The Google Suit: We're All Anti-Monopolists Now
The DOJ Antitrust suit is tight and aggressive, and the start of a new era.
|Matt Stoller||Oct 21|| 37||45|
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…
This issue will be short, with some quick thoughts on the Google case.
First housekeeping. This morning, I was on Rising with Saagar Enjeti and Krystal Ball, and yesterday I was on Yahoo Finance to talk about the suit. And on a slightly different note, I spoke at Berkeley Law’s Consumer Advocacy and Protection Society with Professor Prasad Krishnamurthy. (Thanks Reed Shaw for setting it up!)
Second, there has been one important development since yesterday on the Google case. The government had a reasonable draw in terms of a judge, with the case assigned to Obama appointee Amit Mehta. Mehta blocked the Sysco-US Foods merger in 2015, so this is someone willing to hold up plaintiff arguments.
I’ll be popping into the comments periodically throughout the day to answer questions and chat. Be excellent to each other!
There Is No Alternative
When conservative Prime Minister Margaret Thatcher ran the United Kingdom in the 1980s, she used the phrase “There is no alternative” (TINA) to describe her policies of reducing the size and scale of public institutions. She put forward a political economy revolution in that nation, reorienting how British people related to the government and to one another. In Thatcher’s framework, she wasn’t fighting a political battle; the Labor Party’s ideas simply didn’t matter, because libertarian-style capitalism was the only system that was even possible.
Thatcher’s greatest triumph wasn’t in defeating her opposition and implementing neoliberal policies, but in changing the terms of debate so radically that when the Labor Party finally won power, Labor PM Tony Blair ended up following her philosophy in governing. One Labor official said, “We are all Thatcherites now.” In other words, her opponents accepted what Thatcher believed.
There is no alternative.
I bring this up because the Google suit is a stunning change in the consensus underpinning American politics. The complaint itself a tight, well-reasoned, and nicely framed case, and the scope will likely broaden over the next few months. What the DOJ is arguing is basically a carbon copy of the Microsoft case of the late 1990s, where the government accused Microsoft of illegally tying Internet Explorer to Microsoft Windows. Today, the DOJ is accusing Google of illegally tying Search to its mobile phone operating system Android and its browser Chrome. And the government is seeking to break up Google.
The details of the case aren’t particularly important for the purpose of this essay, but if you want to know them, you can read the complaint here or read my colleague Sarah Miller’s write-up in the Guardian.
Ideologically, this complaint is just a stunning victory for anti-monopolists, who largely congregated on the progressive and Democratic side of the aisle. Republicans have been traditionally hostile to antitrust doctrine, but are now shifting. Take the words of Arkansas Senator Tom Cotton, who said in response to the suit, “I commend the Department for finally holding Google accountable. When it comes to big tech, this is just the beginning. Winter is coming.” It’s an aggressive comment from any political leader, and it’s coming from a conservative Republican.
What a sea change! Remember, it was the George W. Bush administration that pulled back on the original Microsoft case, and it was Ronald Reagan himself who orchestrated the narrowing of antitrust law in the first place. And this isn’t some partisan power grab either; Leticia James, New York’s Attorney General and a staunch Democrat, said she is conducting her own investigation (along with a bunch of states), and is going to join the DOJ case.
When I started working in anti-monopoly politics in 2005, I began on the problem of net neutrality, because I saw how telecom companies like Verizon or AT&T had power over speech platforms. At the time, the bipartisan consensus of Bush officials and ex-Clinton officials was that public institutions shouldn’t dare touch private corporations. For fifteen years, through the financial crisis, Donald Trump, the rise of big tech, and now Covid, the idea of public democratic institutions having a core role in structuring markets was something on the intellectual and political fringe. I heard endless variants of ‘you’re stupid and wrong,’ ‘you don’t know economics,’ and most often ‘they are too powerful and politicians are too corrupt.’ Most recently, it was an anonymous GOP House aide saying we’re a bunch of socialist adherents of ‘hipster antitrust’ who let “kombucha ferment for too long.”
Well yesterday, the right-wing Republican administration Trump administration, cheered by conservatives, announced they are going to try to break up a trillion dollar giant. We are all anti-monopolists now. After all, there is no alternative.
Join me and the BIG community in the comments.
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P.S. I got an interesting response to my query about consolidation in the music industry. A music industry veteran Merck Mercuriadis has a new multi-billion dollar fund named Hipgnosis acquiring rights to songs, and I found that puzzling. Here’s an explanation of what’s happening BIG reader David Turner, who has a great newsletter on streaming called Penny Fractions.
I'm David Turner, I work at SoundCloud and also do a newsletter on the music business and actually wrote about the Hipgnosis Song Fund last week. Your basic hunch is correct about a potential monopoly but in music publishing that already exists within a handful of major publishers, all of which are owned by one of the three major record labels. However what more curious about the Hipgnosis song fund is that it's one of many groups (Round Hill Music Group, Concord Music Group, Tempo Music, etc.) that have arisen since the early 2010s which are either funded by unknown deep pocketed financial backers, private equity firms, or some combination of the two.
Today Warner Music Group raised $250 million in debt to go deeper into this market of song catalog. I also wrote earlier this year that much of this can be traced back to the early 80s of finance getting involved in music publishing, because prior to the 60s and 70s much of the consolidation in publishing, less so records, was just big industry figures buying up catalog like Paul McCartney. It's fairly fascinating and heavily underreported and contextualized considering how much money is trading hands with these funds.
Also, it isn't super clear what the long term implications of this might be but likely it'll involve some private equity firms fighting for increased songwriter royalties on behalf of artists that song their song catalogs decades prior and won't see a dime from the increased payouts.
Anyway enjoyed reading about Biden, AND keep an eye on Spotify and the Brits, since their parliament is about to get a look into the digital music business that's being led by a number of unions and artist groups that are pretty ready to have a fight.