The Scary Parallels Between History’s Robber Barons and Modern “Tech Titans”
They’re hiding in plain sight.
In 2018 Facebook CEO, Mark Zuckerberg appeared before the Senate's Commerce and Judiciary committees. When asked if he thought Facebook had a monopoly, Zuckerberg replied, "It certainly doesn't feel like that to me." In a keynote speech at the 2012 Goldman Sachs Technology and Internet Conference, Apple CEO Tim Cook, declared "Honestly, [Apple will] compete with everybody. I love competition." In a letter to shareholders in 2017, Amazon CEO Jeff Bezos divulged his motto for business: "Obsess about customers, not competitors."
The bane of every business is their competitors, but these Tech Titans seem not to be worried. They seem not to hold even a drop of monopolistic sentiment, especially when compared with the Gilded Age Robber Barons. Cornelius Vanderbilt, for example, who spearheaded the railroad industry from the mid to late 1800s, was caught saying, "What do I care about the law. Ain't I got the power?" William Vanderbilt continued his father's monopolistic legacy and said in an 1882 interview, "The public be damned," a stark contrast to Bezos' customer-obsessed business model.
Want to read this story later? Save it in Journal.
But the differences between our modern Tech Titans and historical Robber Barons are just words. This becomes especially apparent when we forget what they say and begin to watch what they do. These Tech companies run subtle monopolies, legal monopolies, but monopolies nonetheless. And their societal effects are no different than that of the Gilded Age.
After the Civil War, the American economy was finally allowed to grow, and entrepreneurs rose to the occasion. New technology and new use of resources created new industries: steel, oil, and railroads became the backbone of America. But each entrepreneur wanted the title of “Richest Man in America” for himself, and they formed trusts, abused workers, manipulated the stock market, and gouged prices to get there. Congress passed the first antitrust act — the 1890 Sherman Anti-Trust Act — and other laws to control these men, but even today, these practices subsist, just in different forms.
Working Smaller Not Harder: Bezos and Carnegie
Andrew Carnegie pioneered business efficiency. The Carnegie Steel Company led the expansion of the steel industry in the 19th century. Without him, the bridges, cars, and skyscrapers we know today would likely not have existed. But this man did not just make steel. He controlled every process associated with steel. Using “vertical integration,” Carnegie cut out middlemen. His own miners mined the ore, and he used his own ships and railroads for transportation. Everything was done in-house, so steel became cheaper and cheaper.
It’s impossible not to see the similarities between this system of management and Amazon. Nowadays, Amazon has its own everything. They have their own fleet of vehicles, planes, warehouses, web services, etc. Amazon controls every aspect of its own logistics. It’s very likely that Jeff Bezos is allergic to outsourcing. But just like Carnegie’s steel, their products have become cheaper and more accessible. Amazon offers same-day shipping, and its products are much more affordable than retail stores.
But also like Carnegie’s steel corporation, Amazon’s vertical integration leaves a slew of side effects on the economy. Carnegie’s method of operation slowly ran every other steel manufacturer to the ground to make way for his empire. Similarly, Amazon overtakes any industry they get involved in. Their delivery services rival UPS and FedEx. In book sales, Barnes & Nobles has been demolished. Amazon now owns more than 80% of e-book sales, while B&N owns just 4% as of 2017. Eventually, it will become that Americans have very few options besides Amazon for retail, just as Carnegie Steel was the only option for steel.
Working Together Not Harder: Zuckerberg and Rockefeller
Carnegie's main competitor in the 19th century was John D. Rockefeller, the head of Standard Oil. Contrary to Carnegie's vertical integration, Rockefeller employed “horizontal integration.” Instead of seeking to control the entire oil refinery process, he sought to control all the oil refinery companies. He convinced stockholders of smaller oil companies to give their shares to Standard Oil, and eventually, gained control of 40 refineries. Instead of competing for supplies and market share, Rockefeller convinced these companies to let him make all the money, and profit when he profited.
This “if you can’t beat ‘em’, buy ‘em’” practice is one that Mark Zuckerberg is all too familiar with. Facebook bought both Instagram and WhatsApp for $1B and $21.8B respectively and it’s no coincidence that these were its main competitors in the social media and messaging space. In fact, these mergers are so similar to Rockefeller’s trusts that in December of 2020, the Federal Trade Commission and almost all 50 states sued Facebook, claiming they were violating anti-trust regulation.
In the 19th century, the oil refineries not in the Rockefeller trust were left hopeless. One owner, George Rice, testified to the 56th Congress about the “uselessness of contending against [the Rockefeller Trust].” By joining forces, these 40 refineries eliminated all competition. Since Facebook has joined forces with Instagram and WhatsApp, it’ll be harder than ever for new social platforms to rise and give consumers options for their internet experience. Mark Zuckerberg sent a confidential email in 2012 claiming that “… we can likely always just buy any competitive startups, but it’ll be a while before we can buy Google.” Zuckerberg awkwardly claims this was a joke, but Facebook’s intention to control competitors is clear.
Working Cheaper Not Harder: Cook and Vanderbilt
The level of growth in the American economy post-Civil War was unprecedented. The country had never seen such rapid expansion, and to keep up with this newly formed consumer culture, the businessmen of the era asked more of workers. Railroads connected the East and West coasts and became essential to meeting the needs of consumers. Cornelius Vanderbilt, the eras premier railroad magnate, made his workers toil for long hours in treacherous conditions for low pay.
Similarly, Apple’s Chinese manufacturing practices are unethical at best. In 2013 it was proven that Apple knew one of its manufacturers was using the labor of minors as young as 14. Despite being fully aware, Tim Cook and the company continued to use that manufacturer and asked for no changes for three whole years. In 2019, Apple themselves also admitted that they had broken Chinese labor laws by employing too many temporary workers.
These unfair labor practices build up pressure that is begging to explode. In 1877, the Vanderbilt railroad executives told workers that they must accept the sacrifice of their wages and long hours until business improved (even though the company was doing better than ever). Eventually, workers stuck back in The Great Railroad Strike of 1877. A series of it violent outbreaks broke out over the countries railroads, and a militia of 60,000 men was mobilized to quell it. For days, America’s commerce was paralyzed. This pattern holds true with Apple. At a Chinese Apple plant, over 1,000 workers went on strike. They reported working close to 120 hour weeks, and blocked highways into the major city of Shenzhen, the country’s first major economic zone. Riot police responded to the strike in full force. The exploitation of workers was a tragedy in the Gilded Age of American history. So just because Apple’s violations of the same principles today are happening overseas, does not mean they can be ignored.
…
During the pandemic, lockdowns benefitted one group the most; that group is the same group that people like Bezos, Zuckerberg, and Cook belong to. In times of chaos, these men found opportunity, in the same way, that the men of the Gilded Age did in the wake of the Civil War. But what’s most important from these comparisons is that we can predict the future from the past. As consumers, these predictions tell us where the industries we participate in are heading so we can determine whether we like it. The 19th-century Robber Barons give us much to learn about 21st-century Tech Titans and allow us to assess what we want from our businessmen in the years to come. __________________________________________________________________
“History repeats itself, but in such cunning disguise that we never detect the resemblance until the damage is done.” — Sydney J. Harris ___________________________________________________________________
Creating something of your own? Join the Journal slack community for support from creators like yourself.
