BIG DEAL

License to Dominate

By now, you’re probably aware that many U.S. lawmakers think Big Tech has a stranglehold on certain digital industries and therefore should be regulated or broken up. 

But what if I told you there was a world in which the government didn’t actually discourage monopolies. A world where the government approved of, even supported, one company dominating at the expense of competition. 

Narnia

No, it’s the world you’re living in right now. I’m talking about government-sanctioned monopolies, companies that have less competition than the ’72 Dolphins and own total market share in their respective industries. 

Think about the last time you bought a train ticket from Philly to Boston. Did you search any website other than Amtrak’s? You probably wanted to, but alas, there is no other option. “Amtrak has an uncontested, indefinite monopoly on intercity train operations in the United States,” writes Cornell professor Rick Geddes. And that’s fine with the government, considering it owns all of Amtrak's stock.

Now think about utilities. You can’t shop around for your electric company like it’s HBO Max or Peacock. Many of these firms have a monopoly that is perfectly legal. 

Why the government is ok with it

It thinks some products and services are so indispensable that inviting competition would be a waste of everyone’s time and inconvenience the consumer. Often, this is because of extremely high upfront costs and the efficiencies provided by scale.

• While it’s not expensive to launch a Morning Brew competitor (still, you don’t want to try), it is outrageously expensive to launch a rival to, say, California’s Pacific Gas & Electric (PG&E) utility.
• PG&E's network includes nearly 170 dams, 42,141 miles of natural gas distribution pipelines, and 106,681 circuit miles of electric distribution lines.

The government response to industries like electricity provision has typically been: “Okay, if it makes sense to have just one player give everyone electricity in a certain region, let’s have one player. But we’ll heavily regulate it so consumers aren’t gouged.” 

This framework has plenty of critics. Some argue that recent technological innovation in the power industry could open the door to healthy competition...if the government allowed it. 

Bringing it back to Big Tech

Is it crazy to think that some of these tech companies have built such extensive “digital infrastructure”—the dams and pipelines of the internet—that they should also be treated like utilities? Not totally crazy: Thinkers on the left and right have been floating this idea for years. And the pandemic, which has left us dependent on social media for critical information and on Amazon for life’s essentials, has poured lighter fluid on those arguments. 

But the folks who wield actual power aren’t swayed. Democratic Rep. Ro Khanna, whose district includes Apple’s HQ in Cupertino, CA, recently told C-SPAN, "I would not trust federal regulators to understand the innovation that is required to make the next iPhone." 

So don’t expect Google Search to be treated like it’s water flow to your house. But it probably won’t mind if it is—sometimes the closer the government gets up in your business, the more license you have to operate as a monopoly.

TOP 10

The best things I read/saw/listened to this week. 

1. If you’re new to camping, here’s a good place to start. (NPR) 
2. Where will everyone go? An engrossing report on how climate refugees might move across international borders. (ProPublica and the New York Times Magazine)
3. The songs you should be listening to right now. (Slate Culture Gabfest)
4. Feed me all the NBA bubble content. (Vanity Fair)
5. The Harvard computer science prof who built a distance learning empire. (The New Yorker)
6. Obviously going to share this: the “smartest” plays in sports history. (YouTube)
7. Good read on Shopify, which has been an incredible success story. Next stop: taking on Amazon? (Marker)
8. What the heck is GPT-3? (Emerging Tech Brew)
9. Making personal development science easy and actionable. (The Science of Success)
10. The culture that is college debate. (The Dublin Review)

MAILBAG

Reader question from Zack: What have you changed your mind about recently?

Neal’s A: Easy, retail chains. As someone who’s been on the road for the last three weeks, I cannot tell you what a relief it is after driving six hours in the middle of nowhere to arrive in a town with a few chain stores. 

I used to get grandpa-level grumpy when I saw a shopping center with a McDonald's, Subway, etc. But I’ve realized that chains are in fact a modern-day miracle. You can be anywhere in the country and walk into a store knowing what to expect in terms of service and product selection. When I needed a car charger that would plug into my computer, boom, Walmart. A coffee shop with wi-fi? Starbucks. Way too much mayo on a sandwich? Jimmy John’s. 

I’ve also found that chains have stricter COVID-19 policies than independent stores. When you have to operate across different jurisdictions during a pandemic and protect tens of thousands of employees, you typically adopt the toughest health practices. That’s why stores like Walmart, Home Depot, and many more mandate face masks. 

Do not read this the wrong way—I still adore the John’s Pizza Shacks of the world and always encourage people to buy local. But I’m just answering the question. I used to hate chains...now I don’t hate them. 

Got another question for Brew writers? Ask right here.

ROUNDUP

Brewnited States of America

Your hub for everything that happened this week at Morning Brew...

Brew U: For college students who love the Brew and want a great learning experience (plus free swag), check out our ambassador program, which just went live this week. 

Yang Gang in the house: It’s not every week you interview a former presidential candidate. This week, though, Business Casual did—Andrew Yang came on the podcast to share his forward-thinking vision for tech. Give it a listen. 

The art of the cold email: Brew Writer Toby Howell got this job by writing a cold email to the Brew’s cofounders. He walks you through his process in detail so you can capture the same magic. 

Q&A with a lacrosse legend: We talked to the Premier Lacrosse League’s Paul Rabil on what it’s like to navigate a pro sports league through a pandemic. 

Your home for antitrust: With Big Tech antitrust hearings on the horizon, we created a guide with everything you need to know about the calls to regulate Apple, Facebook, Amazon, and Google. 

Also...follow us on Twitter. It’s a good time.