IN THE MIDDLE OF THE LAST CENTURY, the tech companies wouldn’t have had the run of the field. They would have been closely watched and occasionally leashed. Americans knew better how to deal with big corporations and their dangers—or at least they cared about the problem then. The ills of monopoly were a feature of political rhetoric and a bipartisan priority of government, especially when companies played an outsized role in the transmission of ideas and knowledge.
Economic concentration has tumbled as a concern since then. In part, this reflects a changing consensus about the government’s role, a long turn toward the light footprint preached by the libertarians and neoclassical economists at the University of Chicago. But the tech monopolies also represent something novel in the history of American business. To manage the threat, government needs a dramatic updating, a bolder program for regulating the Internet, a whole new apparatus for protecting privacy and the competitive marketplace. But before we can redress the problem, we need to be precise about it and to understand its genesis.
In 1989, the Berlin Wall piled into collectible rubble—and the Internet was born in its modern form. The events were spiritually tethered. That idealistic year, capitalism shed its historic competitor, and the Internet began its own journey to the free market.
The American government nurtured the nascent Internet—the “inter-network” in the geeked-out parlance of its earliest days. In the 1960s, the Defense Department supplied the grants to start it, to build a communications system that could withstand a Soviet assault. When it no longer made sense for the Pentagon to manage the system, which had strayed unrecognizably from its original militaristic purpose, the Defense Department handed control over to the National Science Foundation, another corner of the bureaucracy. Government stewards imposed strict controls on the Internet, forbidding “extensive use for private or personal business.”
State supervision of the Internet worked well enough, but the National Science Foundation administrators were farseeing. They understood that the government shouldn’t manage its potent creation. Just as the world took a neoliberal turn, the National Science Foundation conceived a multiyear plan for privatizing the Internet. Without the shackles of the state, the Internet would realize its revolutionary potential as an engine of global commerce and mass communication. If the planet was gliding toward the End of History, a globalized, liberal order, then the Internet was going to carry it all the way toward that glorious resting point.
The euphoria of capitalism’s triumph set the tone for the Internet’s emergence. Time-honored strands of wisdom seemed no longer relevant. Through the twentieth century, the governments of the Western world had imposed rules on the private sector—regulations to limit the harm that business and finance might inflict on the common good. But history seemed to be arcing away from that approach. The Soviet failure cast suspicion on statist solutions. So, the government didn’t just privatize the Internet; it self-consciously decided that it would allow it to grow with hardly any government supervision. “I want to create an oasis from regulation in the broadband world,” William Kennard, the chairman of the Federal Communications Commission, declared in 1999, mouthing a familiar sentiment.
For a time, the Internet lived the dream of 1989. The privatization of the Internet might even be one of capitalism’s most glorious successes, though government played its role, too. Antitrust cases dogged IBM and AT&T into the eighties. The giants were too hobbled, too fearful of antagonizing Justice Department lawyers, to seize control of the Internet at the crucial moment of opportunity. It was a stroke of serendipitous timing, as well as shrewd bureaucratic planning. The Internet wasn’t captured by a single firm. These conditions gave rise to a glorious festival of creative destruction. New companies rose and then fell, innovation exploded in all directions, inaccessible troves of knowledge were instantly available, a consumer’s Arcadia emerged.
It was widely assumed that the history of business settled into a new pattern, what boosters called the New Economy. Firms would never achieve long-lasting dominance in the era of the Internet. Indeed, six years after the last phase of privatization, an astonishing percentage of the highly valued firms spiraled to their doom, in the inglorious dot-com crash. It didn’t matter whether these companies affixed their names to sports stadiums or whether they had just begun to revolutionize commerce. One of history’s great busts wiped them out. The market’s stiletto puncture set our view of the Internet: The Web would never settle into a static pattern. No firm could avoid the patricidal fate of being done in by some young savant in a garage. The Web fostered the conditions for perfect competition, as if an economics professor had designed it. Consumers could always flee to the cheaper alternative or effortlessly shift to the better technology. As the wisdom held, “competition is always just a click away.”
This has proved a wishful view, although for an astonishingly long stretch it held. The era of openness and flux has drawn to a close, inevitably. In his history of communications, Tim Wu described a progression of capitalism that he called The Cycle. Each new information technology follows the same trajectory: “From somebody’s hobby to somebody’s industry; from jury-rigged contraption to slick production marvel; from a freely accessible channel to one strictly controlled by a single corporation or cartel.” History hasn’t perfectly repeated itself, but we’ve reached the hardened end of Wu’s cycle. We need to entertain the possibility that the monopolies of our day may be even more firmly entrenched than the giants in whose path they stride. One of the reasons for the growing distance between the tech companies and their competition is that they have such a large stockpile of a precious asset.
• • •
ONE OF THE CLICHÉS OF OUR TIME: Data is the new oil. This felt like hyperbole when first articulated, but now feels perfectly apt. “Data” is a bloodless word, but what it represents is hardly bloodless. It’s the record of our actions: what we read, what we watch, where we travel over the course of a day, what we purchase, our correspondence, our search inquiries, the thoughts we begin to type and then delete. With enough data, it is possible to see correlations and find patterns. The computer security guru Bruce Schneier has written, “The accumulated data can probably paint a better picture of how you spend your time, because it doesn’t have to rely on human memory.” Data amounts to an understanding of users, a portrait of our psyche. Eric Schmidt once bragged, “We know where you are. We know where you’ve been. We can more or less know what you’re thinking about.”
A portrait of a psyche is a powerful thing. It allows companies to predict our behavior and anticipate our wants. With data, it is possible to know where you will be tomorrow within twenty meters and to predict, with reasonable accuracy, whether your romantic relationship will last. Capitalism has always dreamed of activating the desire to consume, the ability to tap the human brain to stimulate its desire for products that it never contemplated needing. Data helps achieve this old dream. It makes us more malleable, easier to addict, prone to nudging. It’s the reason that Amazon recommendations for your next purchase so often result in sales, or why Google ads result in clicks.
The dominant firms are the ones that have amassed the most complete portraits of us. They have tracked us most extensively as we travel across the Internet, and they have the computing power required to interpret our travels. This advantage becomes everything, and it compounds over time. Bottomless pools of data are required to create machines that effectively learn—and only these megacorporations have those pools of data. In all likelihood, no rival to Google will ever be able to match its search results, because no challenger will ever be able to match its historical record of searches or the compilation of patterns it has uncovered.
In this way, data is unlike oil. Oil is a finite resource; data is infinitely renewable. It continuously allows the new monopolists to conduct experiments to master the anticipation of trends, to better understand customers, to build superior algorithms. Before he went to Google, as the company’s chief economist, Hal Varian cowrote an essential handbook called Information Rules. Varian predicted that data would exaggerate the workings of the market. “Positive feedback makes the strong get stronger and the weak get weaker, leading to extreme outcomes.” One of these extreme outcomes is the proliferation of data-driven monopolies.
It’s a disturbing convergence: These companies have become dominant on the basis of their extensive surveillance of users, the total monitoring of activities, their ever-growing dossiers—what Maurice Stucke and Ariel Ezrachi call “a God-like view of the marketplace.” Put bluntly, they have built their empires by pulverizing privacy; they will further ensconce themselves by continuing to push boundaries, by taking even more invasive steps that build toward an even more complete portrait of us. Indeed, the threats to privacy and the competitive marketplace are now one and the same. The problem of monopoly has changed shape.
• • •
THOUGH IT’S DIFFICULT TO IMAGINE from the vantage of the present, the issue of monopoly dominated our politics for generations. The underlying questions in the debate cut to the core of the Republic: We feared concentrations of corporate power would inhibit freedom and make a mockery of democracy. Those anxieties remain, though the debate on monopoly has grown ever more narrow. Antitrust law—the body of laws designed to preserve a competitive economy—has grown so technical and morally desiccated that it has little to say about the dominant firms of our own time, companies that would have represented the sum of all the old anxieties about gigantism. We need to return to the spirit of those original laws, but we have spent decades veering in the other direction.
The hinge figure in this narrative—the crucial player at the moment when the fight against monopoly surrendered its rhetoric of righteousness—was a cowboy in nearly every sense. He came from Laramie, Wyoming, back when the West was exotic and unimaginably distant, though his blazing wit and acerbic humor won him a fixed place in the American Establishment. Thurman Arnold taught at Yale Law in the 1930s and wrote with misanthropic flair. His signature work, The Folklore of Capitalism, was heavily indebted to the acidic critic of the “Booboisie,” H. L. Mencken. The book was a precise account of all the illusions that prevailed in American life, described with clinical (and satirical) detachment as if Arnold were a “man from Mars.” Our institutions, he argued, maintain their legitimacy because they are bolstered by lies. His assessment of the American people was so dim that he preferred these cynical fibs to actual democracy, what he described as “the feeble judgment of the common herd.” Among our empty rituals and “popular moral gestures”: antitrust laws. These laws were emotionally satisfying but did nothing to stall economic concentration.
It was especially odd, therefore, that Franklin Roosevelt appointed Arnold to head the Justice Department’s Antitrust Division in 1938. His confirmation hearings were an especially uncomfortable affair. Arnold, who could be quite suave, would later admit that he struggled mightily to find a convincing explanation that could square his critique of antitrust law with his deep desire for the job. He was grilled by William Borah of Idaho, a target of his book: “Men like Senator Borah founded political careers on the continuance of such crusades, which were entirely futile but enormously picturesque.” Still, that was a more deferential, more forgiving era. The Senate confirmed Arnold, although Borah allowed that Arnold should “revise that chapter on trusts.”
As it turned out, Arnold did his job with incredible vigor. The Antitrust Division had been moribund when he arrived. On average, it filed nine suits a year. In 1940, once Arnold gathered a head of steam, he prosecuted ninety-two companies. His targets were scattered across the American economy, everywhere really: the motion picture industry, dairy, newsprint, and transportation. The war prematurely aborted his efforts. But never before, and never since, has the government more aggressively enforced antitrust laws. Consider where we now stand: The Obama administration brought two cases to bust up existing monopolies.
Even if his successors weren’t as active as Arnold, they accepted his thinking. True to the steely realism in his writing, Arnold stripped antitrust law of its grand, rhetorical ambitions. The intellectual godfathers of Progressive Era antitrust law—men like Supreme Court Justice Louis Brandeis and President Woodrow Wilson—presented themselves as heirs to Thomas Jefferson. They hated corporate bigness because they viewed it as a threat to self-government. In their view, the protagonists of history were the small shopkeepers and small producers—or as Wilson called them, “men who are on the make.” Economic independence equipped them for the duties of citizenship, an independence that the monopolies stomped.
Arnold considered this obsession with civic virtue a piece of garbage—a strain of “old religion.” He couldn’t have cared less about the size of a business, or even the fact of its monopoly. Brandeis considered “bigness” to be a “curse”; Arnold didn’t. “That debate is like arguing whether tall buildings are better than low ones, or big pieces of coal better than small ones,” Arnold wrote. In Arnold’s view, antitrust law had one mission, and one mission alone: It needed to prosecute industries that were inefficient and whose inefficiency injured the welfare of consumers. As the political theorist Michael Sandel has written, “Unlike antimonopolists in the tradition of Brandeis, Arnold sought not to decentralize the economy for the sake of self-government but to regulate the economy for the sake of lower consumer prices.”
Arnold’s line of thinking has prevailed through the present. We begin to worry about economic concentration only when it is achieved through big mergers or through nefarious tactics. And we begin to fret about a firm’s dominance only when it jacks up prices. Which is to say, we almost never take action that might dislodge an incumbent monopoly. The concentration of economic power is an accepted fact of our lives. When the Economist analyzed the question last year, it found that most sectors of the economy—two-thirds of the nine hundred areas it examined—were far more concentrated than they were in 1997. The Roosevelt Institute has declared, “markets are now more concentrated and less competitive than at any point since the Gilded Age.”
The old obsession with the consumer was narrow, but it wasn’t misguided. The economy, however, has morphed considerably since Arnold’s day. Some of the biggest corporations in America now give their products away for free; Amazon and Walmart may not hand out freebies, but they are maniacal about low prices. By Arnold’s standard, there’s not much to fear about these behemoths. Perhaps we should worry about how they squelch competitors, but there’s little reason to fret about the inefficiency of these industries. That, however, is a fairly incomplete view of the role these companies play in American life. Arnold’s vision of antitrust law remains relevant, but the problem of monopoly in our time more closely tracks the nightmare scenario described by Brandeis. The threat of bigness posed by Amazon, Facebook, and Google is a threat to self-government.
• • •
BRANDEIS—THE CORPORATE LAWYER turned corporate scourge—could be a prude and a scold, neither of which negates the power of his opinions. His great concern was the quality of democracy. He really meant the quality of its citizens. Deep strains of populism and snobbery coexisted in his view of his fellow Americans. The populist in him believed in the limitless potential of everyday people to formulate sophisticated, well-reasoned opinions. As a snob, he disdained how citizens were seduced by the lure of consumerism and spun around by advertising. The potential of the average American could be fulfilled only with reading, contemplation, and extensive engagement with the higher forms of culture. When he spoke about the subject, he would passionately point to the need for workers and shopkeepers to “develop their faculties.”
All these exhortations about contemplation and reading weren’t just intended as a form of self-help. They were cornerstones of his political philosophy, which he later developed in the rulings he issued as a Supreme Court justice: “The final end of the State was to make men free to develop their faculties.” He formulated and then reformulated our modern understanding of privacy in order to create the conditions for men and women to think independently and critically. The legal scholar Neil Richards has described Brandeis’s theory as “intellectual privacy”— “the protection from surveillance or interference when we are engaged in the processes of generating ideas.” Public debate was possible only after the formulation of private opinions—and that required the freedom to experiment and discard ideas, without worrying about prying eyes. If we believe we’re being watched, we’re far less likely to let our minds roam toward opinions that require courage or might take us beyond the bounds of acceptable opinion. We begin to bend our opinions to please our observer. Without the private space to think freely, the mind deadens—and then so does the Republic. Brandeis wrote, “The greatest menace to freedom is an inert people.”
There were crucial assumptions in Brandeis’s thinking that demand revival. The first was a critique of efficiency. It’s not that Brandeis entirely rejected the idea. He was a devoted student of Frederick Taylor, the apostle of scientific management who used stopwatches and data-driven methods to make factories churn at a faster clip. But Brandeis hated the prospect that society might elevate efficiency to the highest value. Convenience was nice, but we shouldn’t sacrifice ourselves to achieve it. His fear was that the benefits of efficiency might lure us to surrender our liberty. That’s the authoritarian temptation: that liberty comes to seem a small price for trains that run on time. To update the thought—it’s not worth having free email if the price is our privacy; next-day delivery is nice, but not if the consequence is a sole company dominating retail, setting the market price for goods and labor.
A second assumption flowed from the first. The Framers preferred liberty to efficiency, which is why they designed a less than efficient form of government. They checked, they balanced, intentionally slowing the machinery of the state they designed. Brandeis believed in the importance of countervailing powers. Democracy struggles for breath when one realm of society becomes too big and powerful. He believed that unions were necessary for limiting the power of corporations. And that oligopoly was such an imminent danger to the Republic that the state could take drastic action to prevent that condition. Not that Brandeis fully trusted the state—rather, he preferred to keep power devolved to units smaller and less menacing than the federal government. But in his view of modern life, the primary fear—which remains as terrifying as ever—was that a small group of companies would achieve outsized political and economic power. “The American people have as little need of oligarchy in business as in politics,” he wrote.
There’s no doubting what Brandeis would have made of Google, Facebook, and Amazon, which embody the full collection of his fears. They are monopolies operating without restraint, regulatory or otherwise. The companies preach the gospel of efficiency as they engage in the most extensive surveillance in human history. They are rent-seekers with little regard for the independent producers whose goods they sell. They shape the minds of citizens, filtering the information by which citizens arrive at their political opinions. Brandeis helped set the norms for modern American life, and the companies have built the systems that grievously injure those norms.
• • •
IN BRANDEIS’S DAY, the case for regulation rallied the masses. In our day, we can’t quite see anything wrong with monopoly, especially not when it comes to these companies. We’re certain that our tech giants achieved their dominance fairly and squarely through the free market, by dint of technical genius. To conjure this image of meritocratic triumph requires overlooking several pungent truths about the nature of these new monopolies. Their dominance is less than pure. They owe their dominance to innovation, but also to tax avoidance. Of course, every big American corporation tries to limit the tax bill. Armies of accountants are a staple of capitalism; the manufacture of new deductions is one of our country’s greatest showcases of innovation. But the tech companies are especially slippery with the tax man. In part, it’s the nature of their product. Unlike manufacturing or finance, tech doesn’t need to be pinned to a geographic home. Tech companies can transfer their core assets, their intellectual property, to whatever tax haven offers the sweetest deal. They have hatched schemes that their competitors—brick-and-mortar firms, media companies—couldn’t dare attempt.
When Jeff Bezos first conceived of Amazon, he originally wanted to locate the company on a California Indian reservation, where it would pay hardly any tax. Authorities rejected that gambit. But Bezos understood that Internet commerce challenged traditional ideas about taxation. Thanks to a court ruling, rendered just as he launched his company, Amazon could get away without paying sales tax to the states to which it shipped its goods.
But as the company expanded, it needed employees spread across the country. Each time Amazon opened a warehouse in a different state, it should have paid taxes there—at least that was the prevailing understanding of the law. Bezos rejected it. There was something Nixonian about this effort. Traveling Amazon employees carried misleading business cards, so that the company couldn’t be accused of operating in a state. When Amazon opened a warehouse in Texas, the company apparently didn’t tell the state tax officials about the building. That’s a hard secret to keep. After authorities read an exposé in the Dallas Morning News, Bezos vowed not to pay the $269 million the company owed. If the state wanted that cash, he would shut down his facility and take his business elsewhere. In the end, Texas forgave Amazon’s debts, so long as it accounted for itself honestly in the future. Texas was a template for the nation. When Amazon moved into South Carolina, the company finagled a five-year exemption from sales tax as a precondition for building a distribution center there.
Amazon promised the cheapest prices—and delivered that to consumers. It could offer the best price only by resisting tax. Economists at Ohio State University have shown the crucial role that avoidance played in establishing Amazon. They studied Amazon’s sales after states ultimately forced it to pay tax. When states began collecting, household spending at Amazon dropped by 10 percent. In his history of Amazon, the journalist Brad Stone described this dodging as “one of the company’s biggest tactical advantages.”
Avoiding tax is an overriding corporate obsession—“employing every trick in the book, and inventing many new ones” in Stone’s words. To outmaneuver the IRS and European collectors, Amazon hatched Project Goldcrest. The code name referenced the national bird of Luxembourg. In 2003, the company sought out a deal with the Grand Duchy. As a reward for building a headquarters there, it would pay hardly any tax. Once Amazon set up shop in Luxembourg, it transferred a vast swath of its intangible assets there—vital software, trademarks, and other shards of intellectual property. Truly, these assets exist in no particular country—does one-click shopping really have a physical location?—but they have a basis in contracts, and those contracts are the basis for taxation. Amazon devised a labyrinthine corporate structure, a dizzying network of subsidiaries and holding companies. As Amazon relocated, it drastically understated the value of the assets it shifted to Luxembourg. The whole plot has irked the IRS, which has built a careful case against Amazon. Calculations by the IRS show that Project Goldcrest helped Amazon to dodge a bill of at least $1.5 billion that would otherwise have been paid to the U.S. government.
Google has the same sort of unpatriotic accounting schemes. It prefers maneuvers known as the Double Irish and the Dutch Sandwich. Google has also shifted assets to Bermuda, that famous mecca of high tech. By the end of 2015, it had “permanently reinvested” $58.3 billion of its profits in foreign tax havens, earnings on which it pays no U.S. tax. The tech companies maintain every shred of data, yet seem to want to purge every bit of taxable earnings. The year Facebook went public, it recorded $1.1 billion in American profits, but didn’t pay a cent of federal or state income tax. Indeed, it earned a $429 million refund. According to Citizens for Tax Justice, Facebook bilked the treasury by taking a single deduction: It wrote off the stock options it gave to its executives.
It’s hard to have sympathy with Walmart or Home Depot or the other big-box stores. They hardly pay the largest tax rates in the nation. Still, they cough up a reasonable sum. Over the last decade, Walmart, the supposed Beast of Bentonville, handed over about 30 percent of its income in taxes; Home Depot paid 38 percent. We can bemoan the fact that they don’t pay more, yet it seems reasonable to note that their prime competitor isn’t paying even half that rate. Amazon averaged an effective tax rate of 13 percent—that includes taxes owed to states and localities, as well as the feds and foreign governments. Apple and Alphabet were only slightly less adventurous with their avoidance. They both paid a rate of about 16 percent. This is one of the dangers of monopoly that caused Brandeis such agita. Our biggest companies manage to acquire power, a sense of impunity, that allows them to further extend their advantages, to further shirk their public responsibilities.
These companies can afford to push the limits of acceptable behavior, because they have paid such care and attention to Washington. While the tech companies are hardly the image of corpulent K Street, they have built massive lobbying operations that pace the halls of the regulatory agencies and Congress, stacked with skillful hacks. Google executives set foot in the Obama White House more often than those of any other corporation—its head lobbyist visited 128 times. Google spread its money across Washington with joyous ecumenicism. Google spent about $17 million on influence peddlers of both partisan varietals. By one count, Google poured more into its D.C. apparatus than any other public company. An investigation by The Intercept concluded: “Google has achieved a kind of vertical integration with the government.” Somehow Google managed to overcome the recommendation of staffers on the Federal Trade Commission who found Google’s monopolistic machinations worthy of a lawsuit.
Lobbyists for the companies have preserved a blissful state of barely regulated, barely taxed monopoly. They have played the politics brilliantly. Obama spent his presidency cheering on the tech companies, even pleading with the Europeans not to collect the taxes owed to them. In return, the tech companies have sent their best brains to work for the Democratic administration and its political campaigns. The tech monopolists have aligned themselves with the left, culturally and electorally, which has defanged their most likely critics. That’s the wise way to hedge: Republicans might not especially care for the donations that the tech companies send to Democrats, but they have no ideological interest in placing them under the thumb of government. Big tech has created a corporate paradise, which will prevail, until it doesn’t.
• • •
THE TECH COMPANIES have so mastered Washington, they have acquired such cultural prestige, that it’s hard to imagine the system ever restraining them. But we know that politics doesn’t repose in a steady state, and the companies have one gaping vulnerability—they aggressively surveil users. Thus far, the public has tolerated these invasions, but that won’t last forever.
Hackers are constantly testing security cordons, and constantly bursting through them. Everybody has tolerated this as a fact of digital life, a minor price to pay for its wonders. With the exception of Russian interference in our election, these have been relatively minor breaches. They will prove throat clearing compared with the Big One, the inevitable mega-hack that will rumble society to its core. The Big One might be an exposed cache of intimate information that disrupts marital relations en masse, as the Ashley Madison hack did on a small scale. It might disrupt our financial system, so that fortunes disappear in an unrecoverable flash. Or it might trigger an actual explosion of infrastructure that kills. If we could predict, we could prevent, but we can’t.
The tech companies can see the Big One coming, and they are bracing for the fallout, which is a perfectly reasonable posture. Their companies have created devices and code that enable omnipresent surveillance; their pack-rat servers hoard personal data. These companies could logically carry the blame for a massive attack. The best analogy is the financial crisis of 2008. There was nothing that the banks could do to gain political traction in the face of the catastrophe that they unleashed. When the Big One arrives, the tech companies will be vulnerable to the regulation that they have skillfully avoided. (Shamefully, there’s no modern law governing the use of data.) Just as the financial crisis triggered the creation of Elizabeth Warren’s Consumer Financial Protection Bureau—the rare launch of a new agency—the Big One has the potential for creating a sizable regulatory infrastructure.
What we need is a Data Protection Authority to protect privacy as the government protects the environment. Both the environment and privacy are goods that the market would destroy if left to its own devices. We let business degrade the environment within limits—and we should tolerate the same with privacy. The point isn’t to prevent the collection or exploitation of data. What are needed, however, are constraints, about what can be collected and what can be exploited. Citizens should have the right to purge data that sits on servers. Rules should require companies to set default options so that citizens have to opt for surveillance, rather than passively accept the loss of privacy, a far more robust option than the incomprehensible take-it-or-leave-it terms of service agreements.
This is a matter of autonomy: The intimate details embedded in our data can be used to undermine us; data provides the basis for invisible discrimination; it is used to influence our choices, both our habits of consumption and our intellectual habits. Data provides an X-ray of the soul. Companies turn that photograph of the inner self into a commodity to be traded on a market, bought and sold without our knowledge.
It’s a basic, intuitive right, worthy of enshrinement: Citizens, not the corporations that stealthily track them, should own their own data. The law should demand that these companies treat this data with the greatest care, because it doesn’t belong to them. Possessing our data is a heavy responsibility that must come with ethical obligations. The American government has a special category for corporations that profit from goods that they don’t truly own: We call them trustees. This is how the government treats radio and television broadcasters. Those companies make money from their use of the public airwaves, so the government requires that these broadcasters adhere to a raft of standards. At times, they were asked to broadcast civil defense warnings and public service announcements; they were asked to adhere to decency standards and were required to provide equal airtime to candidates of both political parties. The government, in the form of the Federal Communications Commission, supervises the broadcasters to guarantee that they don’t shirk these obligations.
One of the most sacrosanct obligations of the data-driven firms is that they don’t abuse their power to undermine democracy. The government shouldn’t dictate the editorial policy of the platforms, but we should prevent our informational gatekeepers from suppressing criticism of themselves; we should insist that they provide equal access to a multiplicity of sources and viewpoints. I don’t deny that this is a thicket of complex questions, which would require a legislative doorstop and many judicial rulings to untangle. This is not, however, a novel interpretation of the government’s responsibilities. It’s exactly what the Supreme Court has demanded of the state, even its most conservative justices. In 1994 Anthony Kennedy intoned, “Assuring the public has access to a multiplicity of information sources is a governmental purpose of the highest order.”
• • •
IN A SHORT SPAN, we have moved very far from Justice Kennedy’s view of government. It’s the Europeans who have assumed the American mantle, though Americans prefer to mock them for that. And, it is true, the Europeans have occasionally struggled to articulate the basis for their hostility to the tech companies and their sundry efforts to block them. One reason for this difficulty is that they have instinctively veered far from their own political tradition, into strange terrain. Through its history, Europe has shown favor to cartels, giant corporations closely tied to the state. Until recently, the continent evinced little concern for the virtues of economic decentralization. It’s not hard to ascribe self-serving motives to their sudden concern over the American tech giants—a desire to protect their own indigenous firms from American ones.
But before the United States damns Brussels’s approach, it should stare in the mirror. Over the decades, the American state has done a first-rate job of limiting communications behemoths, allowing the oxygen for new technologies and new competitors. In the earliest days of the Republic, the postal service monopolized the flow of information. But with the advent of the telegraph, the government withstood the temptation to control the new medium, even though the postal service had ample opportunity to swallow it. The government allowed a period of rigorous private competition—which ended, as all such cycles do, with the rise of a monopoly: Western Union. Politicians, however, kept threatening to dismember Western Union, a threat that deterred Western Union from extending itself into telephony. AT&T emerged as the dominant firm in that new technology, but the government wouldn’t let it extend into radio. When NBC achieved a grip over radio, the government insisted that it divide into two—NBC and ABC. The Nixon administration encouraged a challenge to the Big Three networks that controlled broadcasting, by promoting the emergence of cable. It’s a noble, though sometimes imperfect, history of activism that has extended into our own era. The Clinton administration’s case against Microsoft was quietly killed by the Bush administration in the aftermath of September 11, but the case put a scare into the software giant, which deterred it from repeating bad patterns of behavior. Instead of using its strength to strangle Google in its cradle, which was well within its power, it watched the upstart from a careful distance for fear of getting slapped by the government.
A Data Protection Authority would be the heir to this tradition. Unlike the Federal Trade Commission, which evaluates mergers to preserve low prices and economic efficiency, the authority would review them to protect privacy and the free flow of information. It would constrain monopolies as they attempt to carry their power into the next era, creating the opening through which challengers can ultimately emerge. The old Brandeisan view of antitrust needs to be hauled off the shelf—and though it might be a few moments premature, we shouldn’t limit our policy imagination. The health of our democracy demands that we consider treating Facebook, Google, and Amazon with the same firm hand that led government to wage war on AT&T, IBM, and Microsoft—even dismembering them into smaller companies if circumstances (and the law) demand a forceful response. While it has been several generations since we wielded antitrust laws with such vigor, we should remember that these cases created the conditions that nurtured the invention of an open, gloriously innovative Internet in the first place.
Nearly thirty years after the fall of the Berlin Wall, after a terrible recession, and decades of growing inequality, regulation hasn’t regained its reputation. In some ways, its stature has receded even further. Large swaths of the left now share the right’s distaste for the regulatory state, a broad sense of indignation over corporations capturing the apparatus of the state. Instead of defending the people against big business, government becomes its servant.
But the long history of regulation also shows that the project is not nearly as futile as its critics claim. When government tries to remodel the economy for the sake of efficiency, it has amassed a mixed record. When government uses its power to achieve clear moral ends, it has a strong record. There are notable failures, for sure. But our automobiles are safer, our environment is cleaner, our food doesn’t poison us, our financial system is fairer and less prone to catastrophic collapse, even though those protective provisions have imposed meaningful costs on the private sector. In the libertarian fervor that followed the fall of the Berlin Wall, we lost sight of this moral vision. The Internet is amazing, but we shouldn’t treat it as if it exists outside history or is exempt from our moral structures, especially when the stakes are nothing less than the fate of individuality and the fitness of democracy.