The Industry

Why Zephyr Teachout Wants to Break Up Big Tech

In a new book, the professor and politician argues that Amazon, Facebook, and Google—among others—have become monopolistic crime families.

Zephyr Teachout
Zephyr Teachout on Aug. 8, 2018, in New York City. Drew Angerer/Getty Images

“We don’t know what the flowering will be after we break up Amazon, but I promise you it’s coming.”

Zephyr Teachout made that prediction in an interview released Monday, two days before Amazon CEO Jeff Bezos appeared before the House Judiciary subcommittee on antitrust alongside fellow masters of the universe Mark Zuckerberg of Facebook, Tim Cook of Apple, and Sundar Pichai of Google.

The hearing devolved into Republican representatives complaining about the companies’ perceived bias against conservatives, but Democrats invited the CEOs—who spoke from their homes—to address rising concerns about their companies’ alleged monopolistic powers and anti-competitive influence on markets and politics.

The antitrust debate around Big Tech gained prominence after Facebook’s Cambridge Analytica scandal and again during this year’s Democratic presidential primary, after Sen. Elizabeth Warren announced breaking up the companies as part of her platform. But Warren isn’t alone.

Teachout—a law professor and author who has run (unsuccessful) campaigns for New York governor, state attorney general, and the House of Representatives—has made a career of tackling government corruption, open communication, and corporate manipulation. And antitrust reforms are the subject of her new book, Break Em Up: Recovering Our Freedom From Big Ag, Big Tech, and Big Money.

She joined host Mike Pesca on The Gist to discuss the book and many of the issues that led to Wednesday’s hearing. A portion of the interview is transcribed below; it has been edited and condensed for length and clarity.

Mike Pesca: You’ve taken a populist turn, and I can sense that because the em in your book’s title is not in T-H-E-M. It’s apostrophe-em. You’re a woman of the people.

Zephyr Teachout: Well, one of the horrible things that has happened with antitrust and anti-monopoly is that a bunch of economists, academics, well-funded Robert Bork–style thinkers really basically started to tell the American people that they had no business talking about antitrust or anti-monopoly. That this is a technical issue for highly trained economists; you’ve got to get your nose out of here. And one of the things that I care the most about is letting people know that they have complete authority to demand a new antitrust era, to demand things being broken up. They don’t have to know all the details of particular economic models in order to say, “Hey, Amazon and Monsanto have way too much power, and it’s a problem.”

You write, “Amazon, Google, Facebook, Monsanto, AT&T, Verizon, Walmart, Pfizer, Comcast, and CVS … represent a new political phenomenon, a 21st Century form of centralized authoritarian government.” OK. Why aren’t they just robber barons who want to rob, as opposed to want to rule, because that’s what a government does as opposed to what capitalists do?

Yeah, that’s right. [But] think about Facebook or Amazon. If you’re a seller in America today and you want to get your goods to market—if you’re a seller of consumer goods—you basically have to go to Amazon. You don’t have a choice. You can’t opt out unless you happen to have a trust fund and don’t plan to make any money.

And so Amazon then becomes the regulator, basically regulating how you are treated—how well you show up in search results when people are looking for shoes. And there’s a scope of power that they have over people’s lives, making decisions, directing who wins and loses. Or when it comes to Facebook: The amount of power that Facebook has over media and deciding who the winners and losers are in media—that is beyond just being a participant in the market and actually comes to be a kind of governing power.

I don’t think that there’s an easy, precise line that divides the two, but I don’t think there’s any doubt that Monsanto and Facebook and Google are on the other side of that line—that they are not inside the market, but controlling the market. And that’s the real line that I take.

And by the way, this is part of a long American tradition of thinking of monopoly power as governmental power and as a rival form of government that really threatens democracy. It’s an idea that was popular for most of American history and then faded out of view in the 1980s with the Reagan revolution.

So the argument you just made about Amazon—which I think is accurate—I recall the same argument being made about Walmart 12, 15 years ago. They have such power as a retailer; they have such monopsony power; they could set prices. I think that was true, but doesn’t the presence of Amazon argue that even such world-changing power can be threatened?

Well, no. But I first want to give people a sense of what this means, the scope of the power. One of the examples that was often used with Walmart is that Walmart could tell Coca-Cola what sweetener to use in its recipe or threatened to demote its shelf space. And basically that Walmart, because of its position—like Amazon because of its position—has the ability to demand in its contracts with sellers a huge amount of transparency into their businesses and then control what those businesses do.

So I see it more like Amazon and these other new monopolists—if you analogize it to the mafia, [they] saw one crime family doing well and said, “Let’s get in on that.” And in fact, you see Amazon really studying the pathologies that Walmart did a great job of pioneering and building on top of them. So now we have multiple crime families. It doesn’t make it a better system; it makes it a more dangerous one. And what I see is that more and more, our government is shared government between elected officials and a relatively small number of big companies, and then financiers behind them.

Would you admit, though, that there is a certain genius behind some of these methods? That the Google algorithm is really smart and good, and whatever they do with it aside, they deserve to have some success based on the fact that they’ve delivered search to consumers in a way that consumers really like?

The same seems true with what Walmart did to the efficiency of the supply chain and that Amazon perfected. In some of these cases, I think these aren’t even quality products; they’ve just learned to capture the market. But with other cases, maybe the tech ones, some benefit to the consumer and some success should be allowed.

I think we’ve got to separate out two different things. One is [that] a lot of innovation is innovation in monopolization, and you referred to that. But the other is that a lot of times we look at companies like Uber and praise them for technological advances that really Uber shouldn’t get credit for. In fact, the ideas that Uber really pushed—in terms of being able to not have to hail a taxi but push a button and have a taxi come—were already well in the works. And most of what Uber did had to do with monopolizing markets and lawbreaking.

And I think that there’s a fiction out there that we can’t have nice things unless monopolies provide them to us, and that’s just not true. There’s an ongoing debate that’s a hundred years old about which is more innovative: systems that are top-down or systems that are decentralized? I fall on the decentralized side. So we don’t know what incredible innovations might have happened if Amazon, Facebook, and Google weren’t in the catch-and-kill business, where they make sure that they smother any innovators who come up to challenge their power.

And in fact, it’s hard because we don’t have those innovations. But I’ll tell you, I’d rather have thousands of people all pushing their imaginative capacity in different companies than relying on Sheryl Sandberg having a new idea next month for pushing the limits on our innovation. I think we’re going to have more innovation after we break up these companies, not less. And when you look at history, there’s a lot of evidence that’s exactly what happens. Look at the breakup of AT&T and the incredible flowering that led to. We don’t know what the flowering will be after we break up Amazon, but I promise you it’s coming.

I generally agree with the premise that companies like Amazon and Walmart are good for consumers but bad for workers and probably bad for suppliers. And that they’re so bad for workers, especially in some of Amazon’s practices, that it far outweighs the benefit to consumers.

We could try to break up Amazon, but wouldn’t an alternative be if there is the political will to wade into a fight with Jeff Bezos? Perhaps there would also be the political will to, say, raise the minimum wage to $23, or to have real union rules, and that would be sort of an end-run around some of the most pernicious aspects of a company like Amazon?

Yeah. I don’t see these as either/or. In fact [in] one of the later chapters I get into this, especially since I spend most of my time talking to progressives about how they don’t spend enough time taking on power and spend almost all their time focusing on policies, most of which [are] policies that I support, including a significant raise in the minimum wage.

I think that there’s often a false sense of having to choose between better usury laws and breaking up big banks. I would argue that the way to get to better usury laws is to have a more stable political environment where power is more decentralized. So you actually have the capacity to demand those usury laws, not just in a one-off moment, but in a continuous way. I want to get away from a way of talking about antitrust and anti-monopoly that ignores the human impacts of how humiliating it can be to be a subservient in this big chain and not to feel free enough that you could walk away, and also how paranoid it makes people.

This is a difficult-to-prove hypothesis, but I think growing monopolization is part of the growing paranoia in our culture. Because if you are a—I’ll just use “chicken farmer–Uber driver” for now, but we can also say “newspaper that relies on Facebook,” and you suddenly see your numbers drop, and you suddenly get paid a lot less or you suddenly get paid a lot more, you start to develop theories about how Uber or Tyson or Facebook is treating you. But they’re unprovable theories. You’re in the dark, because they are the central forces that can decide your fate. And I think when people’s economic life is so precarious and so dependent on a handful of big companies, it’s not only not ideal because it represses wages—it actually changes who we are. It makes us more paranoid and fearful and suspicious, and I don’t think that’s a good thing.

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Cover of Break Em Up showing a hammer slamming into a Monopoly board
Break ’Em Up. All Points Books