Not so long ago, the US tech industry was the global leader not only in imagining a better tomorrow but actually building it. It brought people closer together, broke down old power structures, and empowered individuals to understand the world in entirely new ways. But in time, the titans of the industry—Google, Amazon, Facebook, Microsoft, and Apple—largely captured control of the digital economy. Now, rather than bringing forth radically better ideas, these five super-large corporations increasingly spend their days appropriating other peoples businesses and devising new ways to manipulate individuals and society as a whole.
Barry Lynn directs the Open Markets Institute. He's the author of Liberty From All Masters.
There are many problems with how these corporations use their power. For starters, as anyone tracking this election cycle understands, many of these platforms’ policies directly threaten democracy, and their hold over the advertising industry has proved catastrophic for news publishers. These behemoths also threaten our personal liberties by storing and wielding vast tranches of data about almost every company and individual in the nation, then using it to direct some of our most intimate actions and decisions.
One of the biggest problems is that the vast reach of these corporations—combined with their growing dominance over almost every corner of our capital markets—gives them the power to shape almost all information technologies to serve their interests. And they are fast moving to capture the same control in energy, health, transportation, and entertainment. Absent action, Google, Facebook, and Amazon will shape all these technologies in ways designed to serve only their particular business models and the personal interests of their owners, even if the result is to stifle vital future innovation.
It’s time for Silicon Valley to get back to the business of building utopia. And despite widespread fear that regulators will never be able to keep up with the pace of innovation, the task will likely prove easier than we expect. The tools for curbing Silicon Valley’s power are already available and, in some cases, have been for hundreds of years. Indeed, one key to fixing the problem dates back 400 years to a battle in Parliament aimed at bringing the king under the rule of law.
The dilemma the US faces today is not so different from that of 17th-century England. Back then, rather than Jeff Bezos and Mark Zuckerberg taking what belongs to the little guys, it was Queen Elizabeth. By 1601, she had figured out how to concentrate ever more political power in her own hands by rewarding allies with licenses to govern a particular economic activity, such as the sale of iron, salt, tin, beer, even playing cards. In exchange, the fresh-minted monopolist was to devote large portions of their new wealth and power to the interests of the queen.
The political problem of such a system is obvious: No one will dare openly oppose the sovereign, for fear she will seize their business and give it to some new friend. So too the economic problem. When the queen can take anyone's property at will, there’s little incentive to invest in new ventures. If it has any success, she will likely end up with both the profits and de facto control over the new business itself.
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Parliament never managed to rein in Elizabeth. But her successor, James, was less adept at keeping his opponents in disarray. And so, under the leadership of a lawyer named Edward Coke, Parliament in 1624 passed the Statute of Monopolies. This outlawed all grants of monopoly, with the exception of special “patents” for demonstrably new ideas.
At a stroke, Coke and his colleagues established a rule of law that protected property from seizure, making it far safer for individuals to speak their mind. They also made the world safer for innovators, as the new patent system protected new ideas from both theft by the state and by powerful private actors.
Years later, John Adams would call Coke “the oracle of the law.” One of the great achievements of the US Constitution was to put Coke’s rule of law on even firmer footing than in Britain.
The value of this decision was proven most dramatically in the mid 19th century, after the introduction of two revolutionary technologies: the railroad and telegraph. Americans found themselves confronted by vast networked corporations that provided essential services. The owners of these corporations enjoyed prerogatives much like those Elizabeth and James once held, to arbitrarily pick who got to market and who did not.
American lawmakers answered the immediate challenge not by pulling out their broadaxes and chopping the railroad and telegraph into little pieces. Rather, as Parliament had done with King James, they established clear rules—codified into law—that carefully spelled out how these network monopolists must treat their customers. And the rules were simple. Mainly they required the corporations to serve all comers in the order in which they arrived and to provide equal service at posted prices.
By taking from the monopolist all ability to favor one company or person over another, and thereby to concentrate control as Elizabeth and James had once done, these rules strongly reinforced America’s democracy. They also laid the foundation for the greatest explosion of productivity and creativity the world has ever seen.
Once citizens had succeeded in neutralizing the power of the railroads and other essential networks, they set about learning how to regulate the size and structure of corporations to achieve specific economic and social aims. One result, by the mid 20th century, was a highly sophisticated approach to using anti-monopoly law to shape and drive technological innovation.
Between the 1930s and 1982 the government brought hard-hitting cases to limit the size and scope of GE, RCA, Xerox, IBM, AT&T and other leading technological corporations of the day.
The government also required these corporations to share their technologies with smaller companies. One effort in the 1950s forced AT&T to license an idea it called the “electronic transistor” to 35 rivals, including Texas Instruments and Fairchild. Today we call this technology the semiconductor.
But then came a radical shift in ideology. Fifty years ago this month, Milton Friedman published a famous essay assailing this traditional American approach to regulating the political economy. Robert Bork, Richard Posner, and other “neoliberals” soon followed with their own attacks.
Their basic message was simple: Let the big get bigger. The result would be more “efficient.”
In the early 1980s the Reagan Administration applied this new philosophy of power to America’s antitrust laws. In the 1990s, the Clinton administration used this philosophy to reframe how the government regulates trade, banking, energy, and communications.
It’s impossible to overstate the magnitude of the changes that resulted. Corporations structured precisely to exploit the new environment of law now dominate every corner of society. They have radically reordered how we do business, how we manufacture, how we farm, even how we think.
Most dangerously, Google, Amazon, Facebook, and a few other corporations have assumed the power to pick and choose who gets to go to market and who doesn’t. One result of this subversion of simple rule of law is an ever more extreme concentration of power and control in these private sovereigns. Another is discord and disruption in society, much as was true in the days of Elizabeth and James.
The good news is that Americans are finally waking to the danger; a new survey shows that more than 75 percent express concern about the monopolies. And the public’s representatives are beginning to act—in Congress, in the antitrust agencies, and in state governments.
Equally important, more and more law enforcers are abandoning the neoliberal philosophy of antitrust in favor of a traditional focus on protecting democracy and liberty from concentrations of power and control. This in turn is helping them learn how to use existing law and institutions to fight the problem today, without waiting for Congress to act. We see this, for instance, in Epic’s recent aggressive and smart use of antitrust law against Apple, and also in the unprecedented decision by the attorney generals of almost every US state to investigate Google for a variety of antitrust violations.
As was true almost four centuries ago, our most important task is to ensure equal treatment for every person who depends on any monopoly to communicate and do business. The way to do so is by banning the platforms from ever arbitrarily favoring one seller or one user over another. Our democracy depends on us getting this right.
It is also vital to relearn how to intentionally structure corporations and markets, and access to technologies, as the trustbusters of the 20th century did. In tandem, these two actions will ensure that America’s scientists, engineers, and entrepreneurs have the liberty to think and dream, and to create exactly the utopia we so desperately need today.
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