Here's what's really behind Elizabeth Warren's drive to make antitrust great again
- There has been a renewed push for updated antitrust regulation and increased enforcement in the past few years, often with bipartisan support.
- Matt Stoller is a fellow at the Open Markets Institute and the author of "Goliath," an analytical history of monopoly power in the United States. He said that the return to fighting against concentrated corporate power is rooted in a reaction to the financial crisis - and Senator Elizabeth Warren is leading the movement.
- Stoller, like other contemporary proponents of stronger antitrust, said that monopolies should not be primarily judged by how they affect consumer choice, but by how they affect market competition and by how they exert influence beyond the scope of democratic politics.
- This article is part of Business Insider's project "The 2010s: Toward a Better Capitalism."
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This past September, a group of 50 American attorneys general from 48 states, the District of Columbia, and Puerto Rico announced an antitrust investigation into Google's domination of internet advertising and search. Led by Ken Paxton, a Republican from Texas, the announcement was striking in its bipartisanship.
The anti-monopoly think tank the Open Markets Institute released a statement, saying, "We haven't seen a major monopolization case against a tech giant since Microsoft was sued in 1998. Today's announcement marks the start of a new era."
One researcher from the institute, Matt Stoller, published this year an analytical history of monopoly power and antitrust regulation in the United States, "Goliath." He told Business Insider in a recent interview that not only do we have the first big case since the late 1990s, we have the first political movement around antitrust since the 1970s. He said that the "too big to fail" designation of the banks in the financial crisis inspired populists on the left and right to reconsider the influence of the private sector, and that Massachusetts Senator Elizabeth Warren's call to break up Big Tech in 2016 helped make "antitrust" an unlikely buzzword. And this is a pivotal moment that can't be wasted, he argued.
Stoller previously worked for Democrats in Congress and was behind putting antitrust policy back in the Democratic Party's 2016 presidential platform (the first time since 1992). His allegiance is firmly on the left, but he's open to alliances with Republicans breaking from prevailing conservative ideology and taking on monopolies, like President Donald Trump's ally Sen. Josh Hawley of Missouri.
Stoller doesn't mind if that gets him criticism from others on the left, because he said that fighting concentrated corporate power in America is the most pressing issue of our time, and considers it connected to all of the other defining challenges of the past decade.
His urgency is twofold: it represents a threat to competition and to democracy. He rejects the prevailing conservative idea that a monopoly should not be judged by size, but rather whether its market share harms consumers. Under that logic, Google's dominance of search and advertising is satisfactory, because internet users enjoy the products. "I think the consumer focus is way overwrought," Stoller said, dismissing that logic. He takes more than a century of American history into account, and sees Google as one of the companies that's both hindering economic growth by closing out markets and exerting too much influence over the government. The Open Markets Institute argues that monopolies have in the past decade used their clout with both parties to avoid regulation and push policies favorable to them, not Americans.
Referring to the companies he deems monopolists and the 2020 candidates opposing them, Stoller said,"We have the choice of whether we want to govern or let them govern. And that's really what's on the ballot right now."
What does concentration look like?
Over the past decade, there has been an increasingly popular reaction against the neoliberal world order that's reigned in the West for the past 40 years. These are policies like loosely regulated markets, low taxes, and the shareholder primacy theory that a corporation exists solely to serve its shareholders.
And while these policies are most associated with President Ronald Reagan and the other Republican presidents since, Presidents Bill Clinton and Barack Obama also adhered to this orthodoxy. Stoller sees the unrestrained rise of corporate power at the expense of democracy as a dangerous side effect of these policies. It should be noted that while a monopoly has unilateral control over a particular market, an oligopoly is when a few companies have that same power. In a highly concentrated industry, individual companies may have monopolies over a particular product in that industry, like online advertising for Big Tech.
So, how concentrated has corporate power become? There's room for debate and interpretation over the data.
In 2017, Rice University's Gustavo Grullon, York University's Yelena Larkin, and Cornell Tech's Roni Michaely published a paper that used Census data to back up their finding that, "More than 75% of US industries have experienced an increase in concentration levels over the last two decades," and that this has decreased competition.
One of the measures, provided by the Census Bureau, that Grullon and his team investigated was the market share of the four largest firms in a particular industry. The data suggest varying levels of concentration across industries, as shown in the following graph.
The Federal Trade Commission and Department of Justice responded by arguing that antitrust law has never been applicable to a massive, broad industry like "pharmaceuticals," but rather applies to markets for specific, competing products. They also argued that even if there has been increased market concentration, the successes and failures of companies are unpredictable and that increased concentration over time is not inherently a bad thing. This connects to the conservative economic view that "big" does not equal "bad" on its own.
Then, in turn, researchers at the liberal think tank the Roosevelt Institute, Marshall Steinbaum and Adil Abdela, (which Stoller had previously worked for), responded by saying that while differentiating between industries and antitrust markets is valid, it is inaccurate to dismiss industry concentration as irrelevant. They also compiled a long list of specific antitrust markets that have been further concentrated over the last 20 years, noting there is less data for such markets than for entire industries.
But they, like Stoller and Nobel laureate economist Joe Stiglitz, connect this general concentration to relatively poor economic growth of the past 40 years.Last year, Stiglitz argued before the FTC that loosened antitrust regulation has led to companies that use their size to create barriers to entry for smaller competitors, keep wages low, and increase their wealth without creating new wealth.
A populist revolt
While the debate continues over the role of antitrust policy and the threat of corporate power, polling has found that many Americans have grown suspicious of Big Tech - namely Google, Amazon, Facebook, and Apple.
According to a survey in August from Harvard CAPS and Harris Poll in partnership with The Hill, 71% of respondents supported the Justice Department investigating Big Tech for anticompetitive practices; an Insider poll in May found that 40% of respondents were in favor of breaking up Facebook (i.e., spinning off acquisitions like Instagram and WhatsApp); and a poll in September conducted by Data for Progress and YouGov Blue (that was shared with Vox) found that two-thirds of respondents were in favor of breaking up Big Tech for the sake of competition, and the results held across demographics, including political ideology.
Stoller sees Big Tech as a vehicle for getting Americans interested again in fighting corporate concentration, but Senator Bernie Sanders has also campaigned on breaking up Big Agriculture when speaking to farmers. And while he sees a Warren or a Sanders presidency as the best shot at revising and enforcing antitrust law, he said he's confident the movement will continue even if Trump is re-elected or a moderate Democrat wins.
He said that the most surprising thing he learned while researching "Goliath" was that concentrating corporate power was a key ingredient of the fascist movements of the early 20th century, as dictators used partnerships with industries to suppress democratic participation. It's one of the reasons he's so passionate about antitrust.
"The last 10 years have been about the debate," he said. "The next 10 years have to be about moving the debate into policy."