Last week, the Federal Trade Commission, along with more than forty state attorneys general, announced they were suing Facebook for its anti-competitive practices, which they allege include the company’s previous acquisition of Instagram and WhatsApp. The suits follow a House Subcommittee hearing on Big Tech and a similar antitrust investigation into Google that was announced earlier this fall. At the House hearing back in September, former Facebook executive Tim Kendall gave a speech evoking the specter of what is likely the most forceful and well-known legal effort against corporate power in American history: the Big Tobacco trials. Kendall, who’s featured as a prominent voice in the hit Netflix documentary The Social Dilemma, told Congress in his speech, “We didn’t simply create something useful and fun. We took a page from Big Tobacco’s playbook, working to make our offering addictive at the outset.”
It wasn’t just Kendall who was making the comparison. It’s become a staple analogy for Silicon Valley’s unfolding antitrust legal battle. The New York Times proclaimed that the hearings were “big tech’s big tobacco moment.” CNBC’s Kelly Evans did the same, while noting that despite the dramatic confrontation between Congress and the CEOs, tech companies still retain public popularity in a way that Big Tobacco did not.
It’s the large-scale dependency these products engineer on the level of our economy that speaks to what’s really at stake.
The news of a broad, multi-state investigation into Facebook is likely to prompt further comparisons between tech and tobacco. And there are some compelling links between what’s happening now and the Tobacco Master Settlement Agreement (MSA), the climactic 1998 Congressional decision that brought massive regulatory overhaul to a prized American industry. It followed a series of trials that staged a powerful confrontation with corporate power, included bombshell testimony from former insiders, and offered the potential for justice to be carried out not just in the courts, but on behalf of the electorate. And of course, the comparison really hits its stride when it comes to the addictive quality of the product, a similarity that was foregrounded in Kendall’s testimony and, thanks to The Social Dilemma and other popular depictions of social media platforms, one that’s become a core of public opposition to Big Tech.
But while the Big Tobacco analogy clearly speaks to some aspects of the cravings, compulsions, and misery faced by users on a platform like Facebook, it’s a comparison that warrants a second look, from both a historical standpoint and a political one. The MSA and its surrounding trials offer insights into useful attack lines against Big Tech, but the comparison also carries some risk. While the everyday addictive qualities of platforms are harmful, it’s the large-scale dependency these products engineer on the level of our economy that speaks to what’s really at stake.
The MSA was the result of several years of messy legal battles that came before it. Up until that point, the companies’ common refrain had been that smoking was a personal responsibility issue: they weren’t forcing anyone to light up. The story goes that Mike Lewis, a small-time Mississippi lawyer, was visiting his secretary’s mother at the hospital as she was dying of a tobacco-related cancer when he had a breakthrough. Frustrated that nothing could so far be done to hold tobacco companies accountable, he thought up the idea of making the plaintiffs in a case against them not individual smokers, but state governments, who were responsible for Medicaid and other health care system costs. They weren’t the ones smoking, so the issue of personal responsibility was moot. Lewis took the case to the Mississippi state attorney general, a friend of his from Ole Miss, who put forward the suit, banding together with attorneys general from forty-six other states, Washington, D.C., the U.S. Virgin Islands, and Puerto Rico, before petitioning Congress to carry out a broader settlement—not unlike the multi-state case that’s just been lodged against Facebook.
When the settlement was finalized on November 23, 1998, four companies—Philip Morris, R.J. Reynolds, Brown & Williamson, and Lorillard—agreed to pay $206 billion to state governments over twenty-five years, the largest civil litigation settlement in U.S. history. And the settlement will continue to grow, as annual payments go to states in perpetuity, so long as revenues from tobacco sales continue to flow. The case transformed Americans’ understanding of public health and corporate malfeasance, as well as shifting the discussion around advertising by writing in explicit restrictions on Joe Camel, the Marlboro man, and other campaigns targeted at young people.
The case wasn’t argued solely on antitrust grounds. But the fact that the tobacco industry had worked as a cartel to prevent the development of healthier, less addictive cigarettes, as well as suppressing research into the harms that their products had on smokers, was a recurring issue in the case. So much so that Tim Kendall’s recent testimony mainly focused on how the effectiveness and addictiveness of cigarettes is mirrored in technology products:
Tobacco companies initially just sought to make nicotine more potent. But eventually that wasn’t enough to grow the business as fast as they hoped. And so they added sugar and menthol to cigarettes so you could hold the smoke in your lungs for longer periods. At Facebook . . . we added status updates, photo tagging, and likes, which made status and reputation primary and laid the groundwork for a teenage mental health crisis.
The comparison is heavy-handed, though it articulates a direct link between social media’s economic model and everyday social ills. But it also does a disservice in drawing the issue back to the consumer. Part of what’s made American antitrust action so ineffective in recent decades is the way that, at least in the dominant interpretation, price and product output have been seen as the yardstick for whether a company has taken advantage of unfair monopoly power. In her influential paper examining Amazon’s anticompetitive practices, Lina M. Khan, a legal scholar who’s played a pivotal role behind the scenes during the Big Tech congressional hearings, lays out the problems that the platform poses for the current antitrust model. By aggressively undercutting the prices of retailers selling through Amazon, the company has largely been able to skirt regulation. Antitrust has been effectively hamstrung since Chicago School economics helped to reshape the philosophy of competition law during the 1970s and ’80s, inspiring conservative legal scholar Robert Bork to author The Antitrust Paradox. This text was frequently cited in Supreme Court rulings during the Regan years and would in effect transform competition law from an older Gilded Age model for taking on exploitative oil barons to a neoliberal understanding of low price as the basis for efficient markets.
As Khan writes, when it comes to regulating Big Tech, the primary issue to contend with is the consumer pricing framework: “antitrust law now assesses competition largely with an eye to the short-term interests of consumers, not producers or the health of the market as a whole; antitrust doctrine views low consumer prices, alone, to be evidence of sound competition.” In short, the customer is always right, which makes it difficult for antitrust regulators to assess tech’s power dynamics, or the negative impacts that it externalizes onto the rest of the economy. After all, the VC-backed model of achieving monopoly control of a particular market rests on creating artificially favorable conditions for consumers, from Uber’s cheap rides to AirBnB’s undercutting of hotel rates. Khan’s proposal is to look at how technology practices have themselves been anticompetitive, like data collection that helps Google prioritize its own search results, predatory pricing in Apple’s ebook marketplace, or Amazon’s logistics dominance. “The thousands of retailers and independent businesses that must ride Amazon’s rails to reach market are increasingly dependent on their biggest competitor,” writes Khan.
The problem with Kendall’s comparison, then, is that it uses the Big Tobacco metaphor to uphold a critique of monopoly power that hinges on user experience, as opposed to the control that these companies now have on a $5 trillion slice of the economy. Google’s search engine and Amazon’s cloud servers are two straightforward examples of this kind of control, but we might also think about Facebook’s pivot toward local marketplace groups, or the proliferation of independent sellers who depend on Instagram to reach customers. The point may seem obvious, but it bears repeating that platforms like Google, Facebook, and Amazon are a lot more like infrastructure or a utility than a recreational good like cigarettes. Platforms have ingested whole sectors of the economy; as opposed to an addiction, they’ve been particularly effective in creating material dependency. And that dependency ultimately comes down to power, rather than technological effects, which are merely a symptom.
Daniel A. Crane, a professor at the University of Michigan Law School, has written about the antitrust dimensions of tobacco legislation and the legacy of the MSA. He’s interested in how antitrust legal frameworks continue to clash with the regulation of tobacco as a risk to public health: successful antitrust cases against tobacco companies have actually led to an increase in product output and a fall in cigarette price, something that antitrust is meant to facilitate, but which also goes directly against the goals of public health policy surrounding tobacco. A similar dynamic applies to alcohol, firearms, gambling, and pornography, notes Crane. His solution is to consider the “net-harm” effects of these products as part of an antitrust framework, so that competition law doesn’t serve to obviate other forms of regulation. To put it bluntly, as Crane does: “If antitrust enforcement broke up a crack cocaine cartel and increased output of crack, would that be a good thing? The answer is surely no.” The mainstream interpretation of antitrust treats all industries as equal, says Crane, when they ought to be considering whether antitrust action is increasing or decreasing the destructive effects of these net-harm markets.
When we consider net harm as a category, it’s easy to recognize how Big Tech might fit the bill. But Crane’s reading of net harm also clarifies the different set of problems posed by Big Tobacco. Big Tech is not a crack cocaine cartel; at least, it’s not just a crack cocaine cartel. While harm reduction may provide a useful touch point—social media addiction is real, and there’s little doubt that it contributes to higher rates of suicide and self-harm among teens—the metaphor only goes so far toward addressing economic practices and Big Tech’s concentration of economic control. To base an argument on the inherent addictiveness or harmfulness of social media platforms is to naturalize them—that is, to argue that certain technologies will inevitably be addictive, rather than that certain power relations have shaped these technologies in a particular direction. It also opens up the counterargument that these products are not necessarily addictive or harmful. As a technology, Google’s search bar is not addictive nor harmful. Nor is the practice of sharing a photo with friends. In The Social Dilemma, Tristan Harris, a former Google Design Ethicist, recounts how it occurred to him that the tech industry had “lost our way” when he realized no one was making Gmail less addictive. But even if Gmail, YouTube, or Facebook were rid of their most obviously addictive qualities, they would still be largely unregulated companies run by exploitative billionaires. Technocratic solutions to the problem of addiction from within tech companies would do little to address the question of tech power.
Big Tech is not a crack cocaine cartel; at least, it’s not just a crack cocaine cartel.
There’s already plenty of evidence to support this conclusion. As they’ve started to come under fire, social media sites like Facebook have embraced the personal responsibility question: they’ve given users the tools to monitor and regulate their own habits and moved to highlight a different set of metrics. For Facebook, that’s less focus on likes and “time on site,” and more on “meaningful engagement,” like participation in local marketplace groups and online communities. Apple, for its part, gives you Screen Time reports to track your phone addiction. If tobacco companies resisted the prospects of a healthier cigarette, Big Tech has been more abiding in the creation of a superficially less addictive product. That the rise of “digital hygiene” has been embraced first and foremost by tech entrepreneurs is telling.
In a review of The Attention Merchants by Tim Wu, one of the preeminent voices on antitrust legislation in the tech world, Ben Tarnoff describes how Wu’s hundreds of pages of insightful policy analysis conclude with a moralizing treatise against the attention economy—a critique of media that’s been repeated since the advent of video games, television, radio, the novel, and, indeed even the printed word. As political messaging, the everyday destructive effects of these products are no doubt evocative. But Wu’s technological determinism suggests that these tools are necessarily harmful, rather than that harm being the product of social processes, with a profit margin driving certain uses of the platforms. This, ultimately, is indistinguishable from the addiction narrative that Kendall employed when reviving the MSA in his congressional testimony.
Perhaps the most disappointing part of the Big Tobacco analogy has to do with the outcome of the settlement. Though it was a landmark case, the trial hardly wound up as a shining emblem of justice: tobacco companies continue to pay annual payments to states to cover health-care costs and the settlement bundled in new restrictions on advertising, lobbying, and distribution, but it has also been criticized by a surprising array of figures. The settlement is a matter of major contention among anti-smoking groups, who point out that only a fraction of it goes to anti-smoking and public health campaigns. Where the money does go is not always pretty. In California, MSA funds have been used to cover legal fees resulting from a police abuse lawsuit targeted at the LAPD. In Michigan, a large portion from last year’s funds went toward public-private partnerships. With no restrictions on how states can use the settlement money, it’s essentially become a revenue stream for the forty-six that participated.
What’s more, the MSA allowed costs to be passed on to cigarette consumers. In effect, it acted as an added regressive sales tax, which means that, like taxes on cigarettes in general, it continues to disproportionately affect poor people. This is an issue that’s been raised by, among others, the Cato Institute—not the best people to get trapped into conversation with in the smoking section—who essentially echo the Chicago School argument that price, above all else, should be the foundation of the antitrust regime.
One study even found that the MSA hasn’t damaged the defendant tobacco companies’ finances at all—in fact, their value grew after the settlement. Smokers continued to smoke, and with states now dependent on the tobacco companies’ success to keep payments flowing, investors and lenders felt there was less risk than there had been before the settlement. A joint investigation from ProPublica and Marketplace looked at the way that financial institutions began issuing “capital appreciation bonds” for state governments as a way of letting those governments have their settlement money upfront instead of waiting for annual payments. In other words, the MSA was securitized and turned into high-risk debt, enriching private investors in the process. In 2014, one out of every three dollars from the settlement went to investors. Ironically, the situation will only become more precarious as the rate of smokers in America continues to decline—less revenue to tobacco companies means less money paid out annually in the settlement.
It’s crucial that we learn from the mistakes of the MSA. We have the opportunity not just to regulate a “net-harm” market, but to reimagine the technology that shapes our lives as a utility—one that is publicly owned, accountable, and democratic. As the current antitrust paradigm attempts to grapple with the digital economy, we might also think about the way that antitrust can help with the large-scale planning and stewardship of our economy. Ron Knox, a senior researcher at the Institute of Local Self Reliance, a nonprofit group that focuses on the concentration of economic power, points out that Amazon effectively takes a portion of whatever revenue is generated on its platform, “becom[ing] this all powerful gatekeeper to the marketplace, for what should be a process governed by democracy.” Additionally, the coming trials are also an opportunity to talk about organized labor within the tech industry; the toil faced by more than eleven thousand Facebook content moderators who developed depression, addiction, and mental health issues as a result of their work; and the countless communities suffering from Amazon’s extractive business practices.
If the Big Tech lawsuits are set to become the stuff of courtroom myth and revive populist support for antitrust, there needs to be an overarching vision of justice and power that can effectively take the industry on. The Facebook antitrust news is promising, with the suits touching on how the social network’s purchases of other tech companies provided them with troves of data, as well as giving Facebook an advantage in the ad market; this is a central part of how Big Tech has been able to reshape the economy. The problem with so-called doom scrolling isn’t the scrolling, it’s the doom—the despair over the fact that our possibilities have been foreclosed and our lives have been made more precarious; the way that the platform economy has offered solutions that serve only to make surveillance more prolific and inequality all the more devastating. Neither addiction mitigation nor technological fixes can serve as the basis of the regulatory argument against Big Tech. To imagine a world beyond the platform giants, it’s vital that we look toward principles of redistribution and democratic control of the infrastructure we now depend on. Comparing Big Tobacco’s tactics to Big Tech is a useful rhetorical flourish, but it’s worth considering what parts of the MSA are actually worth replicating, and what might be worth stamping out.