By: Mitch Torrence,
“Robber Baron” is a term that conjures up images of John D. Rockefeller, Andrew Carnegie, Henry Frick, and Cornelius Vanderbilt; men in dark, smoke filled rooms amassing their fortunes on the backs of monopolistic enterprises. The days of the Robber Barons are gone now. The heads of Silicon Valley, Mark Zuckerberg and Sheryl Sandberg, Jeff Bezos, Tim Cook, Larry Paige, and Sergey Brin don’t exactly fit the description or so it would seem. Rockefeller’s Standard Oil Company was broken up pursuant to the Sherman Anti-Trust Act when the Supreme Court handed down its decision in Standard Oil Company v. United States. Today, Silicon Valley has assumed the mantle once occupied by the likes of Standard Oil, yet conversations about the potential of anti-trust laws to break up the Big Tech companies remain muted. The current state of anti-trust poses a serious problem, but it may be time to consider breaking up the Big Tech companies.
Perhaps the largest hurdle to clear when considering breaking up Big Tech is the state of anti-trust today. Gone are the days of the Standard Oil, American Tobacco, and AT&T breakups. Since the 1980’s, anti-trust has been far less aggressive and less concerned with companies being oversized and depressing competition. The primary driver of this is the rise in prominence of the Chicago School, which moved the focus of anti-trust from structuralism to price theory, focusing on whether or not consumers are paying inordinate prices as opposed to a company driving competition out of the market. This poses an issue with Big Tech companies as many of the services they provide are ostensibly free. This has, as Hubbard notes, allowed the companies to largely fly under the radar but the reality is that the users pay with their data. This line of thinking recently has been challenged more and more by people like Khan and Hubbard, but it remains dominant. It also bears mentioning that the line the Chicago School takes is at odds with the political origin of the Sherman Act. There exists an additional messaging issue in that it’s fairly difficult to say to consumers “the convenience you enjoy from Amazon etc. and the low prices you enjoy, they don’t matter”.  Perhaps the most daunting task that remains is the fact that Tech Companies don’t necessarily resemble monopolies as they’re classically understood. It is worth noting that while the iPhone is the most popular phone in America, it accounts for around only a third of phones sold. Furthering this point, Amazon does not account for the majority of online sales, and its market share of American retail remains in the single digits. It’s true that Facebook and Google constitute a duopoly in digital ads, but this is one of the few classic examples. All of this paints a rather bleak picture for the prospect of breaking up the tech companies; at the very least it is an uphill battle. However, a legitimate case remains to be made and it begins with the outsized effect the Big Tech companies have in the economy.
In the first quarter of 2017 the world’s four most valuable companies were Apple, Alphabet, Microsoft, and Amazon; Facebook came in at number 8. This in and of itself is not necessarily problematic; it is generally a good thing for American companies to occupy these slots. The problem arises when one considers how this value is being attained and the cost that comes along with it, most notably the lack of competition in the space. It isn’t a coincidence that the number of companies started in the United States is at a 40-year low. The barrier to entry in these industries, despite what common wisdom would suggest, is high. Moreover, the structure of companies like Amazon or Alphabet that have their hands in every area creates a structural problem that may manifest itself as outsized leverage. As Khan notes, Amazon is able to use its structural advantages to create anti-competitive environments. This is a problem that anti-trust moving away from the Chicago School may be able to solve. Additionally, there are criticisms of the way these companies are developing that may be the province of anti-trust. There is a mythology associated with Big Tech that paints the companies as scrappy upstarts that stay on top of the market through innovation; the reality is murkier. Google, for example, did not develop Android, but rather acquired it. Amazon has employed similar tactics. The result being that these companies can wield their structural power and create anti-competitive environments that may necessitate anti-trust.
The mythology surrounding Big Tech complicates the matter at hand; the reality is that the level of convenience Americans enjoy due to Amazon, Apple, Google, etc. is largely, and perhaps rightly, considered to be a net positive. However, this does not mean these companies can do no wrong nor does it mean that we ought to ignore the very real structural problems these companies are creating. It is not a forgone conclusion that breaking up Big Tech is necessary, and more to the point the current status of anti-trust doctrine in the U.S. would seem to preclude it. That being said, it may still be time to move fast and break up Big Tech.
 See generally, Standard Oil Co. v. U.S., 221 U.S. 1 (1911).
 Id.; see generally American Tobacco v. U.S., 221 U.S. 106 (1911).
 See Lina Khan, Amazon’s Antitrust Paradox, 126 Yale L.J. 710 (2017).
 Sean Illing, Why “Fake News” Is an Antitrust Problem, VOX (Sept. 23, 2017), https://www.vox.com/technology/2017/9/22/16330008/facebook-google-amazon-monopoly-antitrust-regulation.
 See Farhad Manjoo, Can Washington Stop Big Tech? Don’t Count on It, New York Times (Oct. 25, 2017), https://www.nytimes.com/2017/10/25/technology/regulating-tech-companies.html?_r=0,
 See Natasha Tiku, Digital Privacy is Making Antitrust Exciting Again, Wired (June 04, 2017), https://www.wired.com/2017/06/ntitrust-watchdogs-eye-big-techs-monopoly-data/.
 See Khan, supra note 3.
 See Tiku, supra note 12.
 See Khan, supra note 14.
Image Source: https://latourades.wordpress.com/2014/01/page/2/.