Editors’ Note: I wrote this for my column in the San Antonio Express-News back in October 2021. After the ruling of Google as a monopolist in August 2024, I realized I hadn’t posted it here yet. Whoops.
Prior to a few weeks ago, I was not overburdened with any particular bias or knowledge when it came to antitrust law and how it affected US businesses. If anything, I start with a bias that regulators should butt out of markets whenever possible.
Then I read a short book.
And now I recommend you read this small book, weighing in at a slim 139 pages, Tim Wu’s The Curse Of Bigness: Antitrust in the New Gilded Age.
This book not only has changed my mind about what is likely to happen during the Biden Administration. It also has changed my mind about what ought to happen.
Antitrust, I see from Wu’s history, is something that enhances markets. It improves competition. It’s usually fought tooth and nail by the target company but it can be something necessary for an industry as well as for consumers. I had not expected to come to this conclusion.
We sort of, kind of, remember that the first wave of trust busting involved the dismemberment of John D. Rockefeller’s Standard Oil into 34 regional oil companies. Far from wrecking the oil industry, the break-up in 1911 of Standard Oil kicked off a robust national oil industry of competitive and innovative firms in the US.
Exxon, Amoco, Marathon Oil, and Chevron among others thrived in the over one hundred years since. Compare those to the lumbering national giants like Mexico’s Pemex, Venezuela’s PDVSA, or Saudi Arabia’s Aramco and you would always choose our market structure over theirs. You can see in them what a problem leaving Standard Oil’s monopoly would have been.
Or take the case of AT&T, the last great antitrust break-up, in 1982. This is the most convincing part of Wu’s book, in which he connects the dots between monopoly power, innovation, and the need for antitrust regulation to improve markets. AT&T never would have chosen the path of breakup if President Nixon hadn’t initially brought antitrust action against the company in 1974.
Before its breakup, AT&T had a monopoly on long distance telephony, local distance, and all equipment that could be plugged into a phone jack. It jealously killed off innovators that threatened any of its control, like tiny MCI trying to innovate with microwave towers. As Wu tells it, cutting-edge technologies of the early 1980s – like answering machines and fax machines! – would have been quashed or controlled by AT&T. The ability to innovate with modems, to eventually allow home computers to connect to “online service providers” like Compuserve and AOL, was only made possible by breaking up AT&T’s monopoly power.
Having read Wu’s book, however, I’m jumping on the antitrust train.
Wu argues that Europe and Japan in the 1980s largely left their national telephone monopolies in place. Japan – a tech innovator in the 70s and 80s – suddenly found itself leapfrogged by independent US telephone, and then computer, companies. Nippon Telephone and Telegraph retained its size and monopoly power for too long. As Wu writes “There is, after all, only so much you can do when your innovations need to be engineered not to disturb the mother ship.”
It’s hard to imagine counterfactuals, but the sheer size and control that AT&T had over telecommunications until 1982 meant that all the innovation that followed in the United States might never have happened, were it not for antitrust actions begun by Nixon.
Fast forward to the late-1990s. Microsoft nearly established monopoly control over the internet and search engines by crushing the startup Netscape, and bullying its way to 90 percent share of browser usage with Internet Explorer. Google and Amazon and Apple too at that point were merely scrappy medium-sized companies. After years of antitrust litigation, and an ultimately rescinded order to break up, Microsoft ceded space in the browser and search wars. (Just imagine if Microsoft hadn’t backed down. We’d all be using Bing today for search. Ugh. Bing is awful.)
Now we have today’s Big Tech monopolists. Like Amazon, Apple, Alphabet (aka Google), and Facebook.
Don’t get me wrong, I love these companies. They are extremely customer-friendly. I use their products every day. I am grateful for the convenience and services they provide.
I am convinced by Wu that their size alone justifies their breakup. Notice, I did not say “destruction.” Just separation into smaller, non-monopolistic parts, like what happened to AT&T and Standard Oil.
Currently, the antitrust train against the sheer size of Big Tech is gathering steam in state capitals and Washington DC.
Their size is why Texas Republican legislators teamed up with Governor Abbott to warn large social media companies that any perceived political biases will be punished and regulated. Their size is what made the recent “60 Minutes” whistleblower story resonate, in which a former employee said Facebook purposefully emphasizes hateful and anger-inducing content, because it’s better for increasing engagement with the platform. Their size is why, when Facebook and Instagram suffered an unexpected outage recently, the schadenfreude was palpable. Many of us use these companies but we also rightly fear – and truth be told – loathe them a little bit.
Their extraordinary control over speech and media is what so angered President Trump and conservative supporters when Trump was de-platformed following the January 6th riots.
Conservative Senator Josh Hawley (R-Missouri) pushes his “Trust-Busting Agenda For the 21st Century.”
The language on his website, calling out Google and Amazon in particular, seems straight from Wu’s book. On September 30th he introduced legislation to allow parents to sue social media companies if their children were harmed.
In the wake of the temporary Facebook/Instagram outage, progressive Representative Alexandra Ocasio-Cortez (D-New York) took to Instagram to call for breaking up Facebook, Instagram, and WhatsApp, due to their size.
You could almost ignore these calls as fringe political voices. But you shouldn’t. The antitrust calls will soon be coming from inside the White House. Tim Wu joined Biden’s National Economic Council as Special Assistant for the President for Technology and Competition Policy. I don’t believe Wu joined just to have a job. Stuff’s going to happen.
Having read Wu’s book, The Curse of Bigness, I want stuff to happen. Bigness is its own threat. Bigness ultimately quashes innovation. A better society, and a better market, requires governments to at times check the ambition, size, and voracious appetites of our biggest, and yes, most successful companies.
Don’t fear the trustbusters. We don’t know yet what tech marvels would be possible from the broken-up pieces of Google. Those software engineers don’t just go away. They probably just continue to invent, but without the innovation-squashing that incumbency and monopoly create.
Chop down the tallest tree and let the forest grow.
This post ran as a column in 2021 in the San Antonio Express News and Houston Chronicle.
Please see other Bankers Anonymous book Reviews – They’re all here!
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