Unsanitized: How the Pandemic Expands Corporate Power

And how we can fight back. This is The COVID-19 Daily Report for July 22, 2020.

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First Response

It’s a cute human interest story. Country Time Lemonade decided that, during the pandemic, little boys and girls can’t go out on the street to open lemonade stands. So they would fund a bailout: $100 for a select group of prizewinners who apply for a check. It’s just a little PR campaign that plays off the times we live in with a dash of compassion. The Hill wrote it up, so mission accomplished for the publicity team.

But I, dear reader, am cursed. I’m cursed to know that Country Time Lemonade isn’t a mom-and-pop business, but a division of KraftHeinz, one of the more soulless giant corporations in our economic landscape. Owned by Brazilian private equity firm 3G, KraftHeinz engages in a thing called “zero-based budgeting,” where every year, the entire budget is wiped clean and everyone must justify their expenditures anew. This habitually leads to everything from mass layoffs to trims to printer paper and trash collection at corporate headquarters. “Costs are like fingernails: they always have to be cut,” 3G co-founder Carlos Sicupira is famous for saying.

So the company that is handing out $100 bailout checks (only 1,000 of them, and in exchange you have to give up all your family’s personal information, send pictures of your lemonade stands that can be used in any promotion, and agree to receive advertising from Country Time) has also immiserated tens of thousands of workers. And it’s also nearly destroyed KraftHeinz, with zero-based budgeting ruining investment in its many venerable brands. It’s also under SEC investigation for cooking its accounting books and “modifications to its agreements with its vendors,” a nice word for ripoffs. 

But hey, cute kid bailout.

Read all of our Unsanitized reports

The world I’m explaining in that above anecdote is the world of Monopolized: Life in the Age of Corporate Power, the book I wrote that released this week. It’s a world where our lives have become governed, to a strong and sometimes hidden degree, by a small group of corporations. When you recognize how this system works, you find the influence of monopoly lurking in every corner, even the Country Time bailout. It can sometimes be hard to talk about because it’s so expansive, so I encourage you to read this exclusive excerpt from the book at our site today, about how monopolies caused shortages of IVs—salt and water in a bag.

In talking to interviewers about the book, I’ve been asked how the coronavirus pandemic will affect monopoly. And like so much else, it will accelerate it. As the business climate deteriorates, remaining companies will grow market share either by default or by taking over their sick rivals. The disproportionality of the bailout, assisting large companies far more than smaller ones, plays into this. And changes in consumer patterns in retail, as well as working from home, have been a jackpot for the few winners in that exchange. Big Tech stocks gained $291 billion in market value just on Monday.

The pandemic initially stalled the merger and acquisition market, but that was the calm before the storm. Check out the arrays of deals announced in the past week.

Chevron is buying Noble Energy, the first of many dominoes to fall in the oil and gas sector, where the big companies we have today all come out of mergers in previous moments of financial stress. Liberty Media got the go-ahead to increase its stake in broadcast radio giant iHeartMedia (owner of 850 stations), when it already owns a controlling interest in satellite radio giant SiriusXM (itself the product of a merger of the only two satellite companies), and streaming giant Pandora (a direct competitor of streamer iHeartRadio). CHI Franciscan and Virginia Mason, two hospital networks, have signed a joint operating agreement, the latest in a growing trend that saw 1,667 mergers in the sector from 1998 to 2018. One of the biggest deals of the year brings together two semiconductor makers. Here’s a roundup of mergers in digital marketing, electric vehicles, convenience store operators, health insurance software, are rare earth mineral mining. A German man is monopolizing rare endangered parrots.

There are real-world effects to this activity. The coronavirus has proven a lesser impediment to moving goods from Wuhan, China than recent flooding. An astounding number of facemasks and other PPE still originate from there, and that’s driving shortages in U.S. hospitals, beyond the surge in COVID cases. (That Uighur slave labor is being used to make these items is just a cherry on top.) When a Facebook software bug malfunctioned earlier this month, dozens of apps shut down, because Facebook is embedded in their product. This story on the horrors that Amazon Handmade sellers go through is typical of that company using its private law to govern and immiserate its partners. Meatpacking plants blamed shortages for skyrocketing grocery costs while upping exports to China and pocketing the increase on both sides.

Workers, entrepreneurs, citizens suffer at the hands of monopoly. Quality suffers. Reliability suffers. Choice suffers.

The good news is that there is a small but growing movement fighting back, and building that movement is the only way to infuse the political will to reverse the conditions that created this age of corporate power. Also just in the last few weeks, we’ve seen a comprehensive guide to fixing federal contracting so monopolists cannot gouge the government; a comprehensive guide to fighting monopoly power at the state and local level; and a petition signed by 30-plus organizations to ban exclusive dealing, where monopolists use contracts to formally block rivals. Groups are fighting monopoly price fixing in the prison phone market. The work that the Writers Guild of America has done to reverse the damage of monopolized talent agencies is inspiring, and bearing fruit.

A lot of this work is featured in Monopolized. And while there’s a spark of recognition that we’re living in a strange time and we can do things differently, there’s a long way to go. Next Monday, there’s this enormous hearing with the Big Four tech CEOs, and there’s a huge power struggle happening to set the terms of the testimony. A similar turf war is happening inside the Federal Trade Commission as it determines whether to enforce the law against Facebook. Amazon just announced a record amount of lobbying in one quarter. This is going to take a fight against the most powerful institutions in American life. But it’s winnable, and it’s been winnable in the past, because people have used their collective power to make a difference.

Anyway, hopefully this didn’t come off like a large ad but I do believe this is one of the supreme challenges of our time, and I thought it was important enough to write a whole book about it. So if you’re interested, pick up a copy of Monopolized or read the excerpt today at our site. Thanks.

Days Without a Bailout Oversight Chair

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Today I Learned

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