Amazon Is a Private Government. Congress Needs to Step Up.Roundup
tags: regulation, Amazon, antitrust, tech industry
STACY MITCHELL is a co-director of the Institute for Local Self-Reliance, where her research focuses on economic concentration and the health of local economies. Her recent reports include “Amazon’s Stranglehold” and “Monopoly Power and the Decline of Small Business.”
Amazon, of course, is just one of the tech giants under the antitrust subcommittee’s scrutiny. The panel is building a case that these companies have created a form of private government—autocratic regimes that are tightening their control over our main arteries of commerce and information. As such, they threaten Americans’ liberties. “Our founders would not bow before a king,” Cicilline said at the hearing. “Nor should we bow before the emperors of the online economy.”
Congress has not conducted so detailed an investigation of monopoly power in the lifetimes of most Americans, so it’s hard to conceptualize where it might lead. But if the past is any guide, it could precipitate both new laws and antitrust prosecutions. In 1938, for example, Congress set up a commission to examine concentration across multiple industries. Its findings led the federal government to file a major antitrust case, change the patent laws, and, in 1950, pass sweeping legislation to restrict mergers. Congress conducted other investigations of monopoly in the 1950s and 1960s, and the results shaped antitrust enforcement. But then, beginning in the 1970s, monopoly was sidelined as a concern by both political parties.
The House’s antitrust subcommittee is resurrecting this tradition, and there are signs its work is already having an effect. State attorneys general in New York and California have reportedly opened antitrust investigations into Amazon.
But a multiyear court fight is not the only way to restructure Amazon and the other tech giants. The subcommittee may recommend a more straightforward approach. Congress could approach digital platforms the same way it did the railroads, another pivotal technology that governed market access. In the late 19th century, a handful of railroad barons used their control of the rails to monopolize other industries. They captured the market for coal, for example, by blocking rival producers from using the rail lines to get their coal to market. They also charged farmers exorbitant rates to ship their crops. Congress responded by setting up a commission to oversee rates and ensure that the railroad companies did not discriminate against some customers by imposing higher prices or different terms of access. Then, in 1906, Congress enacted a law barring the railroads from maintaining an ownership stake in firms that produced goods requiring rail transportation, thereby dissolving their ability to self-deal.
By passing a similar law today, Congress could compel Amazon to spin off its core parts, making each of its major divisions—its online marketplace, retail division, cloud services, and logistics operation—a stand-alone company. Doing so wouldn’t eliminate what people like about Amazon. But it would prevent Amazon from leveraging the interplay between its parts to sidestep competition, exploit smaller companies, and expand its dominance into adjacent markets. It would, in the words of the NYU business professor Scott Galloway, “oxygenate the economy,” opening the way for new businesses, new innovations, and new jobs.
Amazon’s investors clearly aren’t worried that this will happen. The antitrust subcommittee’s work may not lead to legal changes for years, if at all. But in the middle of a pandemic that has spawned so much rethinking of how American society has come to operate, the panel is offering a reminder that tech monopolists, too, are subject to democratic rule. By limiting their ability to expand their power, Congress could also reestablish America as a democracy that can actually solve problems and govern itself.
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