Breaking apart Massive Tech can’t save American democracy by itself
Despite these divisions, there is a growing bipartisan consensus that antitrust law could save American democracy from big tech. Senator Josh Hawley (R-Mo.) Has brought the indictment from the right, accusing them of censoring conservatives, suppressing competition and breaking up the American family. On the left, Senator Elizabeth Warren (D-Mass.) Has argued that Big Tech needs to be disbanded because it has “too much power over our economy, our society and our democracy”. Are Hawley and Warren right?
One look at a prominent case of corporate regulation during the New Deal reminds us that antitrust is not a panacea. In 1937 the Justice Department launched antitrust proceedings against Alcoa, a company that one labor activist described as a “masterpiece of monopoly.” Without a single competitor, Alcoa was the only aluminum production game in town. While the antitrust case against Alcoa was initially dismissed, the government won its appeal in 1945 and gave lawmakers the power to destroy the trust. Antitrust law, however, was just one of the tools New Dealers used to contain Alcoa’s power. What meant more than antitrust law was the idea of public benefit, which was at the center of the New Deal regulatory state.
Why was this concept of public benefit important? The Alcoa case was never all about aluminum. For New Dealers like Home Secretary Harold Ickes, who called Alcoa “one of the worst monopolies ever to get stuck in American life,” it was about rivers. Aluminum production required about ten times that of energy production per pound. Because profits depended on cheap electricity, Alcoa built six dams on the Little Tennessee River in the first three decades of the 20th century to power its cottages in Baldwin, NC and Alcoa, Tennessee. Alcoa had entered the hydropower business.
New traders saw the explosion in demand for aluminum as an opportunity to adapt the industry to their needs. During the war, planners from the Bonneville Power Administration (BPA) and TVA turned federal funds into factories that matched their vision for regional economic development. Above all, this meant that aluminum works had to consume publicly generated hydropower in times of war. Private aluminum production became a critical source of income for TVA and BPA.
War planners from regional energy agencies – especially the BPA – believed that the future of public power depended on a competitive aluminum industry. Samuel Moment, the economist who drafted the post-war post-war rebuilding plan for the aluminum industry, had worked as a planner at BPA in Portland since 1940. In 1945, the conclusion of the antitrust proceedings against Alcoa authorized the Surplus Property Board (SPB) – the agency responsible for selling government-funded war production equipment – to implement Moment’s plan. The SPB sold government-funded smelters and refineries operated by Alcoa to two new competitors – Reynolds Metals and Kaiser Aluminum.
However, a competitive aluminum industry was never an end in itself for New Dealers. It was a means of maintaining public control over the nation’s rivers, which they believed would preserve democracy and fuel regional economic development.
Nonetheless, the interplay of public utility and antitrust law during the New Deal contains lessons for the digital age. After the attack on the Capitol, many have welcomed Trump’s excommunication from social media. But if democracy is to survive, a group of corporate elites cannot make such political follow-up decisions. A more competitive tech industry – the solution offered by antitrust law – will simply increase the number of elites who make these decisions without solving the underlying problem.
Antitrust law worked against Alcoa because there was political consensus that certain economic and social areas – such as rivers development – were too important to society to be outsourced to private companies. This vision is worth remembering. If antitrust law enables the state to create competition, the concept of public benefit enables the state to redraw the line between public and private. While it has become commonplace to think of data as the oil of the 21st century, democracy would be better if viewed more like a river. Until our digital communication sphere is public, big tech will remain a threat to democracy.