Vince Cable has compared Google, Amazon and Facebook to the US oil monopolies that exploited their market power more than a century ago – and called for them to be broken up.
In a speech in London, the Liberal Democrat leader said a series of recent scandals, including revelations about Facebook and Cambridge Analytica, meant the “tech titans” had “progressed from heroes to villains very quickly”.
“Just as Standard Oil once cornered 85% of the refined oil market, today Google drives 89% of internet searches, 95% of young adults on the internet use a Facebook product, Amazon accounts for 75% of ebook sales, while Google and Apple combined provide 99% of mobile operating systems,” he said.
Cable, a former business secretary who worked as an economist before entering politics, said the power the giant firms exercised was not like that of traditional monopolies, which exploited their control of scarce resources such as raw materials to overcharge customers.
“Whatever these companies do, they are not price gouging – since their headline price is always zero,” he said. “It is the forces underlying this apparently free bounty that politicians must address.”
Cable raised four concerns: the use of platforms such as YouTube “as a conduit for content which society regards as unacceptable”; the systematic spread of fake news; the firms’ sheer size, making them “a barrier rather than a boon to entrepreneurship”, and the inability of tax authorities to force them to pay their fair share.
“The new internet giants operate in a largely borderless world where their main source of profit is intangible intellectual property rather than measurable ‘things’. This is difficult to track and quantify and has turned national tax authorities into largely powerless bystanders,” he said.
He called for mergers to be more closely scrutinised and for authorities to engage in “trust-busting” – breaking up oversized companies that can exploit their dominance to harm consumers – adding that the European Union was better-placed to do this than national governments working alone.
“There is a case for splitting Amazon into three separate businesses – one offering cloud computing, one acting as a general retailer and one offering a third-party marketplace. Other examples would be Facebook being forced to divest itself of Instagram and WhatsApp as a condition for operating in the EU, creating two new social media networks. Divesting Google of YouTube would be another,” he said.
Cable also said it was time to consider whether the public should be paid for handing over their data.
“The new oil is data. Data is the raw material which drives these firms and it is control of data which gives them an advantage over competitors,” he said.
“By putting data in people’s hands and empowering them to choose who to sell it to, personal data would no longer be monopolised by the tech giants, and innovative insurgents could buy the data they needed instead of letting themselves be bought up to access the giants’ data pools.”
Politicians have been scrambling to address the challenge of regulating the sprawling tech firms, after a series of recent scandals.
Facebook founder Mark Zuckerberg donned a suit and tie to face hours of questioning by US politicians. And in Britain, the culture secretary, Matt Hancock, hauled in Facebook executives and warned them he would not allow them to “shirk their responsibilities to our citizens”.
The social media giant is changing its terms of service to put 70 percent of its users “out of reach” of the European Union’s sweeping new privacy law
Facebook CEO Mark Zuckerberg spent several hours of congressional testimony this month insisting that his company is seriously dedicated to improving user privacy protections in the aftermath of the Cambridge Analytica scandal, but these rhetorical gestures have been undermined by the social media giant’s ongoing efforts to deny privacy protections to a staggering 70 percent of its users worldwide.
“If the company succeeds in dodging the GDPR outside the E.U., users will be subject to lax U.S. privacy standards, which would allow the company to continue collecting data.”
—Tom McKay, Gizmodo
According to a Reuters report on Wednesday, Facebook is changing its terms of service to “put 1.5 billion users out of reach” of the European Union’s sweeping new privacy law, which will require companies to receive clear consent from users before mining their data and impose hefty fines on companies that violate the strict standards.
“Facebook members outside the United States and Canada, whether they know it or not, are currently governed by terms of service agreed with the company’s international headquarters in Ireland,” Reuters explains. “Next month, Facebook is planning to make that the case for only European users, meaning 1.5 billion members in Africa, Asia, Australia, and Latin America will not fall under the European Union’s General Data Protection Regulation (GDPR), which takes effect on May 25.”
As for the hundreds of millions of Facebook users in the U.S. and Canada, they will benefit from the E.U.’s new privacy standards only if the company decides to extend them to North America.
In an interview with Reuters earlier this month, Zuckerberg provoked ridicule by declaring that his company will only adhere to the stringent new standards outside of Europe “in spirit.”
“”People’s lives are [Facebook’s] product. That’s why Zuckerberg couldn’t tell U.S. lawmakers to hurry up and draft their own GDPR. He’s the CEO saddled with trying to sell an anti-privacy, anti-transparency position.”
“If the company succeeds in dodging the GDPR outside the E.U., users will be subject to lax U.S. privacy standards, which would allow the company to continue collecting data,” notes Gizmodo‘s Tom McKay. “(Given that Congress is currently controlled by Republicans allergic to regulation, it seems unlikely anything about that is going to change on a legislative level following Zuckerberg’s testimony before them earlier this month.)”
Facebook’s terms of service change comes as the company is still under intense scrutiny following the Cambridge Analytica data breach scandal, which exposed the personal data of more than 80 million users. Additionally, as Common Dreams reported earlier this month, Facebook admitted that “malicious actors” have mined the personal information of most of its two billion users.
In an article on Wednesday, Natasha Lomas of Techcrunch notes that the heightened attention to Facebook’s lax privacy standards has highlighted the “ugly underlying truth of Facebook’s business,” which is that it “relies on surveillance to function.”
“People’s lives are its product,” Lomas writes. “That’s why Zuckerberg couldn’t tell U.S. lawmakers to hurry up and draft their own GDPR. He’s the CEO saddled with trying to sell an anti-privacy, anti-transparency position—just as policymakers are waking up to what that really means.”
Who Will Protect Elections From U.S. Oligarchs?
No other “democracy” in the developed world comes close to the United States when it comes to giving big-money donors unregulated power in their national electoral processes.
I recently heard on cable news that special counsel Robert Mueller wanted to interview some “Russian oligarchs” about their supposed influence on the 2016 U.S. presidential election.Liberal talking heads at such organizations as MSNBC and CNN keep warning that nothing has been done yet to protect the integrity of our voting process against “Russian interference” as the 2018 midterm elections loom ever closer on the nation’s horizon.
What about the American oligarchs, I wondered, people like businessman Richard Uihlein, who regularly distort U.S. elections at every level—local, state and federal? Who will protect our “democracy” from the plutocratic “wealth primary” power of theAmerican oligarchy?
If you are like most U.S. citizens, you’ve never heard of Richard Uihlein. An heir to the Milwaukee-based Schlitz beer fortune, Uihlein is the billionaire CEO of Uline Inc., a private, family-owned Wisconsin company that sells shipping and packaging materials to the tune of $2 billion in annual revenue. He lives in a mansion in Lake Forest, a hyper-opulent preserve north of Chicago.
He’s also way into right-wing politics. As one can learn from a quick trip to the Center for Responsive Politics’ (CRP) website, Uihlein invested $24 million—that’s right, $24 million—in the 2016 elections. His political contributions went to Republican candidates and Republican-affiliated and “conservative” (that is, radically regressive and reactionary groups such as the Club for Growth. A longtime supporter of right-wing Wisconsin Gov. Scott Walker, Uihlein is a major sponsor of hard-right Republican candidates—at both the state and federal levels—and organizations across the nation.
So far, Uihlein is the top political contributor in the 2018 federal U.S. election cycle, at $21 million. In 2016, however, he was just the nation’s ninth biggest political investor. Above him on the plutocratic “wealth primary” scale stood the San Francisco hedge fund billionaire Tom Steyer ($91 million, all to Democratic candidates and Democratic Party-affiliated “liberal outside groups”); Las Vegas billionaire casino owner Sheldon Adelson ($83 million to Republicans and the right); Florida billionaire financier Donald Sussman ($42 million to Democrats and “liberal” groups); Chicago multimillionaire media mogul Fred Eychaner ($38 million to Democrats and “liberal” groups); Dustin Moskovitz, a co-founder of Facebook and the “world’s youngest self-made billionaire” ($27 million to Democrats and “liberal” groups); billionaire mathematician and hedge fund manager James Simons ($27 million to Democrats and “liberal” groups); billionaire hedge fund manager Paul Singer ($26 million to Republicans and right-wing groups); and billionaire right-wing hedge fund manager Robert Mercer ($26 million to Republicans and right-wing groups). Michael Bloomberg rounded out the top 10 list at a cool $23,786,083.
These megadonors are the superrich cream atop a deep plutocratic pitcher. The CRP’s list of the top 100 individual contributors to federal candidates during the 2016 election cycle ends with Karen Wright, CEO of a leading gas-compressor manufacturer. She gave a whopping $2.2 million to Republicans and the right.
How are such ridiculously astronomical political investments—far beyond the capacity of all but a super-opulent minority of U.S. citizens—possible under U.S. law? Aren’t there limits on how much rich people can spend on U.S. elections?
Not really. Not for rich people whose agents know how get past the nation’s porous regulations. Federal law sets a $2,500 per-person, per-election limit on how much a donor can give to a federal candidate, a $30,800 per-person, per-year limit on donations to national party committees, and a $10,000 total limit on per-person contributions to state, district or local party committees.
But the rules change when it comes to technically “independent” nonparty and “outside” groups called political action committees, known as PACs. A person can give as much as $5,000 to a PAC that contributes directly to candidates. And there are no limits whatsoever on how much a person can give to a PAC that declares it will spend its money totally independently from a candidate’s campaign. These “independent expenditure” groups, which can receive unlimited contributions from individuals, corporations or unions, are commonly called super PACs.
Some nonprofit groups, called “social welfare” organizations or “501(c)(4) groups,” can also accept unlimited contributions. The primary purpose of these groups cannot technically be political, but they can spend substantial amounts on political activities, such as TV commercials.
Adding to the plutocratic muddle, the Supreme Court’s infamous 2010 Citizens United decision overthrew a federal ban on corporations and unions making independent expenditures and financing electioneering communications. It gave corporations and unions the green light to spend unlimited sums on ads and other political tools calling for the election or defeat of individual candidates.
This has opened the door to astonishing levels of private spending in the nation’s public elections. “During the 2016 election cycle,” CRP staffer Bob Biersack notes, “the top 20 individual donors (whose contributions were disclosed) gave more than $500 million combined to political organizations. The 20 largest organizational donors also gave a total of more than $500 million, and more than $1 billion came from the top 40 donors. … At a time when Donald Trump and Bernie Sanders were confirming that large numbers of people donating small amounts could fund successful campaigns, the extraordinary role being played by the very few donors who give the most may be the most important element in this new era.”
Thanks to the problem of “dark money,” moreover, we don’t have a complete record of which rich people give how much to which candidates. While super PACS must disclose their donors, 501(c)(4)s are not required to do so. These nondisclosing organizations engage in numerous political activities: buying ads that advocate for or against a candidate, running phone banks, making contributions to super PACs (!) and more.
It’s reached the point where, as a former Republican chairman of the Federal Election Commission told The New Yorker’s Jane Mayer last year, “a single billionaire can write an eight-figure check and put not just their thumb but their whole hand on the scale—and we often have no idea who they are. … [A] random billionaire can change politics and public policy—to sweep everything else off the table—even if they don’t speak publicly, and even if there’s almost no public awareness of his or her views.”
Their right to not disclose means that the campaign finance data listed above significantly underestimates total political investments made by the nation’s leading election donors. (And that was just federal data. It does not include campaign finance at the state level, where the right-wing billionaire Koch brothers focus a lot of their legendary election funding and policymaking power. The Kochs and their allies understand that, in the words of historian Nancy MacLean, “corporate and conservative interests can make their will felt most easily in state governments—and are more likely to be challenged successfully by the citizenry at the federal and local levels—partly because state affairs are less well monitored by the people the press”).
According to the CRP, outside spending by nondisclosing 501(c)(4) groups—so-called dark money—exceeded $160 million in 2016. “A [U.S. campaign finance] system founded on the principle of individuals giving limited, disclosed contributions directly to candidates, parties and PACs has morphed into a system that allows individuals and organizations to give hundreds of thousands, or even millions of dollars, to groups to spend in elections, some of whom are closely aligned with candidates and parties, without disclosure. …”
Under the high court’s 1976 Buckley v. Valeo decision, the federal government can set no legal limits on a candidate’s total campaign expenditure except in cases in which public campaign funding is made available to candidates. The sky’s the limit.
All of this and more makes the United States’ ever more expensive electoral politics a wild West-like money chase in which candidates who want to be viable must endlessly court big-dollar, business-class donors who do not generally invest without profit-serving policy returns in mind.
No other “democracy” in the developed world comes close to the United States when it comes to giving big-money donors unregulated power in their national electoral processes. Along with other and related characteristics of its election and party system—winner-take-all contests with no proportional representation, rampant partisan gerrymandering of election districts, voter registration problems, corporate media bias and the “federalist” decentralization and partisan control of U.S. election process—this plutocratic campaign finance free-for-all is why the Electoral Integrity Project (a research undertaking funded by the Australian Research Council with a team of researchers based at the University of Sydney and Harvard University) ranks the democratic election integrity of U.S. elections below that of all 19 North and Western European democracies and also below that of 10 other nations in the Americas (Costa Rica, Uruguay, Canada, Chile, Brazil, Jamaica, Grenada, Argentina, Barbados and Peru), 10 nations in Central and Eastern Europe, nine Asian-Pacific countries, two countries in the Middle East (Israel and Tunisia) and six African nations. The U.S. ranks dead last among “Western democracies.”
What does American campaign finance have to do with the 2016 election, whose outcome so much of the Democratic Party establishment and its many friends in the nation’s corporate media oligopoly blame on “Russian interference” and “Russian oligarchs”? A lot more than one might think from the media’s focus on “Russiagate” or from Biersack’s reflection on how “Donald Trump and Bernie Sanders [supposedly] confirm[ed] that large numbers of people donating small amounts could fund successful campaigns.”
An essential source here is the distinguished political scientist and money-politics analyst Thomas Ferguson’s recent study, co-authored with political scientist Paul Jorgensen and statistician Jie Chen, titled “Industrial Structure and Party Competition in an Age of Hunger Games: Donald Trump and the 2016 Presidential Election.” Ferguson, Jorgensen and Chen mined the nation’s complex finance data to paint an extraordinary portrait of how the American oligarchy’s campaign funding put Trump in the Oval Office.
Perhaps their most remarkable finding is that the left-leaning “populist” Sanders came tantalizingly close to winning the Democratic presidential nomination with no support from Big Business. The small-donor Sanders campaign was “without precedent in American politics not just since the New Deal, but across virtually the whole of American history … a major presidential candidate waging a strong, highly competitive campaign whose support from big business is essentially zero.” In the end, though, Sanders was foiled by the big-money candidate Hillary Clinton’s advance control of the Democratic National Committee and convention delegates. He dutifully complied with her corrupt victory and campaigned on her behalf as he promised from the start. The Wall Street establishment kept its command over the not-so-leftmost side of the American two-party system. Sanders failed.
Things were different on the Republican side. The right-leaning “populist” challenger—Trump—ran strangely outside the longstanding neoliberal Washington consensus, as an economic nationalist and isolationist. His raucous rallies were laced with dripping denunciations of Wall Street, Goldman Sachs and globalization; mockery of George W. Bush’s invasion of Iraq; rejection of the New Cold War with Russia; and pledges of allegiance to the “forgotten” American working class. “In striking contrast to every other Republican presidential nominee since 1936,” Ferguson, Jorgensen and Chen note, Trump “attacked globalization, free trade, international financiers, Wall Street, and even Goldman Sachs. … In a frontal assault on the American establishment,” Trump “proclaimed ‘America First.’ Mocking the Bush administration’s appeal to ‘weapons of mass destruction’ as a pretext for invading Iraq, he broke dramatically with two generations of GOP orthodoxy and spoke out in favor of more cooperation with Russia. He even criticized the ‘carried interest’ tax break beloved by high finance.”
This cost Trump much of the corporate and Wall Street financial support that Republican presidential candidates usually get. But however disingenuous and laced with racism and nativism it may have been, much of Trump’s rhetoric was popular with a considerable portion of the electorate, thanks to the widespread economic insecurity that had spread among the populace during the transparently bipartisan New Gilded Age and with special low-wage poignancy in the wake of the Great Recession. He would become the first Republican presidential nominee in memory to outperform his Democratic opponent with small (middle-class and working-class) donors.
It’s a mistake, however, to see Trump as a sign of small-donor potency in the American system. The billionaire Trump’s personal fortune permitted him to tap popular anger while leaping insultingly over the heads of his less wealthy, albeit corporate and Wall Street-backed competitors (“low energy” Jeb Bush and “little Marco” Rubio most notably) in the crowded Republican primary race. A Republican candidate dependent on the usual elite bankrollers would never have been able to get away with Trump’s crowd-pleasing—and CNN and Fox News rating-boosting—antics.
Things were different after Trump won the Republican nomination, however. He could no longer go it alone after the primaries. During the Republican National Convention and “then again in the late summer of 2016,” Ferguson, Jorgensen and Chen show, Trump’s “solo campaign had to be rescued by major industries plainly hoping for tariff relief, waves of other billionaires from the far, far right of the already far right Republican Party, and the most disruption-exalting corners of Wall Street.” By the authors’ carefully researched account, the Trump general election campaign relied for its success on “a giant wave of dark money—one that towered over anything in 2016 or even Mitt Romney’s munificently financed 2012 effort—to say nothing of any Russian Facebook experiments.” Along with giant contributions from the casino magnate Sheldon Adelson and his wife ($11 million), Sands Casino employees ($20 million) and Silicon Valley executives, Trump garnered a giant wave of money that “turned into a torrent” from big hedge funds and “large private equity firms, the part of Wall Street which had long championed hostile takeovers. …”
The critical late wave of right-wing big money came after Trump moved to rescue his flagging campaign by handing its direction from the Russia-tainted Paul Manafort to the white-nationalist and American-as-Apple-Pie Breitbart executive Steve Bannon, who advocated what proved to be a winning, Koch brothers-approved strategy: appeal to economically and culturally frustrated working- and middle-class whites in key battleground states, where the bloodless neoliberal and professional class centrism and snooty metropolitan multiculturalism of the Barack Obama presidency and Clinton campaign was certain to depress the Democratic “base” vote.
Along with the racist voter suppression carried out by Koch-backed Republican state governments (Ferguson, Jorgensen and Chen rightly chide Russia-obsessed political reporters and commentators for absurdly ignoring this important factor) and (the authors intriguingly suggest) major anti-union offensives conducted by employers in some battleground states, this major late-season influx of big right-wing political money helped tilt the election Trump’s way.
The Clinton campaign might still have prevailed if it hadn’t made egregiously stupid mistakes. It failed to set foot in Wisconsin after the Democratic convention or to purchase campaign ads in Michigan. Clinton got caught telling wealthy New York City donors that half of Trump’s supporters were “a basket of [racist, white, working-class] deplorables”—a hideous mistake hauntingly akin to Mitt Romney’s gaffe in 2012 when he was recorded telling elite donors that 47 percent of the population were a bunch of lazy welfare dependents. Above all, the Clinton team decided not to talk about policy. In an epic miscalculation, her team decided not to advance anything close to a standard, progressive-sounding, Democratic Party policy agenda. Clinton ran almost completely on the issue of candidate character and quality. This was a blunder of historic proportions, given Clinton’s own highly problematic character brand. Any campaign needs a reasonably strong policy platform to stand on in case of candidate difficulties.
What was her deafening policy silence about? Money—big American oligarchs’ money. Clinton’s campaign funding success went beyond her party’s usual corporate and financial backers to include normally Republican-affiliated capitalist sectors less disposed than their more liberal counterparts to abide the standard, progressive-sounding policy rhetoric of Democratic Party candidates. This was a curse. For “one fateful consequence of trying to appeal to so many conservative business interests,” Ferguson, Jorgensen and Chen note, “was strategic silence about most important matters of public policy. … Misgivings of major contributors who worried that the Clinton campaign message lacked real attractions for ordinary Americans were rebuffed. The campaign sought to capitalize on the angst within business by vigorously courting the doubtful and undecideds there, not in the electorate.”
As the authors show, there is little empirical evidence to support the Clinton and corporate Democrats’ self-interested and diversionary efforts to explain her epic fail and Trump’s jaw-dropping upset victory as the result of (1) Russian interference, (2) then-FBI Director James Comey’s October Surprise revelation that his agency was not done investigating Clinton’s emails, and/or (3) some imagined big wave of white, working-class racism, nativism and sexism brought to the surface by Trump. The impacts of both items 1 and 2 were infinitesimal in comparison with the role that big campaign money played both in silencing Clinton and funding Trump. The blame-the-deplorable-racist-white-working-class narrative is belied by basic underlying continuities in white, working-class voting patterns. As Ferguson, Jorgensen and Chen note, “Neither turnout nor the partisan division of the vote at any level looks all that different from other recent elections. … 2016’s alterations in voting behavior are so minute that the pattern is only barely differentiated from 2012.” It was about the money—the big establishment money that the Clinton campaign took (as the authors plausibly argue) to recommend policy silence and the different, right-wing big money that approved Trump’s comparative right-populist policy boisterousness.
Imagine if Sanders had snuck past Clinton in the primary race. Could he have defeated the billionaire and right-wing billionaire-backed Trump in the general election? Perhaps. Sanders consistently outperformed Clinton in one-on-one match-up polls vis-à-vis Trump during the primary season, but much of the big money (and corporate media) that backed Clinton would likely have gone over to Trump had the supposedly “radical” Sanders been the Democratic nominee.
Even if Sanders has been elected president, moreover, Noam Chomsky is certainly correct in his recent judgment that a President Sanders “couldn’t have done a thing” because he would have had “nobody [on his side] in Congress, no governors, no legislatures, none of the big economic powers, which have an enormous effect on policy.” A Sanders presidency would certainly have been undermined—if it had tried to do anything seriously progressive—by several factors, including a significant downturn in capitalist investment (with an attendant rise in joblessness) and the relentless hostility of the corporate media oligopoly. Right-wing media, including Fox News, talk radio and Breitbart News (which has received at least $10 million in backing from the arch-reactionary U.S. plutocrat Robert Mercer) would have gone ballistic, driving its followers to scary new levels of deadly disruption.
As Chomsky might have added, Sanders’ oligarchy-imposed “failures” would have been great fodder for the disparagement and smearing of progressive, left-leaning and majority-backed policy change. “See,” the reigning plutocratic media and politics culture would have said, “we tried all that and it was a disaster!”
That and more are reminders of something I made a special point of highlighting (with no special claim to originality) in my 2014 book, “They Rule: The 1% vs. Democracy“: Campaign finance is just the tip of the iceberg in how the American capitalist ruling class owns and runs the political and policy systems the United States. It’s got nothing to do with Russia.
Meanwhile, though, political money matters a great deal as we race into the 2018 midterm contests and the 2020 elections with U.S. “election integrity” still unprotected from the special plutocratic power of America’s wealthy masters. Nobody in Congress is talking seriously about passing bills to remove private cash from the public elections—or even to mandate reasonable “dark money” disclosure. Fuming about Moscow’s allegedly powerful conspiracy against our supposedly democratic elections looks more than a little ridiculous when considered alongside the deafening official silence on America’s own oligarchic electoral system.