Editor’s Note: Sally Hubbard is director of strategic enforcement at the Open Markets Institute, a former antitrust enforcer and author of Monopolies Suck: 7 Ways Big Corporations Rule Your Life and How to Take Back Control. The opinions expressed in this commentary are her own.
As Covid-19 continues to spread, millions of Americans are losing their jobs, thousands of restaurants have closed for good and one in three small businesses surveyed by the nonprofit Small Business Majority said they won’t survive beyond the next three months without additional funding. Yet the nation’s most dominant corporations seem to be weathering the pandemic just fine.
In October, Facebook announced its revenue increased by 22% compared to last year, despite a major advertiser boycott over hate speech, and Amazon reported its profits increased by 197%. Google’s YouTube, notwithstanding controversy over misinformation on the platform, saw a 32% increase in advertising revenue.
The strength of monopolies and oligopolies — where a few corporations rule an industry — has long come at the expense of the smaller businesses and entrepreneurs they muscled out of the competition. And now, as a result of monopolies’ extractive business models, the rest of the economy must battle the pandemic from a point of weakness. For the US economy to recover from Covid-19, then, we must fight monopoly power.
Many corporate giants such as Facebook, Amazon and Google have obtained their dominant positions throughout the years in large part through anticompetitive acquisitions and conduct that violates antitrust laws, not by purely competing based on merit.
The House Judiciary subcommittee on antitrust, commercial and administrative law detailed Big Tech’s anticompetitive abuses in a 450-page report released in October, stating that “there is mounting evidence that the dominance of online platforms has materially weakened innovation and entrepreneurship in the U.S. economy.”
Whether the dominant corporations are Big Tech, Big Pharma or Big Agriculture, the problem is the same: A monopolized economy works for only a select few.
The government has also helped these companies accumulate power. Ever since the early 1980s, federal antitrust enforcers have brought fewer and fewer antitrust cases and have often settled cases for fines that don’t sufficiently deter illegal behavior, while judges have routinely dismissed antitrust suits.
Compounding weak antitrust enforcement, government bailouts in the Covid-19 crisis have repeated the mistakes of the Great Recession, sending millions and even billions of dollars to the largest companies without extending enough relief to small and mid-sized companies, which are now facing a second round of shutdowns. Unless the government changes course and provides more stimulus funds to small and mid-sized companies while pursuing antitrust enforcement and policies that promote fair competition, the pandemic will further concentrate our economy and do long-lasting damage to Americans’ finances. When corporations face weak competition for employees, they pay them less.
The way to “build back better” is to create a resilient economy with distributed resources and prosperity, dynamic entrepreneurship and thriving small businesses. But instead we’re currently on track to emerge from this crisis with an even more monopolized economy.
The first step to recovering from Covid-19 is to build a stronger health care sector. We pay more for health care in America than citizens of any other country, but when Covid-19 hit, we didn’t have enough ventilators, hospital beds, masks, gowns, swabs or reagents. How could that be?
Decades of health care mergers weakened our defenses to Covid-19, leaving only a few big companies to produce critical supplies. We faced life-threatening shortages because so few suppliers remained. Ever since the 1980s, politicians, antitrust law enforcers and judges have bought into the myth that bigger is better. Our government let big corporations take over medicine and kick smaller companies out of the competition through mergers and monopolistic behavior, making our health care markets highly concentrated.
Only two companies make the swabs used for coronavirus testing, for example. The number of hospital beds in the United States declined from 1.5 million in 1975 to approximately 924,000 in 2018, according to Statista, leaving a shortage of beds to handle the pandemic. And now that vaccines are finally showing promise, concentration in the vaccine industry hampers our ability to roll them out, with only a few companies making essential equipment like vials and syringes.
Our health care system is fragile and expensive. It doesn’t need to be this way. This is a result of choices made by policymakers.
Now is the time to build a better world — in health care and beyond. Congress can start by giving small and mid-sized businesses — the engines of jobs and innovation — the stimulus funds they need. Then Congress should pass the reforms proposed in the House Judiciary’s Big Tech report, including structural breakups to remove conflicts of interest by dominant platforms, strengthening the antitrust laws and enforcement across the board, requiring non-discrimination rules that ensure dominant corporations offer the same terms to all, and interoperability rules that promote competition.
Congress also can use its Big Tech investigation as a model for diving deep into other industries. Lawmakers must put an end to sweetheart tax breaks and subsidies enjoyed by the most powerful corporations. Anti-corruption reform that reduces the influence of money in politics is another critical step to create an economy that works for everyone.
Rather than our government choosing policies that give dominant corporations even more power at the expense of the rest of us, now is the time to reimagine what our economy and our lives should look like. Our government can amplify inequality and further weaken our nation, leaving us vulnerable to the next threat that will inevitably come, or it can disperse power and wealth and build a stronger, more resilient economy. The winners of our current system will use their political power to push for the former. The latter will only happen if we, the American people, demand it.