On July 15, 2015, Amazon marked the twentieth anniversary of its founding with a “global shopping event” called Prime Day...
Prime Day is now an annual event; last year it marked the largest sales day in Amazon’s history. The sale has become a secular holiday, akin in its economic wallop and social ubiquity to Super Bowl Sunday or the Fourth of July. Today, nearly half of the nation’s households are enrolled in Prime. That’s more Americans than go to church every month. More than own a gun. And more than voted for either Donald Trump or Hillary Clinton last November.
The rise of Amazon, and its overwhelming market dominance, has accelerated the collapse of traditional retail outlets. Amazon’s stock has risen by 300 percent since 2012, and Wall Street analysts have compiled a “Death by Amazon” index to track the retail companies most likely to be killed off by the online giant. This year alone, three retail stalwarts—Walmart, JCPenney, and Rite Aid—plan to shutter or sell off nearly 1,200 stores, and nearly 90,000 Americans have been thrown out of work since October. One of every eleven jobs is tied to shopping centers, which generate $151 billion in sales taxes each year. All of which is rapidly being lost to a single company. In June, Amazon announced its largest-ever acquisition, paying $13.4 billion to buy the Whole Foods grocery chain. Such is the power of the “everything store” and its “one-click ordering.”
Amazon did not come to dominate the way we shop because of its technology. It did so because we let it. Over the past three decades, the U.S. government has permitted corporate giants to take over an ever-increasing share of the economy. Monopoly—the ultimate enemy of free-market competition—now pervades every corner of American life: every transaction we make, every product we consume, every news story we read, every piece of data we download. Eighty percent of seats on airplanes are sold by just four airlines. CVS and Walgreens have a virtual lock on the drugstore and pharmacy business. A private equity firm in Brazil controls roughly half of the U.S. beer market. The chemical giant Monsanto is able to dictate when and how farmers plant its seeds. Google and Facebook control nearly 75 percent of the $73 billion market in digital advertising. Most communities have one cable company to choose from, one provider of electricity, one gas company. Economic power, in fact, is more concentrated than ever: According to a study published earlier this year, half of all publicly traded companies have disappeared over the past four decades.
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Increasing concentration of ownership has also led to unprecedented levels of corporate crime. In case after case, courts in Europe and the United States have ruled that giant companies are operating as “cartels,” engaging in illegal conspiracies among themselves to divide up their turf. As a result, they have been able to fix the price of almost everything in the economy: antibiotics and other life-saving medication, fees on credit card transactions, essential commodities like cell-phone batteries and electric cables and auto parts, the rates companies pay to exchange foreign currency, even the interest rates on the municipal bonds that cities and towns rely on to build schools and libraries and nursing homes. A single price-fixing scandal by the world’s largest banks—fixing the global interest rates known as LIBOR—involved more than $500 trillion in financial instruments.
But the price we pay for increasing monopolization goes far beyond such corporate rip-offs. Monopoly increases income inequality by concentrating wealth in major cities: St. Louis, for example, has lost a long roster of hometown companies to mergers and acquisitions, including Anheuser-Busch, TWA, Ralston Purina, May Department Stores, A.G. Edwards, and Panera Bread. Rural America has been especially hard hit, as local stores and family farms have been “disrupted” by giant supermarket chains, seed companies, fertilizer giants, meat processors, and grain traders. And don’t blame automation: Corporate America’s investments in workplace technology have plunged by 30 percent over the past 30 years. Even robots are subject to the power of monopoly.
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To succeed at breaking up today’s economic overlords, Democrats must pursue three related approaches to antitrust. First, they must stop monopoly before it happens. That means using the antitrust authority of the federal government to crack down on mergers. “Monopoly is made by acquisition,” notes Jonathan Taplin, the author of Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy. “Google buying AdMob and DoubleClick, Facebook buying Instagram and WhatsApp, Amazon buying, to name just a few, Audible, Twitch, Zappos, and Alexa. At a minimum, these companies should not be allowed to acquire other major firms, like Spotify or Snapchat.” When it comes to stopping mergers and acquisitions, Democrats should become far more aggressive.
Second, Democrats should work to rebuild structural barriers to monopoly in a wide range of industries, as they did in the 1930s with Glass-Steagall in banking. A content distributor like AT&T should not be allowed to buy a content provider like Time Warner. Online ad companies should be barred from owning browsers and ad blockers. And Amazon should not operate as both a marketplace and a competitor within that marketplace. It’s one thing, say, to run a big trucking company—but if you’re allowed to own the highway itself, other truckers won’t stand a chance.
Third, Democrats should move to split up or neutralize the power of corporations that have the ability to dominate and control entire realms of commerce. Amazon has forced publishers to offer it steep discounts on books, Monsanto is organizing the genetics behind much of our food supply, and the Cleveland Clinic exerts power over doctors throughout northeast Ohio. Such monopolies must either be regulated aggressively or broken up.
