As Democrats prepare a program to win the legislature in the 2018 legislative elections, one issue stands out as new: The idea of breaking up large tech companies.
In an op-ed today, Senate Democratic leader Chuck Schumer wrote that his party would “going to fight to allow regulators to break up big companies if they’re hurting consumers and to make it harder for companies to merge if it reduces competition.” Another Democratic senator with reputed presidential ambitions, Cory Booker, told Recode that “corporate villainy is reigning” and regulators should look to Google as a potential monopolist. And Democrat David Cicilline, who represents Rhode Island in the House of Representatives, is calling for hearings on the anti-competitive possibilities of Amazon’s planned purchase of Whole Foods.
All three lawmakers are using a complicated economic proposition to make a populist point ahead of their confrontation with the Republican party of Donald Trump: We’re in favor of helping out the little guy against modern corporations that are exploiting regular people.
“Our antitrust laws are designed to allow huge corporations to merge, padding the pockets of investors but sending costs skyrocketing for everything from cable bills and airline tickets to food and health care,” Schumer wrote.
Fixing the problem is a key plank in the Democrats’ “Better Deal” campaign platform, which envisions the creation of a new anti-trust advocate—a “trust buster”—to push regulators to crack down on monopolists. In a sense, they are catching up with party darling Elizabeth Warren, who outlined this agenda in a 2016 speech (pdf).
The anti-trust project taps intop latent questions about the digital economy, which is creating enormous amounts of value for investors without providing mass employment on the scale of previous American corporate renaissances. To its advocates, battling monopolies is the political rallying cry Democrats need to regenerate their populist appeal, which was famously lacking in the 2016 election. Besides tech companies, Democrats can highlight any number of corporate villains, from telecom giants to airlines, that leverage concentration to public consternation. They’ve even got a plan to fight beer monopolies and lower the prices on suds.
If the Democrats win the House in 2018, their power on this issue will still be limited mainly to conducting investigations as long as Donald Trump and his veto pen are in the White House. But the party could use that time to educate the public about the principle challenge that has left anti-trust enforcement a largely dead letter since Microsoft was sued by the US government in 1998—namely, legal interpretations that base the decision to enforce, or not, on the prices consumers pay.
It’s easy to demonstrate that tech companies have seized enormous amounts of market share in various domains, from search to online retail to social networking. But because many of Google’s services are ostensibly free and Amazon’s market share is driven by low prices, regulators have done little to stand in the way of these companies. Even in more traditional industries, this theory is used to justify consolidation that might have appalled earlier generations of Americans.
Critics of modern monopolies argue that the damage is felt by society in other ways—in shrinking new business formation and private investment; in growing income inequality; in the proliferation of personal data across digital platforms; and in the hollowing out of the media industry.
“For more than 35 years, both parties have embraced a competition philosophy that put the rich and powerful first,” Barry Lynn, who directs the Open Markets program at the New America Foundation, wrote in a statement. “Democrats must clearly reject the Chicago School philosophy of ‘consumer welfare.'”
In other words, Democrats will need to push new ways of thinking about and enforcing anti-trust laws if they want the public on their side.
Beyond the legal hurdles of taking on the digital behemoths, the politics of such a move would be risky. Tech company investors and CEOs have been a fertile source of campaign cash for the Democratic party; directly challenging their business model could prove costly. House Democratic leader Nancy Pelosi hails from San Francisco and is as protective of local industry as any lawmaker. And some Democrats looking for gains among Republican-leaning suburban voters turned off by Trump might fear that attacks on big business may come off as attacks on business itself.
Yet the embrace of trust-busting rhetoric by the party’s head honchos suggests at least one thing: It polls better than the alternative.