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Whether it's big tech, big pharma or big supermarkets, Sally Hubbard argues monopolies have a vice-like grip on our lives.
She is an antitrust expert and director of Enforcement Strategy at the US Open Markets Institute. She served as an assistant Attorney General in New York's Antitrust Bureau, and is the author of new book Monopolies Suck.
Hubbard says industry self-regulation has been a failure and monopolies actually stifle innovation.
Going back to basics, she explains a monopoly is one company ruling a sector, a duopoly is two big players in the market. Then there are oligopolies, with three or four big players that dominate a sector.
“None of these situations is good for the people, it doesn’t really provide enough competition to have a thriving economy and to protect citizens.”
Corporate concentration has got drastically worse over recent decades, starting in the 1980s, when “there was pretty much a revolution against anti-trust enforcement” in the US.
The idea was, bigger is better and as long as corporations got larger, they would be more efficient leading to lower prices for everyone.
“This has really been the ideology that has dominated what we call anti-trust law in the United States but just competition law around the world.”
Many sectors are now only dominated by one company, she says.
“It’s really correlated with a major decline in quality of life.”
If you want markets to function properly, you need anti-trust enforcement, she says - if you don’t enforce the law you get to a point where you don’t have a free market.
Nearly every sector in the US has now consolidated as a result – you can see this in the defence and agriculture sectors, she says.
“We’re talking about 40 years of consolidation. Now we’re left with the consequences of that, which is higher prices, less economic opportunities for entrepreneurs, lower wages for employees.
“The capture of our governments by the economic power these corporations have translates to political power and an inability to solve some of the most pressing problems that are facing us all.”
Innovation suffers when a few companies control the eco system, Hubbard says.
Big tech companies now have “kill zones” around them, meaning any company trying to create an innovation that could be funded get squashed, she says.
“What this means is our vision of innovation is really being driven by a handful of companies that are run by a handful of people. They’re charting the course of innovation because the business model is now that startups just need to create a little bit of innovation, a little add on to one of these huge companies so that they can get bought by one of the huge companies.”
The idea of building a great company is no longer considered realistic, she says.
The Covid-19 pandemic clarified the dangers of consolidating healthcare and supply systems.
“I remember when the pandemic started, they couldn’t get enough swabs for the Covid test because there were two companies around the world that made the types of swabs that we needed for the tests.”
Also, as seen during the pandemic, she says, bail outs of big companies sometimes only fortifies their power.
Monopolists are nothing new, she says – it was the same at the turn of the century with the “robber barons” that controlled the railroads.
The US phone company AT&T in the 80s was another, she says.
“It’s really nothing new under the sun, we have the tools to address these problems and we just need to have the political will and courage to use them.”
