In her new book "Antitrust," Sen. Amy Klobuchar recounts a conversation in Albert Lea with a retired farmer's wife who approached Klobuchar to say she could relate to something the senator said on TV.
"It was about how things are getting too big and it makes it harder for us to make it," the woman told Klobuchar.
She has been hearing complaints about the concentration of power by businesses — on prices, people and product selection — since right after being elected to the U.S. Senate in 2006. Even so, the notion that bigger is not always better is not an easy sell in the United States.
Americans worship wealth and convey celebrity status to those who have it. Klobuchar has seen the tension play out from her perch on a Senate subcommittee on competition policy, a panel she became the leader of earlier this year as Democrats took control of both sides of Congress. In the book and in discussions about it, she carefully and repeatedly notes her support for capitalism.
But business consolidations are behind some of the most difficult issues in the U.S. economy, such as the cost of drugs, the limits of privacy and the capacity for innovation. Klobuchar decided to write the book to speak out about those consequences.
She traced the history of trustbusters, such as Teddy Roosevelt and Ohio Sen. John Sherman, wove in her family's history in organized labor on Minnesota's Iron Range, and laid out a new agenda for controlling Big Tech and other modern-day equivalents of those trusts.
Klobuchar talked about those ideas in an interview with the Star Tribune. Some excerpts:
Q: The way some people operate now is that the little companies want to be innovators, but they do it to be bought out by the bigger fish. Is that OK?
A: They have every right to be bought out, if that's what they want, as long as the big guys don't dominate so much that there is just no other competition. That is part of why we are asking for stricter scrutiny of these major, major companies when they buy small companies, because you could have a situation where you literally have no competition at all. And it might feel good at the moment, but it's not going to be good for competition in the economy if we turn into China. It's not good for innovation in the end, because maybe they'll have some bells and whistles, but they're not going to develop some of the things that you want. If you believe in capitalism and you believe in Adam Smith, he warned about the standing army of monopolies and their unbridled power. So from the very beginning of the country we have always believed in a check and balance.
Q: Is there anything going on today that's very different from times past in the way people acquire companies and build trusts?
A: I have a section in the book about cross-ownership of big institutional shareholders, which is a newly developed field. In this area, I simply call [for the government] to look at it more to see what the Federal Trade Commission should look at, as well as other agencies. There's a guy at Harvard who has started to look at this and [is] showing how when companies are owned by the same shareholders that makes changes in their behavior. So that's like [a] modern-day trust. That's a unique thing that's going on.
On the second front, the thing that's really changed is that the courts are not enforcing the laws like they used to because of theories that have developed over time. Why don't we go back to the original intent of the antitrust law? Why don't we go back to what Congress meant for the Sherman Antitrust Act? The courts have come up with these theories that have made it really hard to use these laws to the point where the Ovation drug was deemed to be OK to have only two competitors and jack up the prices. My answer is, well, let's make some changes to the laws to make them as sophisticated as the companies that are operating in this economy.
Q: In a hearing you had several years ago with a Google executive, you talked about how you couldn't distinguish an ad on Google from your actual search. Is that the kind of thing that favors companies?
A: It's called self-preferencing. They're self-preferencing their own products over others. [Fixing it] is as simple as the Justice Department literally putting conditions on mergers or exclusionary conduct. Then, they have to enforce it. If they don't have the people and power to do this, then we're never going to be able to regulate the biggest companies in the world.
Q: You want to stop problems with monopolies before they happen. But in American business, we often don't make people prove that things are not going to hurt us before we let them try. How do you change the burden of proof?
A: Behind the scenes there are Republicans interested in changing the burden for the big deals over $5 billion. This government is so undermanned compared to these tech companies. Instead of making the government prove that [a merger] hurts competition, [the companies] have to show that it's not going to materially create an appreciable risk of reducing competition. I think that makes sense because we want competition in this country … [Facebook founder Mark Zuckerberg's] clear intent was to buy out his competitors … so that they couldn't grow to any space that would allow them to compete with him.
I don't know what else you need as a definition for monopoly unless we're just ready to concede and say one company or two companies can control everything. Then, people who are trying to buy things from them or transport goods [with] them, well, you're just eventually you're going to get screwed, because they're going to charge whatever they want. That is not consistent with capitalism, as we learned it growing up. It's not consistent with our laws developed by many, many congresses. It is not going to be good for the people of this country.
Q: Usually you hate monopolies, because they can charge you more. But I can still go on Amazon right now and kind of price shop. So when are we going to reach the point where the monopoly is actually going to raise prices?
A: That's in the control of the monopolies. But we reached a really interesting point in Australia. Because [Google and Facebook] were going get charged for [news media] content. They were just going to leave … going to take their marbles and go home and leave [an] entire industrialized nation with no search engine. … They were threatening to do that because they thought they could. … At some point [monopolies] would change the prices. We know that economically.
If you [have] a company with that much power, they do have the ability to do [things.] … I am all in when it comes to the private sector and capitalism. And I do not want to destroy companies. I simply want there to be a rejuvenation of capitalism so we keep getting to the point where we can invent the next new Amazon or the next new Google. And right now because of the market control. That is nearly impossible to do.
Jim Spencer • 202-662-7432