I’m old enough to remember when corporate monopolies were a major societal concern. In 1969, the U.S. Department of Justice sued IBM and argued that it was a monopoly in computer hardware and software services. The legal proceedings dragged on for years until the government dropped the antitrust suit in 1982. That same year, the government decided to break up AT&T, which at the time was a government-sanctioned monopoly.
Today, there are companies that arguably have a similar stranglehold on consumers, but public and political figures don’t think they’re a problem. There used to be a broad-based coalition against monopolistic companies in the Democratic Party — now the populist parts of that coalition are Trump voters and part of a Republican coalition with free-market proponents, so the antitrust issue has disappeared from view. This is a marked shift in public sentiment since 1890 when the Sherman Act passed almost unanimously. Sen. John Sherman captured the American mood of the time when he said, “If we will not endure a king as a political power, we should not endure a king over the production, transportation, and sale of any of the necessities of life.”
Conversely, in 2014, Peter Thiel, one of the most famous venture capitalists and early investor in Facebook said, “If you want to create and capture lasting value, look to build a monopoly…. Competition is for losers.” Perhaps, this is why we are allowing the market dominance of Google, Amazon, and Facebook, among others. Google and Facebook receive about 85 percent of all online advertising dollars. Amazon has more than 70 percent market share in ebooks.
There are significant differences between today’s monopolies than Rockefeller’s Standard Oil (divided into 34 companies in 1911, including ExxonMobil, Chevron, Amoco, ARCO, Phillips 66, and Marathon). An oil company that wanted to compete with Standard Oil would have faced cost-prohibitive expenses for oil pipelines alone. Today, it would not be outrageously expensive to create a browser that would compete with Google Chrome. Good luck to such a competitor in trying to obtain sufficient advertising revenue to sustain the business.
Standard Oil also operated at a time when overt bribes were not unusual. Today, they take the form of charitable contributions to the Clinton or Trump Foundations (the latter is under investigation; donations to the former have dried up considerably since the donors apparently didn’t really have charitable intentions). Google has mastered “crony statism” where the company tries to have a symbiotic relationship with the government. During the Obama administration Google officials had White House meetings approximately weekly for all eight years. Dozens of senior people moved between Google and government positions. When the Obamacare website was not functioning properly experts primarily from Google were given leave to fix the system. This symbiotic relationship has resulted in key decision makers being sympathetic to Google’s growth.
The history of free markets in the United States is such that some company has always come along to disrupt an apparent monopoly. Just when IBM seemed overly powerful, Microsoft became ascendant. Likewise, Microsoft seemed to have a monopoly in many ways but has been eclipsed by Google. Yet, even in recent times the U.S. government has felt it necessary to bring anti-trust charges against companies such as Apple, in music sales. What do you think — are Google, Facebook, and Amazon, the wealthiest companies in the world, monopolies unfairly preventing competition, or should they be allowed to maintain their market dominance?
Eric Dent is endowed chair professor of Ethics at Florida Gulf Coast University.