In running for president, Sen. Elizabeth Warren proposes to break up the Big Tech giants of Amazon, Google and Facebook.
Her focus is a bit odd because Warren, as a Harvard academic, first achieved national attention as co-author of a study claiming that medical bills were to blame for 62 percent of bankruptcies. It ignited a scholarly debate that continues. But health-care companies have gotten big – PricewaterhouseCoopers reported 255 mergers and acquisitions in the second quarter of 2018 alone.
Warren was also the one who established the Consumer Financial Protection Bureau, a federal agency to police the scams and hustles inflicted on households in the run-up to the financial panic of 2008 and the Great Recession. Many of the worst actors were big banks.
So it's not just Big Tech that needs the equivalent of trust busting – something I proposed in a column a year ago.
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Health-care companies, banks, airlines, railroads, media companies, Big Oil, Big Pharma, Big Telecom and more are too big and stifle competition, innovation, job creation, wages and customer choice. The share of young companies has been declining in America.
Yet Warren chose Big Tech rather than the areas where she has the most expertise. One can assume she's trying to get ahead of a left-moving Democratic Party at a time when prominent technology giants are in bad odor.
In a Medium column where she fleshed out her ideas, she wrote, "Today's big tech companies have too much power? – too much power over our economy, our society, and our democracy. They've bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation."
Paradoxically, however, she nearly undermines her argument by claiming that the Microsoft antitrust action in the 1990s helped clear a path for internet companies like Google and Facebook to emerge.
Well, maybe. But Microsoft is bigger and healthier than ever – the Beast of Redmond is well-liked, too – and the "successes" she cites are now giant corporations she says need breaking up themselves. So perhaps the Microsoft lawsuit cleared a path, but the fundamental problem of bigness remains.
Like the Green New Deal and raising top marginal tax rates on the rich, breaking up Big Tech is an idea in motion, the start of a conversation. But it has political appeal beyond the left, as Big Tech's reputation has taken a big slide in a new Harris Poll.
And like the other proposals, it stands little chance of becoming law anytime soon because of the red-state lock on the Senate. Presidents alone can't make this happen, but they can appoint regulators – no small thing.
The late 19th century's Gilded Age was characterized by monopolies and cartels, as well as high inequality, protected by the political power of the wealthy. It didn't last, giving birth to the Progressive era, with antitrust and regulation reigning in the worst abuses.
For example, John D. Rockefeller's mighty Standard Oil was split into 34 companies in 1911, in a case that went to the Supreme Court.
This tough stance continued through much of the 20th century, with an exclamation point being the 1982 breakup of the Bell System.
But big business and conservative intellectuals began fighting back in the 1970s. Especially influential was Robert Bork, more widely known for his failed nomination to the Supreme Court. Bork's most consequential achievement was dramatically redefining antitrust laws.
Instead of protecting smaller businesses and ensuring competition, antitrust laws should encourage economic efficiency, Bork argued. This revolutionary interpretation gradually took hold in the federal courts until it was the standard by which mergers and company size were judged. Or given a pass. The Bell System essentially reconstituted itself in recent years.
Especially since the 1980s, critical sectors of the economy have been taken over by cartels and semi-monopolies with unbeatable pricing power along the supply chain. (How many anti-Amazon New York City protesters went home and ordered something on Amazon because it was cheaper and more convenient than patronizing their local shops?)
Not just the courts backed lax antitrust. It was supported by both Republican and Democratic administrations, as well as deregulation such as the Glass-Steagall Act. The big banks brought on the Great Recession – the best argument yet against bigness – yet they came out of the crisis even bigger.
As a result, Warren and the Democratic left would have to win many elections and gain a Supreme Court majority before a new era of trust busting could get underway. It's a rough ride that Theodore Roosevelt never faced.