Digital technology firms, monopolies, and antitrust actions

Today’s digital technology industries are characterized by intense degrees of corporate concentration.

Amazon revolutionized access to books and continues to grow its market share of both print books and eBook sales — approaching 50% of print sales and more than 90% of eBook sales.  It is also starting to dominate the sale of many other kinds of goods, and now vigorously seeks a dominant market share in sectors such as grocery retailing and pharmacies. Facebook, which owns 54% of the social media market, is responsible for a great deal of the Internet hate speech and fake news nightmares we face today. Google, which revolutionized the business of search, and now owns 76% percent of that market, seems to manipulate the search engine algorithm for its own commercial benefit.  Apple, which demonstrated that it was possible to design for ease of learning and ease of use and still achieve commercial success, now owns 66% of the tablet market and 22% of the mobile phone market, and seems to manipulate the policies of software distribution on its platforms for its own commercial benefit.

There is now increasing activity by the U.S. Congress and various agencies of the executive branch of the government to investigate the degree of monopoly control exercised by these four firms, and whether or not this deserves a vigorous response.

The United States has a rich tradition of opposing monopoly control of critical industries through antitrust legislation and action. Columbia University Professor Tim Wu has documented this in a brilliant new book, The Curse of Bigness.  Wu documents the history of antitrust action against monopolists J.P. Morgan and John D. Rockefeller through legislation, such as the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914, as well as the later Anti-Merger Act of 1950, and political actions by figures such as President Teddy Roosevelt.  Perhaps the highlight of such activities was the 1984 mandated break-up of AT&T into seven regional “Baby Bells”.

U.S. antitrust actions faded in the latter part of the 20th century as the “Chicago school’ of antitrust became dominant. As evangelized by lawyers such as Robert Bork, it asserted that the only role for government with respect to possible monopolies was to ensure that consumers benefited, which they generally interpreted as lower prices for purchases.  An example of the influence of the Chicago school was the failure of the US Government’s antitrust action against Microsoft.

Wu suggests, towards the end of his book, that the degree of market concentration in digital technology industries today requires more research to better understand the evolving monopolies; merger reviews, with full public consultation; big antitrust cases, such as those carried out against J.P. Morgan, John D. Rockefeller, and AT&T; and, ultimately, break-ups of firms that have become monopolies.

But does monopoly control of an industry actually lead to the lowest possible price?  Strong argument can be made that did this that this is not the case. We shall address this question in a future blog post. We shall also discuss other considerations, other values, that should be considered in deciding to what extent monopoly control of digital technology industries should be allowed, and when government needs to take decisive action against such monopoly control.


Do you believe that monopolies provide lower prices to consumers?  Why or why not?  What other considerations and values are important in deciding whether or not to allow or encourage firms whose market position is so strong that they are achieving significant dominance over a market.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s