By Sean King
Put yourself in the shoes of John D. Rockefeller in 1870. With industrialization springing up from every corner of the world, you decide to jump into the fray. Abolishing your previous business partnership, you found Standard Oil. Using your experience in the business world and previously earned money, you are able to find people knowledgeable with managing oil and soon become the leading company in the newly budding oil industry. To maintain your grip on providing oil to America, you buy up all of your competitors — even the ones that you don’t think have a chance of competing against you. As the company grows, you begin to purchase railroads and block other, smaller companies from using them to transport oil. Your product innovation begins to plateau, but it doesn’t matter because nobody else can challenge you with a better product. You, John D. Rockefeller, are on top of the world, until 1911, when the Supreme Court abruptly rules that you are an illegal monopoly under the Sherman Antitrust Act. Your empire is broken up into many smaller companies leading to increased competition with Shell, Texaco, and ExxonMobil equally duking it out for a grip on the oil industry all the while improving to give consumers constantly updated products.
The same problem of large companies developing control over an entire industry is occurring in modern society with companies such as Google or Amazon. By controlling an entire marketplace where independent companies can sell products, Amazon directs traffic previously sent to these companies’ private websites to Amazon.com. Then, Amazon copies the products sold by these small businesses and favor their internal search bar to direct consumers to purchase their own copies of these products. Google maintains dominance over the internet since it controls almost 70 percent of all internet traffic. Essentially, everyone is dragged through Google before going elsewhere on the internet. During this time, Google gathers data about consumers which it can sell. No other company has this amount of data and cannot compete with Google. Using power these companies have gained in their infancy while competing with other dwarf companies, they can now maintain control over their respective industries.
In addition, both Amazon and Google gobble up all their competitors before they have a chance to compete with them. For example, Google’s biggest ad-related competitor was DoubleClick. DoubleClick was purchased by Google as soon as it emerged as a possible competitor. As is the case with Google, Amazon snatched up Zappos.com and Diapers.com just as they began to challenge Amazon’s grip on the e-commerce market. By using their stockpiled stores of money, these monopolies can squash competitors before they begin to challenge their status.
To combat these monopolies, companies should be given a temporary moratorium on purchasing competing companies, giving other companies a chance to develop into legitimate contenders. In addition, these monopolies need to be unwinded. Amazon needs to be split up back into Zappos.com and Whole Foods or Google might be forced to relinquish its acquisition of DoubleClick. To prevent further cases like this, antitrust laws need to be updated. Currently, they rely on consumer welfare which says that if another company entered the market, prices would remain unchanged. This would imply that new innovation would not occur to lower prices. This is outdated since frequently, as in the case of Google, their services are free and this metric can not be assessed.
As during the Industrial Period, there is a current wave of high-tech companies which got their start in the 1990s that are beginning to control our lives and squash competition. With a few restrictions and updated laws this complex problem can be solved for the benefit of all Americans and the ever-crucial American economy.