The Digital Robber Barons
In 1890, the Sherman Antitrust Act was signed into law, promising to end an era of aggressive corporate collusion and monopolization. In the first 100 years since the passage of major antitrust legislation, huge progress has been made to ensure no single company or small set of companies controls an industry. However, where 19th century rulings paved a way for more evenly-distributed economy through the 80s, they have ultimately failed to address the monopolies, duopolies, and oligopolies which have coalesced under new digital consumer outlets.
The antitrust powers of the early 1900s were leveraged swiftly by President Teddy Roosevelt, who sued 45 companies, including Standard Oil, for functioning as monopolies. Though consumer protection from aggressive pricing collusion was one reason for breaking up monopolies, the primary motive for governmental action was more institutional—artificially high prices were also leveraged on the state, and powerful monied interests kept a growing stable of legislators in their pockets to keep it that way. Sound familiar?
Monopolies of the past were obvious. Their resources were mostly tangible. AT&T controlled all the phone lines, railroad companies had exclusive ownership of the rails; big banks controlled the money. Today, the goods and services at stake are more subtle: bandwidth vis a vis the internet, personal data vis a vis social media, and facts/truth vis a vis the news. And while there are plenty of examples of tech companies that look like monopolies, it doesn’t get much more obvious than Amazon.
For years now, Amazon has been expanding its reach. As far as hard goods go, at its heart, it’s a logistics company—and it’s really really good at logistics. The company has used that expertise to rapidly takeover online sales. In 2017, more than half of all online sales were generated by Amazon. With their takeover of Whole Foods last summer, the whispers of antitrust action have begun growing louder.
The trick to unmasking Amazon as a monopoly is to view its growth trajectory. Amazon began by selling books and expanded into other consumer goods, including visual media and groceries. Amazon is on it’s way to creating a legitimately omnichannel experience—a one-stop-shop for anything you might need. And if we can get everything we need from Amazon, why bother spending money anywhere else? This is the danger Amazon presents to the market—a monopoly on something much more subtle: convenience is a monopoly on anything.
The effects are already being felt across America. In the same year CEO Jeff Bezos was ranked World’s Richest Man, reports suggesting a desperate Amazon warehouse workforce tuned us back in to the reality of Amazon’s success. Within hours of posting record profits for 2017, the company announced it would be raising the price of Prime memberships to an annual $119.
And while Amazon’s own workers struggle, other businesses are being squeezed by ruthless price gouging, technological scale-tipping, and impossible economies of scale. In trying to offer a future to businesses who want to be like Bezos, one author basically says that they aren’t going to get any further than a bookstore that smells like grandma’s house.
Rather than ponder the ways in which we might eke out a living in the age of Amazon, couldn’t we be focusing on how we can foster a better opportunity for more people? What would it take to pry the futures of small business and unskilled labor out of the hands of Amazon.com?
Europe might have an approach. EU and UK regulators have made no secret of their intention to examine large tech companies for potential infringements on antitrust laws. And though breaking up the tech giant may be out of the question in a traditional sense, creating regulations aimed at increasing competition could have long-term benefits for smaller businesses and consumers.
Whatever the solution is, it will likely not come from Amazon, nor will they be likely to embrace it. The route of Bezos’ march towards an “Amazon for everything” world has been solidified. It’s going to take a serious disruption to change that course.