html.
Feldman, Maryann P. “Monopoly Money: Tech and the Changing Geography of Wealth.” Kenan Institute of Private Enterprise, 11 Mar. 2020, https://kenaninstitute.unc.edu/kenan-ind sight/the-role-of-tech-monopolies-in-mapping-the-geography-of-wealth/.
Guardian staff. “John Oliver on Big Tech: ‘Ending a Monopoly Is Almost Always a Good Thing’.” The Guardian, Guardian News and Media, 13 June 2022, https://www.theguardian.com/tv-and-radio/2022/jun/13/john-oliver-big-tech-monopolies-apple-amazon-google.
Hess, Abigail Johnson. “Georgetown Study: ‘to Succeed in America, It’s Better to Be Born Rich than Smart’.” CNBC, CNBC, 29 May 2019, https://www.cnbc.com/2019/05/29/study-to-succeed-in-america-its-better-to-be-born-rich-than-smart.html.
Thiel, Peter. “Competition Is for Losers.” The Wall Street Journal, Dow Jones & Company, 12 Sept. 2014, https://www.wsj.com/articles/peter-thiel-competition-is-for-losers-1410535536.
Wu, Tim. The Curse of Bigness: Antitrust in the New Gilded Age. Columbia Global Reports, 2018.
