They also lay claim to whole terrains of potential innovation including ideas barely on drawing boards and flood the system with so many applications that lone inventors have to wait years. The White House intellectual property adviser, Colleen V. Chien, noted in 2012 that Google and Apple were spending more money acquiring patents (not to mention litigating them) than on doing research and development.
Antitrust laws used to fight this sort of market power. In the 1990s, the federal government accused Microsoft of illegally bundling its popular Windows operating system with its Internet Explorer browser to create an industry standard that stifled competition. Microsoft settled the case by agreeing to share its programming interfaces with other companies. But since then Big Tech has been almost immune to antitrust, even though the largest tech companies have more market power than ever.
Maybe these tech companies have actually avoided wrongdoing as they accumulate unprecedented market share. Or maybe they've accumulated enough political power to keep antitrust regulators at bay.
In 2012, the staff of the Federal Trade Commission's Bureau of Competition submitted to the commissioners a 160-page analysis of Google's dominance in the search and related advertising markets, and recommended suing Google for conduct that "has resulted -- and will result -- in real harm to consumers and to innovation."
But the commissioners chose not to pursue a case. Investigators also found evidence that Google was pushing it's own products ahead of competitors' on search results, though they did not recommend a lawsuit on this point.
It's unusual for commissioners not to accept staff recommendations, and they didn't give a full explanation. The FTC noted a competing internal report that recommended against legal action, but another plausible reason has to do with Google's political clout. Google is now among the largest corporate lobbyists in the United States. Around the time of the investigation the company poured money into influencing both the commissioners and the commission's congressional overseers.
Google is heading into a major fight with antitrust officials in the European Union for some of the same reasons the F.T.C. staff went after it. Not incidentally, Europe is also investigating Amazon for allegedly stifling competition in e-books, and Apple for doing the same in music. Many on this side of the Atlantic believe Europe is taking on these tech giants because they're American. Another possible explanation is that Google, Amazon and Apple lack as much political clout in Europe as they have here.
Economic and political power can't be separated because dominant corporations gain political influence over how markets are maintained and enforced, which enlarges their economic power further. One of the original goals of antitrust law was to prevent this.
"The enterprises of the country are aggregating vast corporate combinations of unexampled capital, boldly marching, not for economical conquests only, but for political power," warned Edward G. Ryan, the chief justice of Wisconsin's Supreme Court, in 1873. Antitrust law was viewed as a means of breaking this link. "If we will not endure a king as a political power," Senator John Sherman of Ohio thundered, "we should not endure a king over the production, transportation and sale" of what the nation produced.
Sherman's Antitrust Act passed the Senate with just a single vote against, passed the House unanimously, and was signed into law by President Benjamin Harrison on July 2, 1890. Twelve years later, President Teddy Roosevelt used it against Edward H. Harriman's giant Northern Securities Company, which dominated rail transportation in the Northwest. In 1911, President William Howard Taft broke up John D. Rockefeller's sprawling Standard Oil empire.
The underlying issue has little to do with whether one prefers the "free market" or government. The real question is how government organizes the market, and who has the most influence over its decisions.
We are now in a new gilded age similar to the first Gilded Age, when the nation's antitrust laws were enacted. As then, those with great power and resources are making the "free market" function on their behalf. Big Tech -- along with the Big Pharma, giant health insurance companies, Big Agriculture, and the largest banks on Wall Street -- dominate our economy and our politics.
Yet as long as we remain obsessed by the debate over the relative merits of the "free market" and "government," we have little hope of seeing what's occurring and taking the action that's needed to make our economy work for the many, not the few.
[This originally appeared in the September 20 edition of the New York Times. It's drawn from my forthcoming book "Saving Capitalism: For the Many, Not the Few."]
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