concentrated corporate power is a threat to democracy

Published in concentrated corporate power, internet, tech industry, monopoly, on Dec 25, 2020

In Anyn Rand's the Fountainhead Howard Roark is an architect of absolute integrity, totally self suficient. His buildings are like his personality: innovative and austere. He relies on himself alone and illustrates the primacy of the individual. It's like a 900 page book about how collectivism and governments screw everything up. It's the story of the noble capitalist. Since 2010 with the Citizens United ruling corporations get treated like people under the law. More recently we've had antitrust suits against Google and Facebook and congressional invistigations into Amazon and Apple. Antitrust cases are back in the original trustbusting spririt of Theodore Roosevelt. The last major antitrust case in American history was the Microsoft case. No antitrust cases were brought against any company in eight years of Bush presidency by the FTC. Hilary Clinton was going to name Sheryll Sandberg to her cabinet, a Facebook executive. The tech industry consolidation happened under Obama and Trump presidencies. The major tech companies have cornered there respective markets and pay big lawyer and lobbying fees to keep it that way.

It's the U.S. government's job to reign in unrestricted capitalism in order to preserve competition and prevent foul play.

Each of the major tech companies are incredible businesses with great products. What they've built is amazing. There are fantastic "Howard Roark" narratives about each of the major tech companies. Mark Zuckerburg built a company from a dorm room and beat out competitors like MySpace with a better product that respected privacy. Jeff Bezos built Amazon to define online shopping. Google with its page rank algorithm made the web easier to navigate. Apple builds a sleek operating system and remarkable phones. In a capitalist society these companies should not be punished for their success at building great products. These tech billionaires inspire tech industry workers with their success. Zuckerburg and Bezos have built their companies from nothing to become some of the richest men in America. They give to charity; they pay their taxes. One line of thinking posits, leave them alone, don't punish them for their success. They have the best products and services.

It's the U.S. government's job to reign in unrestricted capitalism in order to preserve competition and prevent foul play. Concentrated corporate power restrains American's freedom. To illustrate that the government has a role in the economy we can look at the Micrsoft antitrust case of the 1990s. At the time of the Justice Department's suit against Microsoft, Microsoft controlled the personal computer operating system and crushed Netscape Navigator by bundling and giving away Internet Explorer with the Windows operating system for free. During the course of the 1990s the government investigated Microsoft culminating in a large scale antitrust lawsuit from 1998 to 2001. The Bush administration ended up dropping the case, allowing Microsoft to stay as one company. The Bush administration didn't pursue a single antitrust case in eight years of office. Though the case was unsuccessful in breaking up Microsoft it was effective in bringing more competition to the tech industry.


I'd like to invite you to consider an alternative reality. Imagine the government didn't bring a case against Microsoft. Bill Gates never had to testify about his business practices in court. The company was never concerned about government action in this alternate reality. Microsoft is a powerhouse. Windows runs on 95% of Personal Computers (PCs). The onramp to the nascent internet is accessed by internet explorer. Microsoft controls suppliers for hardware, the operating system and the browser. They can bully Venture Capitalists into not funding companies that'd compete with them. There's no way this Microsoft would let another company control internet search and eCommerce shopping. Because of government action though, Google and Amazon were able to emerge and thrive. Microsoft was focused on survival and startups flourished. It's ironic that Google and Amazon, today's tech titans owe their existence to the antitrust suit against Microsoft.

Going further back even Microsoft owes it's existence to the governemnt antitrust suits against IBM and AT&T. IBM was so preocupied with not being seen as a monopoly by the government they completely reversed course and built open architecture, helping startups succeed. Giving room for companies like Microsoft and Intel to grab a foothold. Government antitrust action can restore compition to marketplaces and release innovation. Startups need room to breathe, room to run in order to compete with incumbents.

Looking forward, we can imagine a government that does not implement any antitrust laws. In this alternate future Google, Amazon, Facebook and Apple all merge into one company. They control all mobile phones, all internet retail and all cloud computing services after they bought up or killed all their rivals. Exclusive business agreements make it nearly impossible for hardware manufacturers to work with anyone else. Like at the grocery store there are many options but they're all made by the same companies. Any startup or business that wants to succeed has to pay the existing companies. The lucky ones get bought up into the congolmerate, the rest are marginalized and killed. Retailers have no choice but to sell through this one tech company since they control all the phones, operating systems, browsers internet retail and search queries. Digital advertising and publishing all happen through and with the consent of this one company. As time goes on the founders die and and a new generation of leaders take the helm of this tech behmouth. Politicians live or die by the tech company's approval. The "don't be evil" and "connect the world" mantras are forgotten about. No company can compete. The barriers to entry are too high and business arangements with existing suppliers block new entrants. Technology and innovation stagnate. This tech monopoly controls the digital world, our devices, our information and our politics.

These tech giants are separate today but theoretically they could try and merge. Without a government to stop them it could make sense from their financial perspectives, afterall, in the words of Peter Theil Competition Is For Losers. A merger between today's tech titans would rule our economic and political lives. Without govenment action, a tech behmouth ruling our lives and economy could have been IBM through it's control of hardware and software. It could have been Microsoft through control of the PC, operating system and browser. A merger between Google, Facebook, Amazon and Apple would siphon off search, internet infastructure, online retail and mobile devices to the control of the few. There's resistance brewing to the power of these tech monopolists. The government filed antitrust lawsuits against Google and Facebook. Congress is investigating competition in Digital Markets, firing warning shots at Google, Facebook, Amazon and Apple. There are active campaigns by labor activists, politicians, scholars and business people to break up the major tech companies are restore competition to the marketplace.

I think there are definite advantages to having a government concerned about preserving competition. This is all we'll cover for now but there's a ton more I'd like to dive into in future posts :)