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How Do Mergers, Monopolies Affect Workers?

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Monday, October 9, 2017   

SEATTLE – Nowhere is the trend toward market consolidation, or monopolization, more apparent than in the technology industry.

In August, Seattle-based Amazon acquired Whole Foods Market, raising questions about whether the company is becoming a monopoly.

Washington state also is home to another tech giant, Microsoft, the third most valuable publicly traded company, above Amazon.

But as these companies grow larger, what does that mean for workers?

Brian Feldman, a policy analyst with Open Markets Institute, summarizes the impact of mergers on workers in these three ways.

"A poor distribution of benefits going back to workers,” he explains. “Also, additional power of companies to exercise rights over workers, as well as job layoffs."

Feldman cites a study that found that as sectors of the market become more consolidated, the share of money going to workers declined by $14,000.

There also has been a rise in non-compete and forced-arbitration clauses in employee contracts, making it harder for workers to look for other jobs and address labor disputes in court. Mergers cause layoffs due to overlaps in jobs.

Feldman says a lot of companies have avoided the label monopoly because of a policy that arose in the 1970s and '80s known as "consumer welfare," which basically means anything that lowers prices for consumers is thought of as OK.

But he says tech companies, or what he calls "platform monopolies," aren't fit for regulation under our modern understanding of antitrust laws, even as they box more companies out.

"They have such large networks of customers that they're able to act as gatekeepers and chokepoints on their platforms and shut out certain competitors," he explains.

Breaking up monopolies may not be popular either, since some see it as government interfering with the free market.

But Feldman says the government plays the role of referee, not free-market meddler.

"What the antitrust laws are trying to do is actually create a more competitive and free market and return us to a time when we actually had more entrants being able to at least enter one sector and say, 'Hey, you know, I have this new technology,’” he relates. “’Let me give it a shot and see if there's a market there.'"





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