Antitrust is key to innovation

Nonetheless, breakups are critical on at least two grounds. In testimony before the House of Representatives last year, Judge Diane Wood stated that “without competitors, there will be no competition.” Even if Congress and agencies prohibit certain forms of unfair competition, they cannot conjure up beneficial forms of competition in monopolistic markets, especially markets in which incumbents enjoy the protection of large network effects. Without a serious search rival, how much motivation does Google have to improve its search results and interface? In the absence of effective competitors, the quality of Google search appears to have steadily declined, including through the proliferation of often unwanted ads. So long as Amazon dominates e-commerce, will it feel much pressure to reduce commissions and improve other terms for its millions of sellers? Paired with rules on unfair competition, breakups of dominant tech corporations can ensure business rivalry that confers benefits on consumers, workers, and suppliers. Great size also means great power: Amazon exercises power up its supply chain to the detriment of manufacturers and their workers, while Facebook and Google wield outsized clout over advertisers. Further, a corporation that owns dozens of plants and facilities across the United States is well positioned to thwart labor organizing. Large corporations today, in the words of labor lawyer Brandon Magner, “disperse their production without dispersing their power.” Under current American labor law, unions can only be formed at the establishment level. For example, Amazon warehouse workers would have to organize the company one warehouse at a time. With its concentration of power but decentralization of operations, a firm like Amazon can reallocate work away from warehouses with unions or even nascent signs of union activity and toward warehouses with more quiescent workforces. This is not a new fear. In 1920 the Interchurch World Movement attributed the failure of workers to organize U.S. Steel to the corporation’s enormous size: The first cause of failure was the size of the Steel Corporation. . . . It had too large a cash surplus, too many allies among other businesses, too much support from government officers, local and national, too strong influence with social institutions such as the press and the pulpit, it spread over too much of the earth—still retaining absolutely centralized control—to be defeated by widely scattered workers of many minds, many fears, varying states of pocketbook and under a comparatively improvised leadership. Giant corporations—specifically their controlling shareholders and top executives—wield extraordinary power in society. They can use their command of economic resources to shape the course of political campaigns, fund favorable media coverage, sponsor sympathetic scholarship, and decide which cities and regions thrive. The utility holding companies did this in the 1920s and ’30s and Big Tech companies do this today. Lord John Browne, the former CEO of BP, candidly told the Wall Street Journal in 2003: “We do get the seat at the table because of our scope and scale. Whether we are the second or the third largest (oil) company is of very little import, but we’re certainly up there and we operate in places which are important to the United States government, and the United States government is important to us.” Jeff Bezos exercised the power that comes with scope and scale in a particularly brazen fashion in 2017 when he invited states and cities to compete to host Amazon’s second headquarters. Municipal and state governments offered Amazon lavish incentives with the aim of attracting “HQ2” and the associated jobs and tax revenues. This frenzy to entice one of the world’s richest men took a particularly embarrassing turn when New York Governor Andrew Cuomo jokingly offered to rename himself Amazon Cuomo if Bezos selected New York for the second headquarters. With elected officials supplicating before Bezos, democracy certainly seemed subordinate to great wealth.