America's top foundations bankroll attack on Big Tech

Major nonprofits and other organisations have pledged millions of dollars toward groups that are taking on corporate giants. Photo / Anthony Russo, New York Times

Sens. Elizabeth Warren and Bernie Sanders have discussed breaking up the biggest tech companies during their presidential campaigns. Federal and state regulators are investigating whether the companies have violated antitrust law.

But the activists and scholars who first raised concerns about the market power of companies like Facebook and Amazon don't plan to stop there. They want to sell their thinking to the broader public, too. And they are amassing numerous wealthy backers to help them do it.

Major nonprofits, including the Ford and Hewlett Foundations, have pledged millions of dollars in total toward taking on the power of the country's corporate giants like Facebook and Amazon. Other supporters include groups run by George Soros, the billionaire financier, and Pierre Omidyar, an eBay founder.

The foundations regularly fund critical looks at capitalism. The Ford Foundation, for example, supports many organisations that study and fight inequality. The Hewlett Foundation, whose lineage goes back to a founder of Hewlett-Packard and has a US$10 billion ($15.2b) endowment, has put a slice of its money toward organisations re-examining the free market economic policies that dominate Washington.

But the financial support is reaching new heights, and it could help the activists keep pressure on Silicon Valley by building the sort of political might that has powered liberal policy victories on issues like civil rights and net neutrality. Activists recently announced a coalition to take on Amazon, for example, that includes organisers around the country.

One of the groups receiving foundation money is led by Chris Hughes, a Facebook co-founder who now publicly argues for breaking up the social media giant. His group, the Economic Security Project, is pooling some of the money and then distributing it to projects focused on antitrust and concentration concerns. Hughes, wealthy from his time at Facebook, has contributed some of the money himself.

The Economic Security Project plans to give antitrust activists US$10 million over the next 18 months. On Tuesday, the organisation will announce how it plans to spend the first US$3m, putting the money toward grassroots organisers, researchers at several Washington think tanks and a group that recruits artists to make graphics that "expose how our economy really works."

Elizabeth Warren (right) and Bernie Sanders have discussed breaking up the biggest tech companies during their presidential campaigns. Photo / AP

The coming years will test whether the efforts of the advocates can harness the skepticism about large corporations and the wealthy that is animating the Democratic presidential primary race. Ultimately, these advocates hope to address corporate concentration in numerous businesses, including drugs and farm products, and combat rising economic inequality.

They have their work cut out for them. Tech companies spend tens of millions of dollars on lobbying every year. And antitrust issues hinge on dense questions of law and economics that don't fit on a bumper sticker.

"It's not just about trends and corporate accountability," said Maria Torres-Springer, vice president for US programs at the Ford Foundation, which has a US$12b endowment. "It's about creating and sustaining a movement that rebuilds political and economic power for everyday Americans."

A leading beneficiary of the money is the Open Markets Institute, a research group whose focus on antitrust issues has been pivotal in making corporate concentration a matter of public debate. It expects to bring in more than US$3m in 2020, according to an internal document from the first half of this year. In 2016, before the group split off from a bigger organisation, New America, its revenue topped out at just over US$900,000.

This year, the Knight Foundation, which focuses on journalism, awarded Open Markets US$2m to study the impact that concentration among technology platforms has on the media. In September, the Ford Foundation gave it US$200,000 to examine how tech monopolies affect workers. A public campaign it has led to break up Facebook will expand to include Google next year, according to Sarah Miller, the organisation's deputy director.

Hughes' Economic Security Project is contributing to that campaign. It is also paying for Open Markets to conduct public opinion polling.

"Our view is you need an ecosystem," Hughes said. "You need a community of people who generally share the same values but who, among themselves, may even have different approaches to the issues."

Another progressive group, Jobs With Justice, plans to hold sessions next year explaining to people the antitrust case against tech companies in simple terms. In the draft script of the training, the session's leader seizes on a simple metaphor, asking attendees to consider two lemonade stands.

Concerns have been raised over Amazon's market power. Photo / Bloomberg

The first stand belongs to someone whose family owns the local grocery store, so it gets its lemons free. The family's neighbours, who opened a competing stand, aren't so lucky. Over time, the first stand is able to slash its prices to undercut the second stand.

The session leader asks for a volunteer to play the person running the stand that can't use a family connection to get free fruit. The volunteer has to decide whether to engage in a price war with the more powerful competitor while an organiser charts the volunteer's dire financial situation on butcher paper.

Each situation ends with the volunteer's lemonade stand closing and a revelation: Amazon, the session leader will tell participants, has used this tactic against its competitors.

"What we wanted to do was create some field materials, some training materials, just to even explain what a monopoly meant for people," said Erica Smiley, Jobs With Justice's executive director. "Outside of people maybe playing the board game, it's kind of an old idea that maybe they learned in their fourth grade civics class but haven't necessarily re-upped on."

Smiley's group is one participant in Athena, the new coalition organising opposition to Amazon over antitrust, privacy and other concerns. The coalition says it wants to raise US$15m in its first three years.

Athena will receive money from Hughes' fund, along with other groups trying to rally the grassroots to the cause.

Civil rights group Color of Change plans to use its funding from the project to pay for new hires to lead public campaigns around antitrust issues, while the Action Center on Race and the Economy will run "corporate campaigns designed to influence the public narrative on corporate concentration and win real victories for communities of colour around the country."

Other projects, like the artists' group, are focused on finding new ways to explore the antitrust issue. Hughes' group paid for a New York event in November — held by a project called the Museum of Capitalism — where people could play versions of the board game Monopoly that are meant to call out inequities in the economy.

Hughes will also finance some groups doing academic research on corporate concentration and intends to support more researchers in the future.

"If you're going to see real change, you need a community of scholars who are in dialogue with one another," he said.

Facebook CEO Mark Zuckerberg. Photo / AP

Money is already flowing to campuses. In November, the Knight Foundation allocated US$3.5m to researchers to examine questions about digital platforms, including competition issues.

The foundation, along with Omidyar's philanthropic network, has also provided the money to introduce an antitrust-focused initiative at Yale's business school. In an interview, Sam Gill, a Knight executive, said the foundation had not yet taken a position on whether there should be an antimonopoly movement but felt it was important to finance inquiries into the questions posed by major tech companies.

In recent years, more potential solutions to corporate concentration have emerged. While some believe in aggressive approaches like breaking up companies, others prefer new regulations or other measures.

At a conference at the University of Utah this fall, Dan Crane, a conservative law professor, challenged a group of participants including Tim Wu, a legal scholar and New York Times contributing opinion writer who is a leading voice calling for more aggressive antitrust enforcement. Crane pushed them to be more specific about the changes they would like to see in how antitrust laws are interpreted and enforced.

Over box lunches, the group wrote a statement, later published by Wu, listing legal precedents the group hopes will be overturned and policies it hopes will be enacted.

"Those who believe in a strong revival of antitrust, and a return to its antimonopoly roots, have a duty to specify what, exactly, they mean, in concrete, legal detail," the statement said.

Wu said that, among other purposes, the statement could be a test for judicial nominees. It's a focus reminiscent of the playbook that helped build the conservative legal movement — which in turn shaped the antitrust laws Wu and his compatriots criticise today.

"Over a 30-year period, they won almost every one of those battles," Wu said. "They just sort of said, 'Here's what it should be,' and it happened."

Written by: David McCabe

Photographs by: Anthony Russo

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