Big Tech: We must change the rules of the monopolies game

UNI Global Union General Secretary Philip Jennings was joined in a session at Davos, by David Autor, Ford Professor of Economics at MIT, to debate the question: can we live with monopolies?

 

Watch the session here:

The debate comes at a time of growing concern that Big Tech is not being held accountable, summarised by leading expert, Barry Lynn, Head of the Open Markets Institute: “The central problem with the platforms such as, Google, Facebook and Amazon, is that they concentrate so much power and control as to represent a threat not only to our economy but our democracy.  These platforms should serve the interests of the public and individual citizens rather than the small group of people who run them. We can solve this problem, we do not have to reinvent the wheel, we already have the necessary laws and policy tools in place to deal with monopolies. The issue is to ensure they are applied.”

During the debate with Autor in Davos, Jennings pointed out that the reach of the Tech Giants monopolies is huge.

Jennings said, “In the realm of Big Tech, 46% of online sales are with Amazon, 90% of searches are with Google and we heading towards a Facebook planet of 3 billion online.

“We can make a comparison between retail and finance. If we think back to the financial crisis of ten years ago, the message was ‘banks were too big to fail’, we saw concentration of financial power. They weren’t too big to fail and they failed us.”

Jennings then quoted John Sherman architect of the Sherman Anti-Trust Act 1890 who said: “If we will not endure a king as political power, we should not endure a king over the production, transportation and sale of any necessities of life.”

“Adam Smith in the Wealth of Nations said something similar,” added Jennings.

Jennings underlined the seriousness of the threat: “We have to think of the digital world in terms of digital conglomerates. We are living in a time of digital feudalism. This means that the power that they have is enormous and has ripples and implications in many ways, in terms of the price people pay for a product, in terms of wages, in terms of inequality and in terms of power. These are concerns which we have dealt with in the past but what’s new, in this age of digital conglomeration is that digital tools cannot only direct us in terms of the products that we buy but they begin to have an impact on the way that we think, the way that we respond, perceive and interpret the news. All of a sudden you see an all embracing monopolistic power which goes beyond the material into the non-material in terms of our behaviour and our attitude.”

Autor agreed that monopolies presented real and present danger to workers: “Market power can also be on the labour market side – workers may control so many of the workers in a given occupation that they don’t face much competition from other employees. I think we should be equally concerned about market power on the labour side as we should be about market power in the product market.”

Autor cited McDonalds and others with anti-competitive practices, including a non-compete policy between franchises or ‘no poaching policy’.

Jennings gave another striking example, Walmart: “When Walmart comes to town local competition is hammered. It has depressing effect on competition, squeezes the small and medium size enterprises and has a major impact on the price of labour as well.

“We’ve seen in Silicon Valley, the use of this power when their cartel on engineering salaries was bust. The figures showed that this cartel had caused hundreds of millions of dollars in lost earnings.

“In brief, we are worried about this new power: we must talk in terms of digital capitalism, digital conglomerates, a kind of digital feudalism which goes beyond the material into how we interact as humans, how we form opinions, how we engage in the political process. And our sense this has gone too far.”

Autor said that in his view it was workers rather than consumers who were vulnerable to the negative effects of monopolisation in the Future World of Work: “I’m concerned about the abuse of minimum wage workers who are really struggling to fend for themselves in the labour market. That workers have few options is even more consequential than consumers having few options. Applying this the digital world – this lack of competition has the effect that stores are shut down, they don’t compete for workers, tech engineers have few options if they are not hired by Google – that concerns me.”

Jennings said that it was time to change the rules of the monopolies games for Big Tech and that there were answers, including standing up for worker and human rights.

“The bottom line for us in the world of labour is the ability for us to organise and negotiate for these workers and try to give them a decent contract. There has been a wave of industrial action at Amazon for the people working in their so-called fulfilment centres. The reality is that Amazon and their top leadership are implacably opposed to the organising of their workforce and therefore the workers are taking their destinies into their own hands. We have some works counsels emerging and before Christmas we had a wave of industrial action because Amazon will not respect the basic human rights of their workers to organise.”

In his conclusion, Jennings drew attention to the structural and regulatory solutions which need to be applied: “What could be done is to build structural barriers; do you split or neutralise the power of corporations that have the ability to dominate entire realms of commerce? There are solutions that regulators have in their locker to do something about these monopolies.

“But at the end of the day these organisations have to take responsibility for what they do. They try to wash their hands of media, fake news and all the rest of it and when two-thirds of the population have access to news through social media this raises questions about our democracies as well. I hope this will lead to new reflections on what it means to have such concentrations of power that can manipulate the way people thing act.

“As last word I would say pay your taxes and respect the human rights of people. If you don’t you shouldn’t be granted the social licence to operate.”