What Ed Miliband Did Next: Part II – On Facebook and Standard Oil: Regulating the Tech Industry

In Part II of our Renewal interview, Ed Miliband and Martin O’Neill discuss the politics of the tech industry, the case for democratizing Facebook, and the lessons to be learned from the history of progressive responses to excess market power. For Part I, on Universal Basic Income, click here. For Part III, on Ideas for the Future of the Left, click here.

Martin O’Neill: We’ve discussed Universal Basic Income. But what other big ideas for the left have you been looking at?

Ed Milband: I’ve been looking at the question of how we should regulate the tech industry. The question is, how can government get some control over these behemoths? The more I’ve read into these questions, the more I’ve come to think that people on the left have been completely asleep at the wheel with regard to these issues. We’ve either been Luddite in not thinking about these new technologies, or otherwise – to the extent that we have thought about tech – we’ve been taken in by ideas of horizontalism, and by the promise that these new tech platforms work as forces for democratisation.

It’s true that, to take one example, people have given some thought to what’s problematic about Uber [e.g. Hickson 2017]. But we haven’t been thinking enough about the fact that some of these tech companies have massive monopoly power, and we need to address the question of how that power can be restrained. It sometimes feels like all of the old important lessons that we learned in the early twentieth century – such as with Standard Oil or AT&T in the United States – it’s almost as if those lessons have been forgotten, lessons about how the state can deal with monopoly power. [On Teddy Roosevelt and the break-up of Standard Oil, see e.g. Kearns Goodwin 2013; Chernow 1998]

MO’N:  There have been some interesting suggestions recently about the way in which large tech companies should be regulated, and how they could be made more democratic. I’ve heard the very interesting argument made by the Yale political theorist Hélène Landemore that, given a principle of ‘no production without representation’, and the fact that Facebook users are in effect the workers who collectively create the value of the company, that Facebook ought to be democratised so that its users gain democratic control over it [Landemore, nd; for background see Landemore and Ferreras 2015]. Given the fact that Facebook makes its money in effect from the labour of its users, it does seem to be a crazy model whereby so much of the economic return from the success of Facebook should go to Mark Zuckerberg and to a few of his early investors. The rewards for these few tech entrepreneurs go way beyond any justifable level of incentives. After all, if Zuckerberg had got only 1% of the economic return that he has actually received from developing Facebook, he’d still have splendidly well rewarded for his entrepreneurial activity.

Ed M: Right. I think these tech guys – and they are mostly guys – have been pulling the wool over our eyes in the most extraordinary fashion. They’ve surfed off the back of the initial rhetoric about the internet, and the initial beliefs that people had about the openness and democracy of the web, basically to give themselves a get-out-of-jail card for systematically bad corporate behaviour. These companies do whatever they can to pursue their narrow interests, right up to the limit of the law. And these large tech companies are currently engaged in a massive exercise of hoovering-up their possible rivals and competition, some of them buying a company per week, so that they can get as much market control as possible. So, with these huge tech companies and with big data, the civil liberties concerns are one thing, but I’m even more concerned about the kind of sheer economic dominance that they’re coming to have.

MO’N:  It’s really interesting that you raised the case of Standard Oil. Would the right politics here be the kind of policy that was pursued against Standard Oil?

Ed M: Breaking them up? Possibly. Why should Google be able to own YouTube? Why should Facebook be able to own WhatsApp? These agglomerations are creating a completely dominated marketplace.

MO’N: So do you think it’s the right political response to go with regulation or even with the decision to break these companies up? Or, given that there is going to be a tendency towards natural monopolies with some of these services – such as Facebook – given network effects, and so on, mightn’t the right response be to look at changing their ownership structure, to give users a stake, or as Landemore argues, at least to spread democratic control across their users?

Ed M: That’s all possible, and it all needs to be considered. But, you know, the very fact that we’re having this conversation – it feels like a country that we know exists, but which we never visit, where there’s just no map. And the left needs to map out this territory, and the possible policies we could pursue. If you compare this to, say, the energy sector, well on energy prices you know what the parameters are, or on tax you know what the parameters are. But with the big tech companies we don’t even have a sense of the contours of the debate yet, and so we need to start having that debate properly.

Going back to an earlier parallel, take the case of AT&T, which formed as an agglomeration of a number of smaller telephone companies. The US government were worried about monopoly power, so what they said to AT&T was that they’d have to open their patents to everyone else. Well, on that basis, you could for example say to Google that Google Maps would have to be supplied to other firms. That’s something governments could do.

These tech companies are trying to become as powerful as they can be while they’re able to do so. Google spends more money on corporate lobbying in Washington than the oil companies do.

MO’N:    That’s an extraordinary fact. And you’re absolutely right that there are lots of examples from the history of progressive politics of where we’ve figured out how the state can in different ways deal with companies that have achieved that degree of market dominance. So I take your point that now is a good time to go back to that history and to learn from it. (On the history and future potential of antitrust measures, see Alperovitz 2011, 2013, 2014]

Taking a step back from policy, I’d like to talk a bit more now about political ideas, which you’ve described as “the most undervalued commodity in politics”…

More on What Ed Miliband Did Next continues in Part III of this conversation. Part I, on UBI, is here. Part III on Ideas for the Future of the Left, is here. With thanks to Alex Feis-Bryce.

Reasons to be Cheerful, Ed Miliband’s podcast series with Geoff Lloyd, on progressive ideas for the future, is available via iTunes and all good podcast platforms.

References and Further Reading:

Alperovitz, G. (2011), America Beyond Capitalism: Reclaiming our Wealth, Our Liberty, and Our Community, (Democracy Collaborative)

Alperovitz, G. (2013), What Then Must We Do? (Chelsea Green Publishing)

Alperovitz, G. (2014), ‘The Cooperative Economy: a Conversation with Gar Alperovitz‘, Orion Magazine

Chernow, R. (1998), Titan: the Life of John D. Rockefeller (Ballantine Books)

Hickson, J. (2017), ‘Freedom for Uber Drivers? Justice Everywhere, 13 March 2017

Kearns Goodwin, D. (2013), The Bully Pulpit: Theodore Roosevelt and the Golden Age of Journalism, (Viking)

Landemore, H. and Ferreras, I. (2015), ‘In Defense of Workplace Democracy: Towards a Justification of the Firm–State Analogy,’ Political Theory, 44 (1), 53-81

Landemore, H. (nd), ‘No production without representation: on democratizing the governance of large firms’