On Wednesday December 9, the Federal Trade Commission and forty-eight states and territories sued Facebook for its illegal social networking monopoly after an extensive investigation. The antitrust action seeks to break up the company by forcing it to divest two of its major business lines, Instagram and WhatsApp.
This latest event comes hot on the heels of October’s historic investigation by the House Judiciary Committee — which detailed how dominant platform companies monopolize markets, abuse their power, and explicitly and purposely violate laws and regulations — and another lawsuit by the Department of Justice against Google for illegal anticompetitive actions protecting its search and advertising monopolies.
While the ultimate outcome of these actions is unknown, they are undoubtedly long overdue. The monopolization of the platform economy — what Facebook confidentially called a “land grab” when acquiring Instagram — has only deepened throughout the COVID-19 pandemic. For instance, over the course of the last several months, the five Big Tech companies — Facebook, Amazon, Apple, Google, and Microsoft — have driven stock market growth, further enriching their already absurdly wealthy owners and driving economic inequality.
Moreover, they have taken the gloves off when it comes to deploying their wealth and power to gut laws and regulations designed to rein in their abusive labor practices. In California, for instance, ride-sharing and delivery corporations like Uber and Lyft spent a record shattering $205 million on a manipulative and misleading propaganda campaign to convince voters to approve Proposition 22, which exempts those same companies from a new law that would have required them to treat their workers as employees rather than independent contractors.
The unprecedented rise of many of these companies is linked to the emergence and proliferation of digital platforms over the past several years. While this kind of business model — in which the product or business is focused on facilitating interactions between two or more distinct but interdependent sets of users — is not new, the emerging phenomenon of surveillance capitalism is.
Today’s platform giants have accumulated unprecedented wealth and power — in some cases greater than many nation-states given their global reach — and are beginning to design and modify social behavior in the interest of profit maximization. Boosted by seemingly limitless flows of venture capital (VC), these platform corporations are growing in dominance across our economy, gaining footholds in online retail, social networks, and mobility services.
Moreover, this power is consolidated and extended by a key feature of the platform economy: the exponential collection, analysis, and monetization of data generated by platform users and collected by the platform companies.
The Antitrust Impulse
The early stage antitrust actions of recent months are encouraging signs that policy makers, activists, and others are beginning to wake up to some of the dangers these platform corporations present — including the standardization of precarious work, overriding and ignoring labor laws, the entrenchment and exacerbation of racism and inequality through algorithmic bias, increased financialization, the proliferation of misinformation, and manipulation, the undermining of regulations and tax codes, environmental degradation, and the erosion of privacy and extension of social control.
While these are welcome developments, it’s worth noting that there has been almost no discernable antitrust enforcement against Big Tech in recent years. Antitrust enforcers, for example, have not blocked a single acquisition out of hundreds by dominant platform companies over the last decade. As such, it is unclear how successful these antitrust actions, alone, will ultimately be. So, what are the obstacles and limitations?
First and foremost, for antitrust to be actualized and ultimately succeed, the entire legal regime around it would likely need to be radically overhauled. Specifically, over the last several decades there has been a fundamental reinterpretation of antitrust law by the courts and a large decline in successful antitrust prosecutions by the Justice Department.
Thus, any strategy that centers antitrust is contingent on a wholesale revision of the grounds on which a company is currently deemed to be a monopoly or anti-competitive. In particular, the still prevalent focus on consumer welfare and prices is likely to be an inadequate standard for antitrust action against platforms where in most cases the “product” is essentially provided for free.
Second, increasing competition doesn’t address the natural monopoly dynamics inherent to the platform economy. “The consumer internet is a kind of natural monopoly,” Dipayan Ghosh explains:
Its leading constituent firms consistently exhibit network effects: the networked services operated by Facebook, Amazon, and Google increase in value when more users use them. This meanwhile makes it extraordinarily difficult for new entrants to offer competitive levels of utility to consumers out of the gate. As with telecommunications before it, this industry now maintains impossibly high barriers to entry.
Lastly, without additional changes to the structure of the companies (i.e. ownership, control, values) and the broader balance between market mechanisms (and imperatives) and state intervention, a reconcentration is almost inevitable.
In the US context, there is ample evidence of this. For instance, both Standard Oil and AT&T (two of the most famous companies to be physically broken up by antitrust enforcement) ultimately reconsolidated. The former took several decades (ultimately becoming ExxonMobil) while the latter occurred relatively quickly, highlighting the additional challenges related to implementing antitrust strategies in an era of strong ideological and political adherence to market fundamentalism and neoliberalism.
The Ownership Alternative
Historically, one of the common “solutions” to the problem of natural monopolies has been public utility regulation. And while the idea of classifying and regulating platforms and other Big Data–dependent corporations as public utilities is controversial, it is starting to gain traction among various experts.
However, both the experience and theory (including from diverse ideological perspectives) of public utility regulation in the United States suggests that it is often insufficient to deal with the innumerable problems associated with corporate concentration and power, and does little in furtherance of redistributing or democratizing wealth and economic control. Case in point is the United States’ experience with large investor owned electricity utilities.
This leaves alternative models of ownership as the most viable and radical path forward, and one of the only options capable of getting to the root of the problem. A new report from Common Wealth and the Democracy Collaborative (to which the authors contributed) presents several bottom-up and top-down proposals to fundamentally change the ownership structure, values, governance, and orientation of platforms and data, and gain control over the commanding heights of the modern economy.
First and foremost, this includes taking some or all of the large platform corporations into public ownership (either wholly or through a controlling or majority share ownership position). Part of this process must include embedding democratic principles at various levels.
For instance, if ownership stakes are taken in major platform companies, they should likely be held in an autonomous public trust (or similar vehicle) organized with democratic multi-stakeholder representation from workers, consumers, government officials, the general public, etc. Once in public ownership, the platform companies themselves should also be restructured to embed both democratic management structures and new public interest principles.
Of particular concern will be ensuring that anti-surveillance and data privacy values are woven into these new publicly owned platforms. This cannot be an afterthought, as it would introduce the unacceptable risk that the new public platforms would face incentives and pressure to collect, monetize, and/or misuse data (including sharing it with government agencies engaged in surveillance and social control).
Rather, anti-surveillance and privacy values and rules should be included in any and all enabling legislation. Moreover, a strict national data privacy framework — whether enacted in conjunction with, or prior to, platforms being brought into democratic public ownership — would be an important complement to this proposal, together overcoming the problem of consumer protections creating barriers to entry that favor dominant firms.
Another important component will be ensuring global, multi-stakeholder governance of these new public platforms. While many of the major platform and Big Tech companies are nominally based in the United States, their users are located throughout the world. Any proposal to democratize the ownership of platforms and data must take these global dynamics into account and develop ways in which people around the world (and not just in the United States and the UK) can be involved in ownership and governance decisions.
In addition to public ownership of the major platform corporations, there are a number of further policy solutions that should be deployed to confront the platform monopolies and chart a course away from surveillance capitalism. For instance, a new and powerful set of labor and union rights, such as that put forward by the PRO Act, should be embedded in the organization and management structures of any new public or cooperatively owned platforms (and should be enacted regardless of possible shifts in ownership).
Existing and new public agencies at various scales should be dedicated to incubating and supporting the development and proliferation of new cooperative and nonprofit platform and data alternatives; and financing of such ownership alternatives could be facilitated via direct federal spending and through the establishment of a network of local and regional public banks.
A new multi-stakeholder regulatory authority should be created, tasked with democratically setting and enforcing standards around data collection and speech — taking those decisions out of the hands of bosses, corporations, and state technocrats; and when data is collected, it should be held in a new network of public “data trusts” that enable residents and communities both access to, and democratic control over, the data so that it can improve their lives, and not be misused for purposes of surveillance capitalism and social control.
Lastly, as we are confronted with the rapidly emerging prospect of the currency system itself being captured by platform capitalists like Facebook’s newly rebranded cryptocurrency project, Diem, a linked Central Bank Digital Currency (CBDC) and postal banking system should be established to modernize payment infrastructure, while centering the preservation of financial data privacy inherent to paper cash.
Tech Socialism or Barbarism
None of these proposals are a silver bullet, and all need further exploration and definition. Moreover, as the British economist and former politician Stuart Holland articulated in the 1970s, they won’t by themselves fulfill the socialist goal of abolishing private sector capitalism completely, but they could create a “chain reaction” that radically, and permanently, tips the balance of economic, political, and social power.
This is critical because with the platform monopolies and Big Tech corporations poised to dominate the commanding heights of our economy for decades to come, the decisions we make now will lock in a future; whether that future will be defined by increasingly pervasive surveillance capitalism or a more equitable, democratic, and ecologically sustainable alternative is up to us.
The challenge is to liberate the potential of platforms and data from the logics of concentrated corporate ownership that currently shape their operation. This will require a newly ambitious agenda that can reimagine how platforms, and the data they – and we – generate, are owned, governed, and controlled.