We recently learned that AT&T basically singlehandedly funds One America News (OAN), a Fox News wannabe that is even more caustic. This revelation is just one example of what forty years of failed antitrust enforcement has wrought. Over the years, AT&T has been the subject of federal regulation since its founding in 1881. The most recent one was brought in 1974, and was settled in 1982. In the intervening seven and a half years, much in US politics had changed. The beginning and end of the suit straddled the final breakdown of the Keynesian consensus, and the phoenix-like ascent of a new antitrust regime that remains to this day the reigning hegemony.
When the Reagan administration oversaw the breakup of AT&T, the terms were negotiated in a much friendlier atmosphere than the one that had existed just a few years earlier when the suit had begun in earnest. The justice department under Ford had sought major divestitures from AT&T – for example, it vowed to break up Western Electric, AT&T’s electronics equipment manufacturer ‘into two or more competing firms if necessary’. 1982 saw a different mood in Washington. William Baxter, the Assistant Attorney General under Reagan, who had taken over the suit, was in the process of overseeing the largest merger wave the US economy had seen to date. Playing his part in the new regime that point blank announced its refusal to enforce even the most basic antitrust regulations, Baxter accepted the settlement terms proposed by AT&T. Much of this history is laid out in Matt Stoller’s, Goliath.
Under Baxter, in the early 1980s Antitrust enforcement fell off a cliff. Clearly the war on labor unions was not the only battle waged in the Reagan Revolution. Another important front was the successful ideological battle fought against antitrust, which, when enforced, can cut at the heart of capital – its consolidated power. As neoliberal ideology supplanted the Keynesian consensus, the once considered far right views of Robert Bork and the Chicago School regarding antitrust were popularized. Bork’s thesis, as presented in his treatise, The Antitrust Paradox, argued that the sole goal of antitrust law should be to ‘protect’ the consumer. The only way to achieve ‘economic efficiency,’ as he defined it, was to protect low prices. This was, of course, regardless of any other economic or social impact delivering those low prices entailed. This highly reductive view of antitrust law gained traction, and was particularly convincing to the Watergate babies that were flooding congress at the time, who were much more focused on consumer instead of worker welfare, and did not remember the bloody feuds against the trusts.
The 90’s furthered the trend of almost cartoonishly pro corporatist policies whose supporters sought to reinstate the conditions of the Rockefeller era, including the passage of the Telecommunications Act of 1996 that made consolidation easier and paved the way for the reintegration of AT&T with it’s Baby Bells, smaller regional firms. Today, it is not a surprise that AT&T is the world’s largest communications company, with none of its acquisitions or mergers in the last few decades being challenged in a meaningful way. It has been allowed to buy Warner Media, HBO, CNN, and DirecTV – corporate transactions that would have been denied under a functioning regulatory antitrust. It now uses its consolidated position to fund one of the more bald face jingoist news projects in existence, and that is saying something.
Prior to the Borkian shift, antitrust had been used alongside the labor movement as an effective tool to curtail corporate power; however, some on the left fail to see it that way, and in fact, see it as a detractor. A big reason for that sentiment seems to be a misunderstanding of the function and history of antitrust, and how it relates to the labor movement.
The Global Left Needs Antitrust
In a (somewhat) recent Jacobin article, Doug Henwood warns us lefties about the hazardous folly of antitrust. In the wake of Joe Biden’s executive order on promoting competition, Henwood cautions the Left to be distrustful: “Behind antitrust is a faith in competition as a positive good. As socialists we should take exception to that. We already have too much competitive individualism in this society, and we don’t need any more.”
As socialists, I agree with Henwood that we should be skeptical of any wholesale endorsement of ‘free market’ competition. Such arguments typically eschew the clear benefits of central planning, and conveniently ignore that capitalist corporations rely on large-scale central planning for basic (and successful) operations. This dynamic was carefully documented in The People’s Republic of Walmart by Leigh Phillips and Michal Rozworski. However, recognizing the benefits of central planning should not lead us to concede it, and allow it to remain unfettered in the hands of highly concentrated capital. Doing so has led to an immense power imbalance where the lives of individual workers in the US and around the world are currently far more competitive and precarious than any human life should ever be.
While workers are forced into hyper competition, multinational corporations are saved the inconvenience of ever needing to compete because of the control they exercise over the markets they dominate, and as a result, over our personal and political lives. These multinationals are saved traumatizing precarity, uncertainty, and the breakdown of social cohesion that occurs in a system based on constructed scarcity – forcing us to reduce every moment of our lives to due the market and compete with our sisters for bread. By contrast, these corporations are quite cohesive; and stable. Like MSNBC’s primetime lineup, they tend to all be on the same page. Antitrust is not about glorifying competition. It is about breaking up concentrations of capital so that we can regain sovereignty over our lives.
Henwood’s article is in line with a ‘left’ critique that sees antitrust as a technocratic distraction, an unnecessary liberal fixation. While conceding that the mega companies that run our lives are problematic, this school seems to think that it is a zero-sum game – we can either have antitrust enforcement, or unions. For Henwood specifically, he both contends that our economy does not have a monopoly problem, and to the extent monopolies are a problem, the best way to deal with them is to “encourage unions.”
I think most people’s experience in their actual lives’ cuts against Henwood’s conclusion that our economy does not have a ‘monopoly problem.’ Henwood himself supports this conclusion by pointing to (and misapplying) a market test, which by his own definition should be thought of as technocratic bullshit. We feel the presence of monopolies in our lack of choice, and in the shitty ‘options’ we do have – not just in terms of the products we can buy, but also the kind of jobs we can have. People feel these consequences of a monopolized economy, and the reader should lean into those instincts, because they are correct.
Unfortunately, in dismissing monopolies as a real problem along with the solutions that antitrust can offer, this school often ends up reifying the right-wing viewpoint that sees monopolies as beneficial, as the right has long argued, due to the “efficiency” they bring to society.
Misunderstanding Monopolies – Efficiency is a Conservative Argument
In his article, Henwood tells us why antitrust is not the answer. He explains: “Amazon, like Walmart before it, is known for low prices that crush competitors… That’s not standard monopoly behavior.” Unfortunately, Henwood is not the first to make this kind of argument, though it is one that typically comes from the right, and the (misguided) consumer movement. For Bork and the Chicago School, low (or free) prices are not problematic monopolistic behavior. Under their theory, problematic monopolies charge high prices, whereas low prices mean a firm is efficient, protecting the consumer welfare, and beneficial to society. Therefore, they conclude, large conglomerates are not the proper subject of antitrust regulation. Unfortunately for Henwood’s claim, the practice known as “predatory pricing” in antitrust doctrine tells us something else entirely.
Predatory pricing occurs when a company sets prices below the market rate with the intention to ‘crush its competitors.’ The scam works like this: because large companies can subsidize losses in one sector (on the below market rate sales), with profits from another sector, large firms will strategically reduce prices with the goal of undercutting smaller competitors. Labor is part of this. Companies that are able to pay employees less, are able to sell at further reduced prices. This practice is ‘predatory’ because it allows large conglomerates to drive smaller firms out – who may lack advantages such as vertical integration or geographic diversity.
Once the large firm has driven the smaller competitors out, the monopolist may decide to increase prices unilaterally; however, it will often choose to keep them at least low enough to avoid incentivizing new entrants into the market. Since there are no other competing sellers left, it becomes more difficult to compare prices, and assess whether the monopolist is inflating prices or not. As we have seen with Amazon, people tend to presume that the company continues its ‘good will’ low prices that have earned them so much favor with consumers. The instances of Amazon’s clear price gouging, for example, with school contracts, or pandemic supplies, are viewed as blips instead of indicative of the company’s behavior.
In sum, predatory pricing is sort of the oldest trick in the book, and was made illegal in the Sherman Antitrust Act of 1890. By contrast, a Borkian analysis would argue that even if a company is a monopoly (~75% of market share), and has engaged in actions with clear monopolistic intent e.g., predatory pricing or buying competitors only to shut them down (all of which used to be illegal), no antitrust violation exists if prices are low. The regurgitation of Bork’s central thesis – that no antitrust violation exists if prices are low or free – is, if not disingenuous, and I honestly believe some on the left are making it in earnest, perhaps proof of the total success of the Reagan Revolution and the continuing neoclassical, and specifically neoliberal, choke hold over our politics, political economy, and imagination. It is also a touch stone for why the Borkian shift was so insidiously convincing (who doesn’t like cheap stuff?), and how essential it was in creating the environment for corporate giants like AT&T to expand their power, with new entrants like Facebook and Amazon now joining the fray.
Nothing is Free From These Ghouls
For some, tech giants and other conglomerates are indeed the consumers’ protectors, the shepherds of an efficient economy and safeguarding low prices. The general understanding, even from some on the left who claim to be economists, is that most of these companies’ products are ‘free;’ so, they’re not typical monopolies, and it is unclear how antitrust regulation may be applied to them. While these critics posit that their central concern is workers, they balk at regulating these companies (i.e., breaking them up) if there’s a chance such action might reduce the quality of the consumer products they enjoy, or, up their prices.
While ‘price’ (as a conduit for efficiency), is a central focus for the right and it’s interpretation of antitrust, it should not be for left. Focusing on price alone obscures what is hidden in that low price – and as Marx taught us, it is the labor. First of all, these companies’ products are not free. Even if Facebook and similar tech giants are free to users, few would say they are without cost. Moreover, they are not free to the workers that regularly sustain abuse, both physical and mental trauma at these employers’ hands, only to be left sick with often no benefits. This is the outcome for both the US and the international workforce the tech giants ‘employ,’ or more plainly put, take advantage of. Nor are they free to the sellers that rely on their platforms, who are often extorted into high and unnecessary fees.
Monopolies such as Amazon and Facebook not only store or sell our personal data and control search results, but also mediate social production. Their influence extends beyond our relationship to them as consumers. Due to their power and market share, they also dictate the conditions of our employment and mediate our lives as workers. As monopsonies over the labor market, they collude to keep wages low; or, they use their commanding market share to control wages paid by other companies (and even cities). As Zephyr Teachout outlines in her book, Break ’Em Up, search placement and ads on sites like Facebook and Amazon are critical to many companies’ survival. To gain access, these platforms force sellers to open their books – and provide a huge amount of information about their businesses. With this detailed information, tech giants can set prices knowing what a seller’s profit margin is, and demand the difference go to them, instead of workers.
As we saw in the AT&T and OAN example, monopoly power can change the information that is available to the public, and impact how information is socially reproduced. Although Henwood is a journalist, he seems not to have noticed the widespread layoffs and closures at news organizations across the country fueled by the Facebook take over that solidified the platform as one of the main news distributors in the country. It used its immense power, hiked its fees, and refused to share the profits with the journalists who drove many to their platform in the first place.
The characterization of these company’s products as free is also at odds with other researchers’ findings – also pointed out by Teachout – Josh Dzieza found that for the sellers who use its platform, Amazon’s endless servicing and ad fees function as taxes. The Institute for Local Self-Reliance found that Amazon forced its vendors to use its fulfillment service (Filled by Amazon), or else suffer in product placement on the site (despite sellers regarding it as worse and more expensive than other fulfillment options). Examples of abuse abound, including Amazon’s spat with Hashet Publishing, where Amazon deliberately delayed Hashet orders after the company objected to a clause in a contract.
Facebook is abusive as well. In just one settlement that by its own terms noted it did not cover the full amount of the damage it caused, Facebook agreed to pay $52 million to current and former employees who served as moderators on its platform to compensate them for mental health issues developed on the job. That is a small sliver of the workforce that these companies abuse, and the damages they have incurred.
In many ways, the true cost of the damage visited on society from these tech giants may be unquantifiable. Unfortunately for the workers of Mechanical Turk, Amazon’s on-demand micro-task platform, the nature of the platform is designed to obscure, if not erase entirely, the workers themselves, and any complaints or damage they suffer along with them. In his recent book, Work Without the Worker, Phil Jones describes how Mechanical Turk and other platforms in its image (e.g. Clickworker and Appen) prey on underemployed or unemployed populations – they are a common feature in prisons, refugee camps, and other sites of poverty (e.g. via austerity). Workers log on and search for tasks posted from unidentifiable ‘requestors.’ The tasks represent the smallest unit of work in an online assembly line (e.g. identifying cars or traffic lights). It is sort of like the last stage in Adam Smith’s division-of-labor-hellscape. Workers scour the site to find tasks that take minutes to perform. Without identities, rights or security, the pay for these workers ranges from $4/hour for workers in North America to $1 for those in Africa, and is even subject to strict performance requirements that can result in no pay at all.
‘Requestors’ on these sites are often big tech companies, though they are given the privilege of total anonymity. Workers do not know who they are working for, nor do they interact with one another. Surrounded by non-disclosure agreements, it is almost impossible to learn about these workers and their work conditions. Though in the surveys done, many report exposure to traumatizing images, widespread wage theft that goes unresolved by Amazon, and long if not constant hours that does not result in a livable wage much less mental health care.
Unions would definitely help the exploited workers in situations like those mentioned above, but they have their limitations. Unions are not an easy solve even for a traditional workplace (e.g. Bessemer); and, as we have seen, they have presented novel challenges for organizers who seek to unionize gig economy workers. Whether a union could be possible for the workers on Mechanical Turk or other sites like it, remains to be seen. In addition, unions have historically focused on domestic labor. Though that should, and will hopefully change; in the meantime, it does little to denigrate a revitalization of antitrust that could reign in unacceptable abuses workers suffer at the hands of unchecked corporate power. Even though they there are essential, unions can’t do everything.
Unions Are Essential, But Won’t Solve All of Our Problems
I agree that unionization is absolutely necessary, and will go a long way to solve a lot of economic and political problems. Though some left critics of antitrust hold that the pursuit of unionization is the only acceptable leftist strategy, and therefore jettison antitrust regulation. I believe that a union Facebook, or a union Amazon, will be more hospitable to its own workers. One could imagine that it would be more internally democratic, and that could also lead to better business practices. However, a union typically does not have a say in the corporate management or business strategy outside of workers’ compensation, conditions, and benefits. Once unionized, a monopoly would continue to function within the economy the same as before.
A union is not a co-op, or an ESOP (employee stock ownership plan). The union represents the workers in negotiating the conditions of employment. Treating workers better could give them more of a voice if simply because they may not be as overworked, exhausted, and enjoy better benefits. It is possible that union negotiations might try to include workers’ input or concerns about the company’s product, or changes to its business model, but that would be outside the norm.
Moreover, it does not seem fair, nor like a wholistic approach to suddenly charge unions with the task of negotiating business strategy decisions into contracts that would typically fall under the purview of antitrust regulation. For a union to take on this task – e.g., negotiate a clause forcing management to license its formula for a lifesaving medication to competitors – would be a separate herculean effort to the one they are already charged with – which is unionizing in the first place, winning fair wages and safe working conditions. Even if the workers might be the best stewards of these types of business decisions, there are replete examples of unions holding reactionary views. SEIU and other major unions are against Medicare-for-all (I’m sorry!).
We have seen a few instances of union agreements that include clauses that give employees the ability to pursue new revenue streams (USPS), though employees still needed management’s approval to green light breaking ground on the effort. We have also seen recent non-union organizing efforts by workers to advocate for a specific business policy, for example, the recent anonymous employee campaign at Amazon and Google to divest from military contracts with Israel. Again, these are not typical grounds for unions, and to put that exclusively on them is unnecessary if we do not abandon the possibilities of antitrust.
Finally, centering unions to the dismissal of antitrust does a severe disservice to international workers who are also at the mercy of these US born corporations that have no cap on the concentrated power they may acquire. The proliferation of microwork is a direct result of the immense power that these companies hold, even over that of some countries (arguably including the US itself). Big tech via platforms like Mechanical Turk and Clickworker invade sites of poverty and deprivation. They are able to exploit workers on an international scale due to the international trade regime enforced by the IMF, WTO, and world bank, who act as US surrogates without regard for the health and wellbeing of citizens in other countries. Phil Jones points out that while it is possible a US led union effort could seek to include these international workers, it has so far been unsuccessful. It is also possible that these workers could organize by sector rather than by employer, similar to gig worker efforts we have seen; however, microworkers do not enjoy the modest advantage of a finite physical location that workers on platforms like Deliveroo and Uber have to leverage. This is not to say that unionization is not possible – it is necessary and it is worth the courage these workers around the world have already shown towards achieving this goal. It is to point out that unionizing is difficult, and to the extent there are other policies that may aid that effort, they are also worth our time.
To paraphrase an oft refrain of the late and great Michael Brooks, if forced to choose between multiracial capitalism, and white supremacist capitalism, I’ll take the multiracial option; however, neither is my preference. Unions, though essential to the socialist future we demand, will not solve all of the problems of concentrated capital and corporate power, vertical and horizontal integration, and defusing the monopsony buying power of these giants. It’s important to use all the tools at our disposable, including antitrust regulation to compel licensing and sever the ties of concentrated capital.
Breakup Facebook Like We Broke Up AT&T
Some have used the observation that tech giant’s products are mostly free (they’re not), to support the conclusion that there is no clear way that antitrust regulation would apply to them, or lead to any improvement. What if, the argument goes, suddenly faced with competition, companies start charging? This is a strange thing to worry about since this is not usually how it works. For example, in the post AT&T breakup years, we saw widespread price reductions for international phone services, the narrow sector where the settlement actually led to increased competition.
Another concern seems to be, what if, after being broken up, the spun off companies continue with their problematic business models? The fact that this concern exists at least concedes that these companies are a problem. But, alas, the argument goes, antitrust regulation would do nothing to help.
The problem with this concern is that it fails to realize that conglomeration is the problematic business model at issue here. Vertical integration allows the same company to serve as a search platform, a seller and advertiser, track, sell, and manipulate your data to enhance its profits – all to squeeze ever more profits. One could imagine Amazon selling Mechanical Turk to its sellers the way it forced its fulfillment services on them: “May we ‘suggest’ Mechanical Turk, a service that will allow you to save on labor costs, and in turn, afford to pay our increased fees?” Disentangling these services into different companies has been a long-time practice of successful antitrust reform that recognizes the presence of monopolies is, in itself, antithetical to a democracy.
Others have argued still that since Facebook is essential to facilitating communication, introducing competition might even be dangerous. Henwood voices his concern that antitrust regulation will result in worse services for the 3 billion consumers who rely on Facebook to communicate: “breaking it up into competing services would be like making an AT&T customer incapable of contacting Deutsche Telekom.”
Well, would it? Is breaking up Facebook likely to lead to worse, more expensive products, and obstruct communication? Because we have broken up AT&T in the past, we have at least some model for what the breakup might look like. And the history tells us that the opposite is actually more likely.
Before we take a look at the results of prior big telecom breakups, I think it’s important to note that the primary purpose of antitrust should not be to bolster stagnating innovation or low growth – although both trends describe the US economy since the 80s. If anything, we need to pursue innovation that focuses on equitable distribution of resources alongside de-development and de-growth. However, it is worth pointing out that the concerns of antitrust critics on this point are ahistorical. They echo those of old robber barons threatening that trustbusting would be bad for people.
The US has broken up AT&T several different times in our history. In 1982, AT&T was divested of 70% of its regional operations. These were broken up into regional phone companies, referred to as Baby Bells. In the aftermath, customers were still able to use their phone on one network to call a friend on another network. Similar to today, there was ample fearmongering by the opposition, saying it would lead to a stagnating innovation. In fact, the opposite was true, and a flurry of innovation in the communications and telecommunications market ensued. Though the new competition was short lived, it is the era that is seen as giving rise to the mobile devices we use today.
This is not the only successful antitrust enforcement AT&T has seen – in its early days, the government used antitrust to facilitate and improve communication for the country. In 1913, with the goal of increasing access to phone services, Woodrow Wilson (who campaigned as a trustbuster), forced AT&T to allow phone companies to interconnect with its system. In the wake of the antitrust reforms, access to phone services increased across the country.
In 1959, in an era of high labor union density and stronger worker protections, the Eisenhower administration launched more antitrust suits than in any period since the days of the New Deal. The great compression saw labor and antitrust enforcement working hand-in-hand to curtail concentrated corporate power. As president, Eisenhower was a war criminal who happened to use antitrust effectively, and among the companies his administration targeted was AT&T. The conglomerate had increased prices, refused to license its technology, and forced consumers to rent phones (the Sisyphean dynamic here is worth noting). Among the concessions the administration won were forced patent licensing to smaller companies, and the agreement that AT&T would not expand outside the telecom industry. Though far from perfect, these agreements were somewhat effective at curtailing monopoly power, and increased the public’s access to these technologies. Today, this kind of regulation seems impossible – both because of the gutting of labor and the rise of corporate giants.
Breaking up Facebook by dividing it into sub networks that may no longer communicate is not among the reforms that anyone serious is proposing. More instructive are actual reforms proposed by the Biden administration and antitrust regulators. Among Biden’s proposals are some to prohibit large tech companies from competing on their own platforms, and from leveraging dominance in one market to undercut competitors in another (ie, predatory pricing). Also, better funding the agencies that are supposed to enforce antitrust laws and additionally setting a higher bar for mergers. Although Elizabeth Warren’s plan would have reversed problematic mergers, Biden’s proposes to set a higher bar for future mergers. Biden’s executive order includes provisions that mandate interconnectivity between devices, and I would argue this could be expanded to online platforms as well. These are quite weak willed, and have not even been enforced yet; however, they paint a different picture than the nightmare connectivity situation some imagine.
One More Ghoul For The Road
It’s no coincidence that AT&T, one of the biggest subjects of historical antitrust regulation is the corporate behemoth actively funneling millions into reactionary news outlets, in an era where antitrust regulation is particularly toothless. Unions are essential, and in a thriving labor movement, we should also have an open mindedness that welcomes a multifaceted approach – one that reaches the political economic rot that allows AT&T to amass that kind of power and pursue its anti-democratic political goals. Antitrust isn’t a magic solution to corporate overreach, but denigrating it as a waste of time based on a misunderstanding of the concepts is just sad. We are better than that, we are better than Bork and his cronies, and we can use antitrust to serve labor’s ends. The right wages class war on many fronts. Instead of eating our own, we too can create a unified and multifaceted approach to achieve our equitable future.