Madhavi Singh argues that antitrust alone cannot reign in Big Tech monopolies. Antitrust efforts need to be supplemented by changes to corporate governance that incorporate the interests of all stakeholders and not just those of profit-maximizing shareholders.
The world has a Big Tech problem. A handful of tech companies control the world’s communication channels, decide what we see on the internet, gatekeep access to economic opportunities, and unilaterally impose onerous terms and conditions on users. Indeed, this monopoly problem doesn’t just have implications for free and fair competition. It also significantly exacerbates other regulatory concerns, such as data protection, content moderation, election misinformation, and cybercrime. For example, fake news is more impactful when spread on X/Twitter than when it is propagated on some obscure website. Amazon’s exploitative treatment of third-party sellers, Microsoft’s outage due to a CrowdStrike update or Meta’s security breach attract public outrage especially because of their widespread ramifications.
Unsurprisingly, on both sides of the Atlantic, antitrust is being summoned to solve the consequences of this monopoly power. The Neo-Brandeisian movement, born in response to the monopoly problem, has inspired a new generation of legal scholars, lawmakers and regulators like Federal Trade Commission Chair Lina Khan, Department of Justice Antitrust Division Assistant Attorney General Jonathan Kanter, and Minnesota Senator Amy Klobuchar. This new wave of anti-monopoly scholarship and regulatory activity pushes the boundaries of antitrust, rejects the conventional “consumer welfare” standard, and harnesses the potential of antitrust to redress a wide spectrum of concerns ranging from inequality and wealth distribution to the weakening of democracy. It has led to an increase in competition enforcement. Major antitrust suits have been brought against Big Tech companies and their acquisitions are being closely scrutinized. The European Union has gone even further and upgraded its regulatory tools through the adoption of the Digital Markets Act and the Digital Services Act. In yet another display of the “Brussels effect,” countries like the United Kingdom and India are also emulating the European model of gatekeeper regulation.
While the use of antitrust (and its upgraded successors like the DMA) to counter the monopoly problem might seem intuitive, it is unlikely to work on its own. This is because the essence of antitrust laws runs counter to capitalist business wisdom, which dangles the prospect of earning monopoly rents to attract innovation and entrepreneurship. Indeed, the value of a start-up or an innovation lies in its potential to become a monopoly, either by beating its competitors to emerge victorious (like Facebook did) or creating an entirely new market by designing a new product (like Google’s search engine or Apple’s iPhone). Any viewer of Shark Tank knows that a business proposition which entails operating in a competitive, undifferentiated market with minuscule profits (as the model of perfect competition envisages) isn’t a very enticing one. As the venture capitalist Peter Thiel puts it: “Competition is for losers.”
This misalignment of incentives and clash of values, where antitrust curbs monopolies and business wisdom rewards it, undermines the efficacy of antitrust action. We have seen this in the European Commission’s Google decisions which spearheaded the era of antitrust regulation of digital platforms. In the five years since these decisions, Google, acting under strong profit-maximizing incentives, has found workarounds. Companies have also allegedly already found loopholes in the DMA and DSA. For example, the DMA requires Apple to allow alternative app stores on the iPhone or alternative distribution channels for installing an app. To comply, Apple has removed its technical prohibition against the installation of third-party apps/app stores and instead instituted a core technology fee under which developers of third-party app stores and third-party apps must pay a 0.50 euro fee per installed app. The effect of such token compliance will probably be the continued dominance of Apple’s App Store. Even very high fines have failed to act as deterrents. According to one study, Big Tech companies (Alphabet, Amazon, Apple, Meta, and Microsoft) had earned enough revenue in the first seven days of 2024 to pay off all of the fines imposed on them in 2023 (approximately $3.04 billion). This should caution us that merely adopting new competition tools, strengthening enforcement of existing competition law, or imposing higher fines is unlikely to solve the monopoly problem.
Instead, we need to address the root cause of the problem: shareholder-centrism. For half a century, corporate governance has promoted the idea that the sole purpose of a corporation is shareholder-value maximization. Dogmatic shareholder-centrism has often boded ill for other constituencies, including creditors (see FTX’s bankruptcy), consumers (see Purdue Pharma’s opioid crisis), local communities (see Bhopal Gas Tragedy), and the environment (see BP Oil Spill). The competitive market is yet another in this long list of casualties of shareholder-centrism. So long as the exclusive aim of a corporation remains to increase profits for shareholders, it will be incentivized to monopolize. Monopoly, after all, as classical economics tells us, is the most profitable form of business.
Thus, to solve the monopoly problem, we need to look beyond antitrust to corporate governance. A reconceptualization of corporate governance standards that mandates corporate decision-making to account for stakeholder interests would foster free and fair markets. Under this paradigm, corporations would have to balance shareholders’ interests in incessant monopoly capture and profit extraction against consumer interests in getting good-quality services and greater choice through competitive markets. As extensive corporate governance literature has shown, using company law to execute stakeholderism is no mean feat. However, there have been some proposals for operationalizing stakeholderism such as by giving managers the power and operational discretion to balance stakeholder interests or by identifying directors’ legal duties as those of a trustee.
Undoubtedly, such a reorientation where a company internalizes the economic and social costs of a monopoly (i.e., costs to stakeholders) and offsets it against monopoly profits for shareholders will pose serious challenges. However, in its absence, the antitrust movement to curtail Big Tech is poised to fail. Hence, difficult as its execution may be, it is important to at least clearly identify the benchmark for what it takes to curtail private concentration of power.
Even if antitrust actions manage to restrain the tech monopolies of today, they will eventually be replaced by new monopolies (in metaverse, AI, robotics, etc.). Facebook co-founder Chris Hughes, when making an impassioned plea for Facebook’s break-up, once observed that he doesn’t blame Zuckerberg for his quest for domination because “he [Zuckerberg] has demonstrated nothing more nefarious than the virtuous hustle of a talented entrepreneur.” Unless we fundamentally change incentives for corporations and account for the interests of stakeholders in corporate decision-making, antitrust will remain a helpless spectator as the next generation of Silicon Valley entrepreneurs launch a quest for domination and justify it as their virtuous hustle.
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