Corporate power is in the crosshairs of the Biden administration. Through appointments to the Department of Justice and the Federal Trade Commission and his own statements, President Biden has signaled a desire to rein in some of the largest corporations in the United States. The DOJ sued Google for monopolistic conduct in January (the second such federal suit against the digital giant), and the FTC is reportedly preparing a lawsuit against Amazon that could be filed in the next few months.
To Regulate Big Corporations, Understand How They Got That Way
Big isn’t categorically bad, but it should invite public suspicion and scrutiny.
May 24, 2023
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Summary.
While regulators are considering new ways of taking on corporate power, it’s important to recognize that big corporations are not all of a piece. Large firms, whether measured by employees, sales, or assets, should be thought of along at least two axes. First, centralized, where a company owns a small number of very large production facilities, vs. decentralized, meaning it aggregates many production facilities (some of which can be large in their own right). And second, whether the firm principally grew through organic expansion vs. mergers and acquisitions. Understand the differences can guide regulators in understanding when they create public good and when they don’t.