How Elizabeth Warren came up with a plan to break up Big Tech

By Sheelah Kolhatkar, The New Yorker

When Robert Bork published “The Antitrust Paradox,” in 1978, concerns about monopolies suppressing competition were not new. The first U.S. antitrust law, the Sherman Antitrust Act, was passed in 1890; during the early years of the twentieth century, President Theodore Roosevelt used the law to break up Standard Oil and to apply new regulations to the dominant railroad companies. In 1914, Congress passed the Clayton Act, which granted powers to the Department of Justice and the newly created Federal Trade Commission to insure companies did not become too dominant in the first place. President Franklin Roosevelt and other New Deal policymakers continued the tradition of aggressive antitrust enforcement. But Bork, a professor at Yale Law School and later a nominee for the Supreme Court, argued that many of these antitrust measures had been unnecessary. When deciding whether a particular enterprise posed an antitrust threat, he wrote, the government should only take action in cases where concentration of power in the market harmed consumers in the form of higher prices. In the decade after Bork published his influential treatise, there was a boom in corporate mergers as airlines, energy companies, pharmaceutical firms, and media conglomerates acquired their competitors; as long as it could plausibly be argued that the prices consumers paid for products wouldn’t rise, regulators generally allowed the deals to proceed.

Bork’s consumer-based theory had many flaws. One of the most obvious was that it did not anticipate the rise of online companies such as Facebook and Google, which offer their products to consumers for free. The companies make money by monitoring their customers’ online activity and selling the data, largely to advertisers. As long as the official cost to consumers to use the platforms remained the same—around zero—the giant tech firms argued that their increasing size and influence over every aspect of online life posed no antitrust threat.

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