By Yehuda Waitman
Imagine you live in the year 1890. Large corporations — known as trusts — seemingly dominate your everyday life. Want to purchase a cigarette for a quick smoke? American Tobacco Company, producer of 90% of U.S. cigarettes in 1890, has you covered. Need some oil to heat your home during the cold winters? Standard Oil, responsible for 90-95% of oil refinement in the U.S. in the 1890s, will provide that for you. Missing your Great Aunt Louise in Montana? J.P. Morgan’s railroad trust, Northern Securities Company, will take you there. The examples are numerous. The scope of power and influence of such business trusts makes it appear to you that they’ve squashed all competition beneath their firm grip. Consumers are being forced to pay the prices set by trusts, or face the harsh reality of living without basic necessities. It appears as if these trusts are in control of Congress, highlighted by lawmakers’ receiving backing from trusts. Filled with rage, you think to yourself: “Something must be done!” Heroically, in steps Congress and Senator John Sherman to approve the Sherman Antitrust Act with the goal of utilizing legislation to begin limiting the power of trusts. Over the next 25 years, antitrust legislation advances further. Slowly but surely, massive trusts are broken up, thereby restoring healthy competition to the American economy. “The American people are saved,” you think to yourself! And indeed we were.
No longer do single businesses dominate entire industries as they once did. Need gas for your car? Options are abundant. Standard Oil was broken up into 34 separate entities following the passage of various antitrust bills, opening the door for the countless oil companies operating today. Want to head west to visit relatives? U.S. airlines are constantly engaging in price wars with one another for passengers. Everywhere you turn today, it seems competition is abundant, and when contemplating the intentions of antitrust legislation from the early 1900s, it certainly seems like goals have been achieved. Yet, many lawmakers today seem rather confused.
On Wednesday, July 29, 2020, lawmakers held a congressional hearing on four large tech firms’ business practices. Top dogs at Apple, Facebook, Google, and Amazon were subject to several hours of grilling by representatives from both sides of the aisle, with lawmakers universally concerned about the level of influence these companies have on American society. Amazon was accused of competing against third-party sellers on its own website; Facebook was speared with allegations of gobbling up rival social media platforms to maintain a vast market control; Google was charged with controlling too much of the internet’s traffic; Apple was blamed for its App Store policies; the accusations were heaped on relentlessly for five grueling hours. Rep. David Cicilline, chairman of the House Judiciary Committee’s antitrust subcommittee, even began the hearing by stating: “Our founders would not bow before a king. Nor should we bow before the emperors of the online economy.” Upon hearing these charges, a visitor from the early 1900s would conclude that trusts have managed to live on in America and still dominate our lives, despite our best efforts. Individuals reading this column, if unaware of additional information, might fairly conclude the same. Sadly, the truth laughs in the face of our lawmakers.
Our tech giants today have little parallels with the trusts of yesteryear. The biggest divergence, yet somehow unacknowledged by our representatives, is that today’s tech giants are stalwarts in areas of life that are completely unessential for a functioning society. Apple, Facebook, Amazon, and Google all offer products sustained by the internet. The internet, many of us may have forgotten, developed just in the past 50 years. As evidenced by the fact that humans have been alive and thriving for much longer than 50 years, the internet is not necessarily a basic necessity. Even our most concerned representative at the July 29 hearing would have a hard time denying this fact. Simply put, we do not need any of these companies’ products to live. The opposite is true of 20th century trusts — they dominated industries which were critical for society to function: Oil was a necessary basic good to survive cold winters; addicted smokers had to satisfy their nicotine cravings by smoking; many buildings could not be constructed without the metals produced by U.S. Steel; railroads were the only key to long distance travel; and so on. To suggest, even for just a moment, that the practices of today’s tech firms warranted a hearing from a House antitrust committee, is akin to spitting in the face of our lawmakers who worked tirelessly a century ago to protect American citizens. The two categories of companies operate in completely different realms of necessity for society, and it is shameful for today’s lawmakers to suggest they are paralleled.
Granted, one could still argue that despite the fact that these firms operate in non-essential business areas, their outsize market control is a reason for concern. Upon examination of exactly how much influence these four tech companies have within their industry, one would again find themselves bewildered with our lawmakers’ attitudes. These firms have widely disparate levels of influence across their respective industries, certainly not warranting a congressional hearing which did not distinguish between the four in terms of ‘evilness’ levels.
Amazon? It controls roughly 38% of U.S. ecommerce sales, representing less than 5% of all total retail sales. Apple? It controls 40-45% of all mobile phone sales in America, with its closest competitor, Samsung, commanding a formidable 25-30% of the market. Facebook? It hovers minimally north of 55% of all U.S. social media site visits. Google? While it admittedly does control 85-90% of the search engine market, it’s among the least guilty of firms accused of beating up on ordinary citizens, simply because Google operates in a manner which offers nothing for sale to its users. No product or service is offered anywhere on Google through web searches, which means antitrust legislation is wildly irrelevant. It’s impossible to proclaim a violation of antitrust laws when no one is buying anything. Even more so for Facebook which has a far smaller market share.
Concerning Amazon and Apple, which do actually offer products for sale, the market share data results in a conclusion which was exactly the goal of antitrust legislation: healthy competition. 50% of market share, as in Apple’s case, is a far, far, cry from the 90% or above of market share 20th century trusts enjoyed. Amazon, controlling 38% of ecommerce and only 5% of total retail sales, clearly indicates robust and thriving competition. Clearly, these four companies have little reason to be grouped together as equal villains; there are little to no parallels which exist between the firms’ respective market influence. Lawmakers were comparing peaches to potatoes. If our representatives are legitimately concerned about anti-competitive business actions, perhaps they should stop handing out billions of dollars’ worth of defense contracts to only a handful of firms — see Boeing’s decades-long history of receiving such contracts with little competition.
If these companies all operate in unessential business realms and have widely varying levels of market control, what then motivated this congressional hearing under the guise of antitrust investigations, and the grouping these widely uncomparable companies as equal criminals? Could it be the ever-increasing Democratic disgust for ultra-wealthy individuals, as the heads of these firms all are? Or perhaps, it’s the Republican dislike for liberal-leaning organizational policies which these companies adhere to? Theories abound. One thing is for certain: the lawmakers who called this hearing on July 28 have thrown piles of trash upon the legacy of our bravest antitrust legislators.