Before anyone had heard of COVID-19, Big Tech companies had secured unassailable power in their core markets, and they were leveraging that dominance into new areas.
Amazon was moving into entertainment, Apple had claimed wearables, Facebook was even eyeing currency itself. They had long passed the stage where their greatest profits came from innovation, and were instead focused on monetizing their dominance. Their market power allowed them to starve new entrants of capital, keep competitors off their platforms, and use their profits to turn entire industries (e.g., streaming movies) into loss-leader features that differentiated and protected the lucrative core businesses (e.g., next-day delivery of toilet paper).
Then the pandemic shut down retail shopping, closed in-person entertainment, and moved nearly all of our interactions onto screens—and Big Tech grew even stronger. The rise to dominance of Big Tech has produced staggering share price gains in the short term, but it also suppresses innovation and harms long-term economic growth.
That is why the biggest economic boost that the Biden-Harris administration can deliver won’t be stimulus or bailouts, it will be committing funding and political support for serious antitrust enforcement. I’ve been calling for the antitrust breakup of Big Tech for years, but the last few months of 2020 give me hope that this is going to happen. In that period, we witnessed a surge of legislative and legal actions that respond to the problems of concentrated capital generally and the dangers of Big Tech specifically. If we maintain this momentum, we stand a chance of not only restoring competition and innovation to our markets, but also of beginning the more fundamental repair process our nation needs.
It began in July, when the House Judiciary antitrust subcommittee brought in the CEOs of the Four (Amazon, Apple, Google, and Facebook) for a day of public testimony. Contrary to just about everyone’s expectation, the members of the subcommittee had done their homework and came loaded for battle. Building on a year of document review, interviews, and analysis, they used the companies’ own emails against them, and pinned the CEOs to their tastefully appointed office walls like butterflies in a case.
That was the starting gun. In the last four months of 2020, the Department of Justice, the Federal Trade Commission, and attorneys general from almost every state filed legal actions against Google and Facebook, calling for breakups and other remedies. These events are points on a line, and that line points toward the beginning of the end of Big Tech as we know it.
To prevail against the Big Tech titans, the government will need more than a strong legal case; it will need public support. For years, however, our idolatry of innovators was Big Tech’s ace in the hole. That’s changing. Social media disinformation and polarization, the exploitation of the gig economy, and the strip-mining of our personal information are melting away the heat shield of likability that surrounds these companies. More hearings like July’s CEO barbecue, and more revelations about the way in which these companies exploit their dominance, will burn it away for good.
The point is not that we should adopt an anti-Big Tech posture. These companies are built on a legacy of innovation and products that would have seemed like magic a generation ago. But we are the victims of their success, because the rational decision for a company with the market power of a Big Tech company in 2021 is to secure and leverage that dominance, not to risk further innovation. When that happens, the role of government is to act as a countervailing force to private capital. Like forest fires clearing out the underbrush, antitrust action oxygenates the economy by creating new competitors and opening up space for new entrants.
The return of antitrust enforcement gives me hope about more than just the business of Big Tech. As I write about in detail in my recent book, Post Corona, the COVID-19 pandemic made it impossible to ignore something that has been evident about America for years now: Piece by piece, we have replaced capitalism with cronyism and turned government from private capital’s counterweight into its coconspirator. We have become loving and empathetic with corporations and shareholders, and harsh and Darwinistic toward individuals.
We have to flip this. We have to rebuild our institutions—our enforcement agencies, but also our scientific capabilities, our social services, our state and local governments, our media, and nonprofit sectors—so that we can have full-body-contact violence between companies in a rules-based market while providing security and resilience for the individuals who make up our society.
Antitrust enforcement against Big Tech will have direct, immediate benefits. It has the potential to break Google and Facebook’s stranglehold on digital advertising—which operates as a private tax on business. It could open up the market to permit new, viable business models for social media that don’t depend on enraging and dividing us. Those alone would be great outcomes.
But the greater win would be to push the pendulum away from our false notions of individualism, our idolatry of innovators, and toward a renewed sense of respect for our public servants and the essential role institutions play in our commonwealth. Antitrust enforcement won’t make that happen on its own, but it is a step in the right direction, and a reason for optimism.