The remarkable fact about the rise of Amazon, Google, Facebook and Apple is not that they are now being discussed, examined, and potentially dismembered. It is that they were allowed to make so much money, for so long, without being subject to almost any scrutiny at all.
I was raised on the products created by these companies. I read their financial statements, sought out the wisdom of their founders, and watched as their stock prices invariably trended in one direction: upward. For a long time, this seemed proper. Capitalism has winners. They competed, and won.
Until recently this narrative was rarely challenged. It was nurtured by the Obama administration. In a famous photograph from 2011 (see right), the then-president toasted a dozen tech leaders as he sat between Steve Jobs and Mark Zuckerberg. When EU regulators investigated Google in 2015, Obama warned them off punishing American companies for their success. And a year later, in Obama’s final summer as president, his family hosted a gathering of the tech elite at the White House in imitation of South by Southwest, the fashionable digital conference. Meanwhile, the stock market value of the four Big Tech companies soared, from $204bn when Obama took office in 2009 to $1.95trn when he left (Facebook was floated in 2012).
In the past three years, the value of these companies has continued to climb; it is now $3.5trn, considerably more than the UK’s GDP ($2.7trn). But their reputation has collapsed. Big Tech is now a pejorative term, akin to Big Oil and Big Pharma. And the men who run these companies are viewed as the robber barons of a new capitalist age.
Just as Rockefeller, Carnegie and Vanderbilt once controlled America’s oil, steel and railroads respectively, so do another handful of men now control how we search, shop and share; watch, message and travel. Today’s titans are arguably more powerful. They control not only the raw materials of industry, but much of our time and even perhaps part of our minds. There was nothing inevitable about this concentration of power – and it would have stunned many 20th-century politicians, who devoted their energy to ensuring no one would ever reacquire the might of America’s first industrial kings.
This is the story Matt Stoller tells in Goliath: The 100-Year War Between Monopoly Power and Democracy. Stoller, a Fellow at the Washington, DC-based Open Markets Institute, has a searing message: in the 1970s, a new generation of Democrats shed one of the party’s central beliefs – that private monopolies are always and everywhere a threat to democracy. Goliath is overlong in places, at times repetitive, and key figures are not always vividly portrayed. But Stoller’s point remains vital. And his book complements the work of Lina Khan, a former colleague of his at the Open Markets Institute, who, in a viral Yale Law Journal article in 2017, forensically exposed Amazon’s many monopolistic practices.
Khan explained that Amazon’s stranglehold over commerce was made possible by a silent legal revolution that began 40 years ago, at around the same time the Democrats lost what Stoller calls their “populist soul”. In the 1970s, in both politics and the law, monopoly power was redefined out of existence, and entirely dismissed as a national threat.
This was a remarkable shift. It undid six decades of anti-monopoly law, or “antitrust”, dating back to 1911, when JD Rockefeller’s Standard Oil, which controlled 90 per cent of America’s oil supply, was broken up into 34 pieces by the Supreme Court. Soon afterwards the banker JP Morgan was hauled before a major congressional committee, to explain the “vast and growing concentration… of money and credit in the hands of comparatively few men”. Over the next two generations, many American lawmakers spent their careers opposing such dominance.
Stoller’s story centres around one such man, Wright Patman, a Texan Democrat who paid for law school with “bales of hay” and served in the House of Representatives from 1929 to 1976. Men like Patman were the practitioners of antitrust, but its architect was Louis Brandeis, a crusading lawyer and perennial antagonist of Morgan’s, who Woodrow Wilson put on to the Supreme Court in 1916.
Brandeis was animated by a simple belief. America was either a democracy, or it was a nation where wealth was concentrated in the hands of a few, but it could not be both. A democracy required not only political and religious liberty, but “industrial liberty” – the freedom for people to “do for themselves”. Every American, argued Brandeis, should be able to set up a business and thrive in a competitive market. Anyone living under a monopoly, subject to the whim and caprice of a few self-appointed industrialists, was not a free citizen.
This belief inspired not only Wright Patman but Franklin D Roosevelt, in both the creation of his New Deal and his opposition to Hitler. The language of industrial liberty became part of a mid-century American consensus. Goliath explores this era in depth, and shows how antitrust went hand in hand with strong labour unions, higher tax rates, and constraints on banking power. Populism, Stoller stresses, was not invented by Trump. It was once the foundation of the Democratic Party.
The sea-change undergone by the party in the 1970s can, in part, be traced to one man: Robert Bork. In 1978, Bork published a book, The Antitrust Paradox, which not only rejected Brandeis’ central idea – that monopolies are anti-democratic – but dismissed it as irrelevant. Forget the dangers of concentrated power, said Bork, a leading Republican jurist, and forget a competitive democracy. Such concepts were nothing but “unarticulated social values”. In markets, only one thing mattered: consumer welfare.
For Bork, liberty was nebulous, but welfare was tangible. You could plot it on a graph. If goods were created and allocated with maximal efficiency, the market worked, by definition. How did one know if markets were efficient? Not through competition, the traditional guarantor of cheap goods, but simply through low prices. If prices were low, ran Bork’s logic, the market must be competitive. And if a big firm drove a minnow out by aggressively slashing its prices, it must be the more efficient.
Almost overnight, antitrust was reinterpreted. The Supreme Court began citing Bork’s work; they soon accepted it entirely. Meanwhile, a new generation of Democrats swept to power in Congress, dethroning populists like Patman. Politics shifted all at once. An era of severe inflation made radical change possible. The radical simplicity of Bork’s theory became increasingly appealing. Markets needed fixing. Low prices were part of the answer. Americans also stopped crediting antitrust for the world they lived in. Having been contained, monopolies became less fearful.
Into this void stepped Amazon, whose story Stoller does not tell, but whose power epitomises the threat now posed by Big Tech. For two decades, Amazon has acted as a monopolist. But by focusing relentlessly on the customer, by praying at the Borkian altar of low prices, it has avoided all scrutiny. It is now far more than the “everything store”. It is inescapable.
Even if you renounce its products, you almost certainly help to fund the company. The internet runs on its infrastructure. Anything that exists online needs computing power, servers and databases. Amazon’s web services division has become the global leader in providing these ingredients; you could call them the oil, steel and railroads of the internet age. And
everyone, from Netflix to the Guardian, buys from Amazon.
America was founded in opposition to a tea monopoly. Its creed is liberty, not low prices. Under a President Warren or Sanders, the language of industrial liberty could be rediscovered, with as much speed as it was lost. But tackling these Goliath-like companies may demand more than that. Presidential terms end. The tech titans believe their story has only just begun.
Goliath: The 100-Year War Between Monopoly Power and Democracy
Simon & Schuster, 608pp, $29.99