By Tom Wheeler
Dec 20, 2017
Our nation has faced the corrosive power of monopolies before. The lack of competition that initially contaminated the industrial revolution was gradually tamed, and the benefits of technological progress eventually produced a secure and stable American middle class. But this achievement did not happen by accident, and was instead the product of a hard-fought effort to inject competition into an economy dominated by large and powerful companies. Once again, it falls to Americans and their leaders to rebalance the results of a technological revolution to benefit all, not simply the barons of the new technology.
Eric Schmidt, Executive Chairman of Google’s parent company Alphabet, Inc., wrote in his best-seller The New Digital Age: “We believe that modern technology platforms, such as Google, Facebook, Amazon and Apple, are even more powerful than most people realize.”To this litany of corporate power must also be added the network companies that deliver the internet to you and me. Monopolies that threatened competitive markets in prior decades are alive and well in the digital era. Indeed, four internet service providers (ISPs) control over 75 percent of local internet delivery, usually as local monopolies that give consumers no alternative when it comes to service or price.
The dominance of these companies — whether the networks or the services and content they deliver — has empowered them to make their own rules. And with their own rules comes marked pain for the middle class. It is a stark repeat of the early industrial era when companies exploited technology to control the economy, squash competition, and dictate take-it-or-leave-it terms to consumers.
In the industrial era, this power came from the production of hard assets, whether it was plows or pinwheels. In today’s digital economy, corporate dominance is rooted in companies’ exploitation of soft assets, specifically our private information. Multinational tech firms such as Google and Facebook have rocketed to become the most valuable companies in the world by hijacking and selling something that isn’t theirs — the intimate and personal information about how we each live our lives. And now, the network companies have joined in this exploitation to use your private information.
Not since the power of the industrial barons of the late 19th and early 20th centuries have we seen such a harnessing of new technology to enrich one group at the expense of marketplace competition, individual rights, and consumer protection.
We cannot forget what happened during the industrial era to make things right, however. The great American middle class was the result of progressive reformers who stood up and said, “Enough!” Only then did the government representing those citizens step up to reassert the rights of the people over the powerful; only then did the government move to protect a competitive marketplace.
It is time to recognize that the most powerful companies in the country should not be making their own rules.
We are now at another make-or-break junction. Thus far, the government has stood frozen in awe as spunky young innovators built their businesses — almost in fear of breaking the magic spell of innovation. These young companies, however, have grown into corporate behemoths. The world’s five most valuable companies — Apple, Alphabet (a.k.a. Google), Microsoft, Amazon and Facebook — have replaced industrial firms such as GE, Exxon, Walmart and Citibank who topped the list at the turn of the century.
At the same time, the current FCC has walked away from its responsibility to oversee the behavior of the monopolies of ISPs and companies that deliver internet services to consumers. Their justification is a specious assertion that regulation discourages these companies from investing to improve their connections.
The danger of upsetting whatever technological magic existed has vanished as innovators became giants. The fear that networks won’t get built has been proven to be an empty lobbying threat: to take one example, the share of households with an internet subscription rocketed from under 20 percent in 1997 to 77 percent today. It is time to recognize that the most powerful companies in the country should not be making their own rules.
These are not evil companies or malicious executives. In the absence of ground rules, however, human nature and economic incentive take over. Aided and abetted by their powerful technological capabilities, the companies that control the internet are free to impose their will without permission or oversight.
In the midst of the challenges facing 21st-century Americans, it is sometimes hard to find time to focus on how the corporate Goliaths of the internet are silently slipping their control into our daily lives. Yet, the time has come once again for the people to stand up and shout “Enough!”
A key ingredient in the rise of a healthy sustainable middle class was people’s collective communication to their representatives in government to demand a rebalance of the inequities created by industrial power. A similar imbalance now exists in regard to digital power over each of our lives, our privacy, competition, and consumer protection.
Enough!
About the author:
Tom Wheeler was sworn in by Vice President Biden as the 31st Chairman of the Federal Communications Commission where he served from 2013 to 2017. Presently, he is a Visiting Fellow at the Brookings Institution and the Walter Shorenstein Fellow at Harvard Kennedy School.