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News

Monopoly Power: Yesterday & Today

  • Chicago Rail Yards
August 30, 2021

The hills are alive with the sounds of lawyers, often on phones, discussing matters of monopoly and antitrust. President Biden’s just-issued executive order to encourage commercial competition will reinforce the powerful trend.

This development clearly is important. Twentieth century antitrust activity involved the telephone, but use then was mainly for conversation over landlines.

In May 2021, trial began in San Francisco involving Apple and Epic Games. When the maker of the extremely popular game Fortnite refused to require using the Apple app store, and thereby paying a 30 percent surcharge, the store removed the game. Apple is the target of a number of other lawsuits, some alleging patent infringement.

Also in May, Karl Racine, aggressive Attorney General for Washington D.C., sued Amazon. The behemoth allegedly strong-arms third-party sellers to fix prices.

            This month, attorneys general of thirty-six states and the District of Columbia sued Google. The global giant reportedly is too aggressive in restricting consumers to the inclusive operating system for Android phones, including apps and services.

            In October 2020, the Department of Justice and eleven state attorneys general sued Google for alleged anticompetitive practices. These include paying Apple billions of dollars annually to be the default search engine on products.

Last December, the Federal Trade Commission and forty-six states sued Facebook for anticompetitive practices, specifically buying WhatsApp and Instagram, to stifle competition. In this case, a federal judge threw out the lawsuit on grounds of insufficient evidence and excessive government delay in filing the suit.

Early in the twentieth century, radio and telephones vastly expanded and democratized communication and information. After World War II, television and then personal computers greatly reinforced this transformation. Two continuous characteristics are complex interplay between technology and society, and active government oversight.

Information transmission industries today involve vast rapid change. By contrast, in earlier periods established telephone and computer companies enjoyed more structured, stable commercial environments.

            Since the 1950s, antitrust suits in the United States increasingly have focused on technology. Earlier, extraction and manufacturing industries were more likely to be targets.

            John D. Rockefeller brilliantly built the Standard Oil Corporation into the bedrock of the American industrial economy, but near-total control of oil and kerosene production was also dangerous. Standard Oil could literally control the U.S. economy, and shut down the federal government.

Antitrust action broke up Standard Oil in 1911. Journalist Ida Tarbell played an important role by publicizing abuses, an instructive example of public activism.

Computer and communications companies may attract prosecution, though none has the power of Standard Oil. In 1969, the U.S. Justice Department went after IBM but dropped the suit in 1982. Entrepreneurs led by Apple were significantly weakening IBM’s hold. The market outmaneuvered the regulators.

The Feds had more success in pursuing AT&T with an antitrust suit begun in 1974. In 1984, the corporation was broken up, only to reemerge as the market again changed.

In 1894, Ida Tarbell moved back to the U.S. after several years in Paris. Rather than rejoin family in Titusville Pennsylvania, she settled in New York City, a courageous daring move then for a single woman. 

Electric trains and lights permitted relatively safe, comfortable travel. Once again, evolution of technology was helping the average person.

Consumers benefited from growing freedom of movement, as well as information. Investigator Tarbell made excellent use of newly available telephones.

Learn More: Ida M. Tarbell, “The History of the Standard Oil Company”