Big Tech’s Foray into Politics

The Bezos home, in Washington, USA, where Amazon was founded

The biggest companies in the world and their leaders seem to be solidifying their footing in the political sphere. We will explore why and how this is occurring. 

Why?

It’s simple: they are the biggest companies in the world. It seems unnatural to most due to their industry and carefully crafted brand images fostering innovation and changing the world. Yet, some things seem to be given if a company is worth a trillion dollars. They need to protect their market position through favourable regulation. Because what’s better than achieving a natural monopoly? Well, achieving a government-granted pseudo “de-jure” or regulated monopoly. [1] 

Let’s take the most prominent companies of the past for example. In the 19th century, there was America’s Standard Oil. The petroleum giant lobbied hard to make regulators ignore their influence over the national railroad network and subsequent monopoly. This is not surprising. Even despite growing public outcry, which led to the creation of the Sherman Antitrust Act of 1890, they remained in their market position until 1911. 

This brings us to the crux of the Why. 

The Congress broke up Standard Oil through the Act. Despite presenting itself as a public benefactor, arguing that it benefited consumers and worked with regulators, it still failed to maintain its monopoly. The wave of progressivism at the time (i.e. Teddy Roosevelt, William Taft, Woodrow Wilson) and growing distrust of large corporations led to legal action— where they received a decidedly unfavourable result [2].

The biggest tech companies in the world don’t want to make the same mistakes of the past. 

These companies may be acting out of necessity. Former FTC chair Lina Khan— an appointee of, and in line with, the Biden administration— made a show of force against the industry during the 46th president’s term, an uncomfortable period that they are no doubt anxious to avoid a rerun of. 

It’s also worth mentioning that these new companies have significant power over the government and public opinion due to the nature of their business and the Internet. Algorithms can determine elections, so the interplay between the two parties makes for interesting negotiations.

This past election, these tech giants saw an opportunity. They jumped on the “Trump Train”

Elon Musk, Mark Zuckerburg (Meta), Tim Cook (Apple), Sam Altman (OpenAI), Marc Andreessen and Ben Horowitz (A16z), Jeff Bezos (Amazon), Doug Leone (Sequoia), Joe Lonsdale (Palantir) all either supported Donald J. Trump’s bid for the White House or met with him after the fact. 

There are also those like Peter Thiel, a well-known investor and former CEO of Paypal, who seemed to have nurtured JD Vance from Yale Law School to the White House. 

While others in the Valley are warming up to the idea of defence contracting (e.g., Anduril, Scale AI, and Shield AI), there seems to be a monumental shift in the tech world, from kids in garages to the new elite of the US. San Francisco, once known as the bluest part of California, may be turning purple. 

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The caveat:

I’m not strictly against monopolies. I do think that they can have value in particular cases. Certain advancements require a significant enough company to embark on it, whether due to risk or the amount of capital needed. One can even point to Standard Oil’s development of industrialised infrastructure on such a scale that would’ve been near impossible for a smaller company.

However, there are risks involved, and once monopolies start hurting consumers, whether directly or indirectly, by reducing efficiency, that’s not good. The government’s role, in this case, should be to protect consumers if there are significant negative externalities.

[1] A “de jure monopoly” is defined as a company that is protected by law from competition. Typical examples include AT&T and utility companies. However, I argue that a pseudo de jure monopoly is any company that maintains a monopoly in part through lobbying and regulatory efforts. 

[2] Exxon, Chevron, and BP, known as ‘big oil,’ are ‘descendants’ of Standard Oil. They slowly acquired other remnants of Standard and now remain market leaders. 

[3] The billionaire who fueled JD Vance's rapid rise to the Trump VP spot — analysis - CBS News

[4] What does Big Tech hope to gain from warming up to Trump?