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Congress Gets Ready to Smash Big Tech Monopolies
Boom. David Cicilline's investigation into big tech is about to yield big results.
Hi,
Welcome to BIG, a newsletter about the politics of monopoly and finance. If you’d like to sign up, you can do so here. Or just read on…
Today I’m going to write about the remarkable and historic report from the House Antitrust Subcommittee, the culmination of a sixteen-month investigation into Apple, Google, Facebook, and Amazon.
First, some house-keeping. My organization is hosting a Zoom event today at noon, “Protecting Restaurants & Communities: The Case Against Dominant Food Delivery Apps.” You can RSVP here. Also, I wrote a paper a year ago titled “Ad Tech and the News” on how invasive models of surveillance mesh with monopoly power to undermine the free press. There’s a history of Google and Facebook in there, as well as the rise of surveillance based advertising inventory traded on stock market-like exchanges.
Finally, Axios reported on the enveloping scandal around cheerleading, “Bain Capital’s Cheerleading Investment Gets Ugly,” citing reporting from this newsletter. It’s increasingly difficult to be a monopolist who engages in abusive and predatory activity.
And now…

The Cicilline Report Lands
Yesterday, the House Antitrust Subcommittee chaired by Congressman David Cicilline came out with its report on large technology platforms, the culmination of a 16 month investigation into Google, Facebook, Amazon, and Apple. Like Pujo hearings of (1912-1913), the Pecora Commission (1933-1934), the Temporary National Economic Committee (1938-1941), and Emanuel Celler’s Anti-Monopoly Subcommittee hearings in the 1950s, this investigation and report is a prelude to major policy action reorganizing the economy and corporate America.
The report itself is over 400 page long; I’ve read a bunch of these reports from enforcers all over the world, this one is by far the clearest and most aggressive. The subcommittee staff went through 1.287 million documents and significant quantities of enforcement agency records, did hundreds of hours of interviews with “more than 240 market participants, former employees of the investigated platforms, and other individuals totaling thousands of hours,” and had seven hearings, including questioning the richest man in the world, Jeff Bezos.
It’s an extraordinary document, and it’s worth noting that the investigation was set up to succeed. Cicilline fought tooth and nail to make sure the investigations were serious, and that the CEOs of the four companies at hand testified. The key staffer on the subcommittee, Lina Khan, is an experienced journalist, as well as the preeminent scholar of modern antitrust thinking; before coming to the investigation, she had published a legendary law review article, Amazon’s Antitrust Paradox, which single-handedly undermined the intellectual structure of the current way lawyers and judges handle corporate power.
I spent much of yesterday reading the report. I’m going to explain what’s in it, why it matters, and why the cynics about the possibility of progress are wrong.
Monopolies, Lies and Fear
The basic thesis of this report isn’t a surprise, and consists of two basic elements. The subcommittee found that Apple, Google, Facebook, and Amazon are abusive monopolies. The report also noted that Obama and Trump era enforcers failed to uphold anti-monopoly laws, which allowed these corporations to amass their dominance.
What makes these platforms unusually dangerous is that they are gatekeepers with surveillance power, and they can thus wield “near-perfect market intelligence” to copy or undermine would-be rivals. For Apple the dominant facility is the App store, for Google it’s the search engine, Maps, adtech, etc, for Facebook it’s social media, and for Amazon it’s the marketplace, AWS, Alexa, Fulfillment, and so forth. They exploit their gatekeeping and surveillance power to extract revenue, fortify their competitive barriers, and subsidize entry into new markets.
Over and over, the report just lays into the Federal Trade Commission and Antitrust Division for refusing to enforce monopolization laws and failing to stop mergers, even when they had evidence that such mergers were anti-competitive. The four companies bought more than 500 companies since 1998. However, "for most, if not all, of the acquisitions discussed in this Report,” it says, “the FTC had advance notice of the deals, but did not attempt to block any of them." What were the priorities of the agencies? "Both agencies have targeted their enforcement efforts on relatively small players—including ice skating teachers and organists—raising questions about their enforcement priorities." Ouch.
But the subcommittee report is also a deeply political document, explicitly so. Cicilline attacks the way that these corporations finance think tanks and academics. “Through a combination of direct lobbying and funding think tanks and academics,” it wrote, “the dominant platforms have expanded their sphere of influence, further shaping how they are governed and regulated.” I got fired from my think tank after criticizing Google in 2017, so that section rings true to me. The platforms also engaged in routine attempts to deceive investigators, and the report is merciless about such attempts at deception. For instance, the committee asked Amazon for a list of its top ten competitors. The report authors noted that “Amazon identified 1,700 companies, including Eero (a company Amazon owns), a discount surgical supply distributor, and a beef jerky company." The report has multiple examples of such dissembling, from each company.
The report also notes the coercion they have imposed on commerce. It’s one of the first things Cicilline articulated last year when starting the investigation as he started poking around, how scared businesspeople were to talk to the subcommittee. Investigators found “a prevalence of fear among market participants that depend on the dominant platforms, many of whom expressed unease that the success of their business and their economic livelihood depend on what they viewed as the platforms’ unaccountable and arbitrary power.”
The report is peppered with footnotes of interviews from anonymous customers and merchants who use the platforms. Said one source, “It would be commercial suicide to be in Amazon’s crosshairs . . . If Amazon saw us criticizing, I have no doubt they would remove our access and destroy our business.” One attorney representing app developers said they “fear retaliation by Apple” and are “worried that their private communications are being monitored, so they won’t speak out against abusive and discriminatory behavior.”
It’s a sophisticated document, with sections analyzing industry dynamics among voice assistants and cloud computing, as well as presenting better data on the platforms themselves. Facebook, for instance, has over 200 million users in the U.S. just on its Facebook app, and is on 74% of mobile phones, which is new information. Amazon has in all likelihood over 50% of online sales, not 40% as eMarketer puts out. And I learned some new areas of anti-competitive activity, like Google requiring users of Maps APIs to have a Google Cloud Platform account, or credible allegations that Amazon Web Services engaged in “cross-business data sharing.”
But the key finding was that “courts and enforcers have found the dominant platforms to engage in recidivism, repeatedly violating laws and court orders,” which “raises questions about whether these firms view themselves as above the law, or whether they simply treat lawbreaking as a cost of business.”
I put up a twitter thread yesterday with all the various nuggets I found interesting, but the bottom line is that the House Antitrust Subcommittee found, with lots of evidence, that these are aggressive and deceptive predatory monopolies.
Report Recommendations: Break ‘Em Up
In terms of substance, what Chair David Cicilline was able to accomplish was to put out the most aggressive and important legislative document on corporate power and monopolies in decades, outpacing what enforcers all over the world have done (even my favorite, Rod Sims in Australia).
It will immediately empower regulators all over the world who have been waiting for the U.S. to legitimize real action against large technology platforms. The report also lays the foundation of a Biden administration’s anti-monopoly framework, should Biden be elected. Most importantly, this report re-asserts Congress’s role as the central policymaking body in America, seizing control from judges who have re-written case law in ridiculous ways, as well as slothful enforcers.
What does this report recommend, in terms of policy specifics?
Basically, Cicilline wants to fix the problem we have with big tech, make sure it doesn’t recur by changing the laws that led to it, and make enforcement better by pressuring public officials and empowering ordinary citizens themselves to enforce anti-monopoly laws. So recommendations fall into four buckets: (1) a legislative break-up and restructuring of big tech platforms to restore competition online (2) a strengthening of laws against monopolies and mergers, (3) institutional reforms to fix and fund the Federal Trade Commission and DOJ Antitrust Division, and (4) restoring the ability of ordinary citizens to take monopolists to court on their own.
The premise of this report is that the tech sector is simply far too concentrated, and so Congress will have to affirmatively take steps to de-centralize power there. Cicilline recommends passing laws that would break up tech platforms, as well as imposing rules mandating that dominant platforms offer equal access to their facilities for rivals. The report notes that there are ample historical precedents, like the financial syndication rules that I wrote about last July that sustained Hollywood’s creativity, or the Commodities Clause of the Hepburn Act for railroads, which blocked railroads from owning coal mines.
The report also suggests reinvigorating antitrust laws by reasserting Congress’s role as the central policymaker when it comes to authoring laws, which the courts have gradually encroached on. Cicilline suggests writing statutes to overrule a host of Supreme Court precedents that have unreasonably crippled antitrust laws on things like pricing below cost or abusing one’s dominant position as a platform, as well as making very clear rules on when mergers can go through and when they can’t.
(WARNING - THIS PARAGRAPH IS WONKY - Areas of law to change include monopoly leveraging, predatory pricing, essential facilities doctrine, predatory design, ending special antitrust exemption for platforms (Amex), shifting the burden of proof on mergers for dominant platforms, imposing bright line market share rules for mergers, imposing a presumptive ban on future acquisitions by large platforms, imposing a presumption that vertical mergers by large platforms are unlawful, and ending arbitration clauses and re-empowering class action lawsuits)
The report also suggests more money and skepticism towards the FTC and DOJ, as well as reinvigorating the right of ordinary citizens to sue monopolists by changing a variety of legal standards and invalidating contracts that eliminate the right to sue.
Taken together, it’s a big deal, and would reorient the American political economy so that small companies could once again compete and monopolization would once again be illegal.
So That’s the Report. Does It Really Matter?
I’ve been overflowing with effusive rhetoric so far, but it’s important to note that in terms of impact, the Cicilline Report is just a document with no intrinsic legal force on its own. It will require follow-on enforcement action at the agencies, or Congress to pass new laws. And cynics would argue, with what seems like a mountain of evidence, that the U.S. government is unable to do anything to constrain the powerful. In particular, Congress itself is nothing but a dysfunctional and corrupt mess. So in that sense, who cares? Wake me when Congress actually passes a law or does something beyond putting out a report, so goes this viewpoint.
I think this attitude of nihilism, while tempting, doesn’t stand up to scrutiny. A little over a year ago, I wrote a piece on the Congressional investigation of the large technology firms titled “Big Tech Meets Its Pecora Commission: Why Google's Toughest Opponent Is Now Congress.” I predicted two outcomes. The first was an antitrust case against Google, the second is a report from Congress calling for legislation to split up big tech platforms.
I can’t tell you how many people have rolled their eyes at my optimistic outlook in this area, but they were, frankly speaking, wrong. They would scoff at the notion that Donald Trump’s administration would bring a case against one of the most powerful corporation in America. And yet, a Google case is likely to be announced this week or next. My rationale here for making predictions was the same one as when I noted how the Obama administration would fail to constrain financial power, or in noting that the CARES Act would shift wealth and power upward. It’s what policymakers, and perhaps voters, wanted.
Why do policymakers and voters want to break up monopolies now, when they didn’t before? It’s perhaps too simple to even be accepted as a reason, but it’s actually quite simple. We the people changed our minds. To put it a different way, the norms have shifted, radically.
This happens sometimes in American history. Just twenty years ago, the idea of gay marriage was politically unthinkable, and Howard Dean was considered a lunatic for proposing civil unions. Today gay marriage is broadly accepted, and young people don’t give it a second thought. As another example, in 1995, a majority of Americans didn’t approve of interracial marriage, today that number is at 8%. Not only have our minds and attitudes changed, but people today who opposed either interracial or gay marriage don’t admit or maybe don’t even remember doing so. It just seems crazy to think that we might have thought that way. And policy changed, in line with attitude.
In some ways, that is how norms are shifting around monopoly and corporate power. Today, the anti-monopoly position increasingly seems to be the default. It isn’t that everyone agrees, but that even opponents see anti-monopoly sentiment as the conventional wisdom.
But from 1980-2016, the idea of taking on monopolies was considered fringe. For instance, in the early 1980s, The Economist wrote a profile of Ronald Reagan’s antitrust chief Bill Baxter, whose great accomplishment was to begin the shutting down of antitrust in America. Baxter fought the Supreme Court’s ‘wacko’ decisions maintaining monopolization standards, refused to enforce anti-merger laws, and dropped the major antitrust case against IBM, signaling to Wall Street and corporate America that it was time for a historic merger wave. “John D. Rockefeller would have liked a trust-buster like Baxter,” wrote the magazine.
What’s astonishing about what Baxter did is not just what he did, but that he did it with virtually no opposition. When The Economist noted how Rockefeller would appreciate Baxter’s way of doing antitrust, it wasn’t a criticism, it was a compliment. And this pro-concentration philosophy continued, unchallenged, for decades.
Even into much of the Obama Presidency, virtually no one gave a second thought to monopoly power. It’s almost impossible to remember the excitement of Facebook helping to launch Barack Obama in 2007, both progressive symbols of hope, change, and a better future, or the odes of tech platforms as they offered themselves as beacons of freedom during the Arab Spring in 2011. Many Obama alums went to work at Facebook or Google which, in their view, was continuing their good progressive work they had done at the White House. And it was pretty much taken for granted that Hillary Clinton would be appointing Facebook chief operating officer Sheryl Sandberg as Treasury Secretary. This pro-monopoly conventional wisdom is impossible to remember because it’s so embarrassing.
And this was not some elite plot among Democratic or Republican leaders, either, appreciation for monopoly power was widely held. During the Occupy Wall Street protests in 2011, for instance, hundreds of protesters at Zuccotti park offered a moment of silence to honor, upon his death, the iconic billionaire Steve Jobs (and yes, Jobs shows up as a monopolist in the Cicilline Report). There were an endless number of tweets and comments lauding the Apple co-founder, with lefty anarchist types explaining that Steve Jobs might be of the 1%, but he wasn’t like the Wall Street types they disdained. Here’s a sample tweet promoting Apple’s branding campaign.

I don’t say this to criticize Occupy Wall Street or anyone who lauded Google or Facebook, but to show that five, ten, fifteen, twenty five years ago, most of us though very differently than we do today.
To pick a few data points from this month at random, Donald Trump, no great brainiac, attacked Bloomberg’s monopoly publicly, and just tweeted that we should repeal Section 230 of the Communications Decency Act. Last week, hedge fund consultant Austin Goolsbee, a former top Obama advisor, wrote a New York Times piece with the title, Big Companies Are Starting to Swallow the World. Oh, and The Economist that lauded Baxter for killing antitrust? Today that magazine is attacking Joe Biden for being insufficiently aggressive on market power. That’s today’s conventional wisdom. In other words, it’s hard to conceptualize just how radically our politics has changed from the slothful system and intellectual environment in which we have inhabited for forty years. The norms have shifted.
One consequence of a norm-shift is that old attitudes seem almost unreal. So we forget, and pretend we always knew better. In fact, many like Goolsbee, as well as Obama era enforcers, are protecting their own reputations. Last week, for instance, Bill Baer, who was the head of the Antitrust Division towards the end of the Obama administration and constantly bragged about how well he had done as an enforcer, was forced to admit in a Congressional hearing that he had failed as an enforcer. He explained that he was weak in his enforcement choices, but that’s because “today’s debate hadn’t really begun.” And he’s not wrong about that, but if we recognized norm shifting, Baer would have to acknowledge that his expertise is largely in doing antitrust wrong.
Just as Baer comforts himself by pretending he always knew better even though he demonstrably did not, it’s comfortable for all of us to wallow in powerlessness, to pretend that we can’t act through our democracy, instead of recognizing that we just didn’t realize monopolies were a problem until recently. To do otherwise means acknowledging that our political icons - Obama, Trump, Clinton, Reagan, etc - were actually not what we thought they were. Large numbers of political thinkers find it too painful to recognize that policymakers and voters made bad choices, so instead they comfort themselves with by pretending that they can’t make any choices at all.
Of course it doesn’t help that this stuff, though incredibly fun and interesting, is hard to learn. The language of structuring corporations and banks and markets is a political language, and it has been heavily confused and polluted by the Chicago School. It’s easier to ignore political economy entirely, which is what most of our TV media does.
So recognizing such a shift is embarrassing and requires tossing away our political icons, as well as learning new political discourse. And yet, without doing so, the world makes no sense. A world where we imagine the government can’t act will increasingly diverge from reality as the government does act. It’s not just this report, or the Google antitrust suit. Last week, the Senate Commerce Committee subpoena’d the CEOs of Google, Facebook, and Twitter, with a unanimous vote, and the press barely noticed. Dislike of big tech’s power has become the conventional wisdom, so much so that it’s become boring.
The reality is that we live in a democratic society, where what the people think matters. The reason that we didn’t constrain the powerful with the rule of law is that large swaths of the public and institutional players in business, academia, and politics - including and especially powerful Democratic leaders like Barack Obama - in fact did not believe in doing so. And now, as simple as it sounds, many of these people have changed their minds.
In other words, there has been a massive shift in norms, and one can only understand the massive forces at work if can see that shift clearly.
A Time for Action
So now it’s time for action, and this report is the beginning of real action. While the subcommittee was led by Democrats, in particular Chair David Cicilline, there is Republican support for addressing monopolies. Republican Ken Buck, a conservative from Colorado, released his own additional views to the report, in which he and a bloc of fellow Republicans agreed with Cicilline’s diagnosis of the problem, though he suggested a milder set of remedies. Then there’s the leader of Republicans on the committee, Jim Jordan, who dissented from the report (with a document probably financed and written by antitrust lawyers working for Google, Amazon, and Facebook), but even he called for changes to telecommunications law.
Having multiple competing points of view on a complex problem isn’t unusual; in fact it’s the norm throughout American history. And working through these different points of view is actually how the legislative and political process works. Cicilline has laid out a clear marker, and his report represents the most likely path for legislation and action over the next four years.
But you don’t have to take my word for it. The Cowen Washington Research Group, which is a pretty orthodox investment analysis firm, has a similar view.
Our take: Given bipartisan concerns with Big Tech, we believe passage of a new antitrust statute in 2021 is quite realistic. If Democrats sweep in November, the odds of passage would rise and the specifics become more anti-platform because Democrats could well eliminate the Senate filibuster, which would reduce Republican blocking power. But even in an all-Democratic Washington, legislation to actually break up or structurally separate these American champion companies is likely to be a tougher sell. Finally, regardless of whether any legislation passes, we think the depth of this report – Congress’ first in decades on antitrust – will become the Democrats’ center of gravity on tech platforms if Biden wins. It also could provide cover (or pressure) for DOJ/FTC/state AGs to file tech antitrust lawsuits this year and next even under existing laws.
That’s why in my view, it’s hard to overstate the importance of what David Cicilline and the House Subcommittee just accomplished. This report, and the investigation upon which it sits, represent a radical shift in the American balance of power, moving back who governs from private monopolists to public institutions. It will be explosive abroad, because enforcers in other countries have been held back by American timidity. It’s also a reassertion of Congress as the central policymaking body in America, retrieving that from unaccountable judges and flaccid and bloated executive branch. I suspect that over the next four years, large technology platforms will be broken up, and policymakers in the U.S. are going to restructure our economy.
It’s hard to imagine this happening. I admit I have trouble recognizing the implications of the predictions I’m making. Then again, it was hard for most of us to imagine President Trump, until President Trump happened. The bottom line is that if we refuse to recognize the reality that norms in our society have shifted massively over the past four years, we are leaving out key political evidence that can help us understand the world we are entering.
Thanks for reading. Send me tips, stories I’ve missed, or comment by clicking on the title of this newsletter. And if you liked this issue of BIG, you can sign up here for more issues of BIG, a newsletter on how to restore fair commerce, innovation and democracy. If you really liked it, read my book, Goliath: The 100-Year War Between Monopoly Power and Democracy.
cheers,
Matt Stoller
P.S. Hey antitrust lawyers, here are some job options in the Department of Justice Antitrust division. Apply!
Trial Attorney (Digital Markets Counsel)
Trial Attorney (Appellate Division)
P.P.S. I got this super-sharp email from a high school student, based on the last issue I wrote where I mentioned the edtech software monopoly Clever.
Good evening,
I'm a high school student in North Carolina, and I always enjoy reading your newsletter. When I saw that you had mentioned Clever, I felt the urge to write to you about it. In my school district, we use both Clever and Google Apps for Education. In general, the educational space seems to be full of monopolies and duopolies. From what I can tell, almost all school districts contract with Microsoft or Google for their email and technology. This locks them into an ecosystem of Chromebooks or Surfaces and dictates most of the rest of their technological choices. That's all well known, but one problem that I experience and don't see discussed is how this facilitates the usage of too much software and disregard for student privacy. In any given week, I often have to use ten or fifteen different applications across my different classes. I sign into most of these through Clever or Google OAuth, and teachers do too. As a result, no one seems to stop and consider how many different companies have our data or what that means for students. I'm not sure whether that fits into anything broader you want to write about educational monopolies, but that's just how this one affects me, so I thought it might be helpful. You're probably aware of the various educational monopolies, but I'll list some because I imagine it can be difficult to find them all from the outside. The obvious ones are the College Board, the Common Application, and Pearson, who owns PowerSchool, a grade management platform, but I also see one in Naviance.
While I'm writing to you, I thought I'd also mention another monopoly I see. I don't know much about this one, but I also see a growing monopoly of government information in Municode, a vendor for municipal codification and code management applications. They don't yet hold a monopoly, but with the no-cost model and consistent growth, I see it coming.
I hope that some of this is of use to you.
Yours,
Benjamin Knight
The kids are alright.
Congress Gets Ready to Smash Big Tech Monopolies
The fact that Google Cloud Platform account is needed to get a google maps account is honestly not a super big deal from a bundling perspective, the map keys had previously been managed in their own weird dashboard that was hard to access, and you always wondered, why the hell isn't this managed the same way as all the other stuff you do in google?
No the thing that's monopolistic is the way they tie together all the various parts of the google maps API, specifically in web browsers and do not let you use them separately. The main parts are
1. A set of basemaps
2. A geocoding service for looking up addresses
3. A directions service for routing from point A to point B
4. A library for displaying maps on a web page.
You are not allowed to load the basemaps, or display results from the geocoding or directions service using any other library, which is often a problem since the google maps JavaScript API has stagnated and not kept up with the features of other map libraries or even with the features on the main google maps website.
The other thing they do is you are banned from saving the results of geocoding or directions queries. If you want to add lat longs to spread sheet of addresses you have, there is no amount of money google will take to let you do that.
That being said in the GIS world they are in many ways the scrappy upstart because the 1000 pound gorilla in the room is the company ESRI which has managed to roll up the governmental mapping space so tightly that many people use the term 'GIS' interchangeably with 'ArcGIS' to refer to their flagship desktop software. The company I work for used to be a business partner with them, until we started doing some google maps work and got ourselves kicked out of the program. When ended up probably being a blessing in disguise since ESRI started competing directly with their business partners for work.
Hi Matt,
Thanks for the great work in the monopoly sphere, understanding monopoly power has been a great way to expand my knowledge of the economy at large and I'm really glad to see your newsletter is reaching high school age people too!
I work in the advertising industry, specifically film production or content as its now called, video stock footage is a growing business as more and more companies use video as part of their marketing, stock footage can play a part by keeping costs down for small and medium sized enterprises. As someone who both creates the video content and buys it depending on a clients' budget I think it can be very useful.
However today I checked up on the largest name in the business: Shutterstock which provides photo and video content as well as a range of new services. I was considering putting some of our video archive onto Shutterstock in order to make some passive income so I checked the payment structure, to my shock it is volume weighted and extreme! As a content owner/creator you receive between 15% and 40% of the sale, Shutterstock gets between 85% - 60% of every sale - yes you read that correctly, the people that make the thing being sold get a pittance of the sale. In order to get the 40% you need to shift 25,000 clips per year first. Now I know from first hand experience that search-ability for videos is very important, but this price structure seems insane to me as the most work (VALUE) is on the content side. It made me think of the Uber mode and I immediately started to think it has to be a monopoly where content creators cannot go anywhere else. I hope this sparks an interest in you as I'd love to know more.
All the best
Devin Peters