The Good Fight

Monopoly Power

Why the Justice Department’s demand that Time Warner sell CNN is a troubling subversion of democracy.

The CNN sign is seen outside its New York City headquarters on Nov. 12, 2002.

Mario Tama/Getty Images

The Trump administration is uncannily skilled at being its own worst enemy. In the run-up to the first anniversary of his election this week, the degree to which President Trump has attacked democratic institutions was dissected in a thousand op-eds. And the line that was emerging in many of them was surprisingly sympathetic to him: Though Trump blusters in outrageous ways, the emerging consensus holds, he doesn’t seem to walk his talk. Once we stop paying attention to his Twitter feed and start to look at cold hard facts, it becomes obvious that American democracy is holding up perfectly well.

Just in time to complicate this narrative, the administration is making yet another attempt to remind people just how willing it is to violate the most basic democratic norms when the opportunity arises. After months in which the president has continually attacked CNN as “fake news” for reporting critically on him, the Department of Justice is demanding that Time Warner Inc. sell the news network in order to merge with AT&T Inc. In other words, the administration has decided that a major U.S. corporation will only be allowed to pursue a lucrative business venture if it divests itself from one of the president’s most powerful critics.

This fits the pattern of authoritarian subversion of liberal democracy to a well-nigh comical degree. In every country in which populist leaders have done grievous damage to democratic institutions, from Hungary to Venezuela, one of their very first steps has been to capture state institutions that are supposed to be independent. As soon as they got into power, they appointed loyal cronies to run everything from tax authorities to electoral commissions. And once these cronies were safely ensconced in their new roles, the regime consistently used the seemingly bland apparatus of the regulatory state to punish opponents.

Seen from this perspective, then, the ruling by the DOJ is not the small, complicated issue as which it is being treated in much of the press. On the contrary, it is a huge red flag that suggests the Trump administration seems willing to use all the power it has to reward its friends and punish its enemies.

But might there not be a reasonable justification for opposing the merger between Time Warner and AT&T? And isn’t the burgeoning antitrust movement right to point out that the growing number of corporate monopolies is a huge drag on the American economy?

There are two answers to these questions: one legal and one moral.

The legal answer is that the Department of Justice seems to be breaking with precedent in a very surprising way. For a merger to violate antitrust law, the two merged entities have traditionally needed to be direct competitors. This makes a certain amount of economic sense: If AT&T merged with Verizon, the number of major cell carriers would decline. It would be easier for the remaining providers to demand higher prices from their customers. This is why it is in the public interest to stop such oligopolies from forming in the first place.

But the same problem does not arise when two large corporations that are active in different markets merge. Since Time Warner’s core business is providing cable access and television entertainment while AT&T’s core business is to provide cellphone coverage, a merger between them would not reduce competition; after all, the two companies are not in direct competition in the first place. It is therefore much more difficult to make a case that outlawing their merger is in the public interest. In other words, the legal case for demanding the sale of CNN is weak indeed.

The moral answer is just as important as the legal one—and just so happens to point in the same direction.

One of the most important principles of liberal democracy is that justice doesn’t just need to be done; it also needs to be seen as being done. Let’s say a government official needs to hire a consultant for a lucrative position. Even if his daughter is the most qualified person for the job, hiring her would give the impression of a conflict of interest. This, according to standard government ethics rule, is in itself a reason why he shouldn’t hire her.

The same principle is in play here and it would hold even if we should, as people like Zephyr Teachout have powerfully argued over the past years, try to expand antitrust law. In Teachout’s view, giant corporate conglomerates have advantages over other competitors that render the market uncompetitive in much more complicated ways than the standard jurisprudence of the past few decades has recognized. This means that there are good grounds for opposing the merger between Time Warner and AT&T. But would there also be a good case for a president who has loudly criticized a particular media company to require its sale as a condition of such a merger?

No. For one, Teachout’s basic case for opposing the merger between Time Warner and AT&T would hold even if CNN were to be sold; requiring Time Warner to sell CNN as a condition of the merger thus doesn’t make much sense. For another, even if anti-monopoly activists should somehow be less worried about the merger so long as CNN was not part of the new conglomerate, Trump’s unseemly bashing of the network would clearly make that condition look like a form of retaliation. Justice would not be seen to be done, and the possibility of negative consequences would be substantial: Fearing a similar fate, media companies might decide to go easy on the president from now on. Indeed, even completely different companies that have reason to fear that completely different parts of the regulatory state might one day be used against them might then be cowed into submission on any number of issues.

A full year into Trump’s presidency, we are still dangerously tempted to think that any risk to liberal democracy must come in the form of jackboots and swastikas. But this is not how modern democracies have typically begun to die; on the contrary, the erosion of liberal democracy in countries like Hungary and Venezuela has often taken the form of exactly the kind of bureaucratic gambit in which the DOJ is now engaging.

To be sure, one such instance of what we might call “bureaucratic authoritarianism” will hardly be enough to bring the American Republic to heel. Though the DOJ’s request is outrageous, it is unlikely to result in the sale of CNN. And even if it does, there are still plenty of other excellent media organizations around to pick up the slack. But even though it is unlikely to destroy our freedoms from one day to the next, we should recognize this serious violation of democratic norms for what it is: a thinly veiled power grab that could be the beginning of something much more dangerous if we allow it to succeed.