The Thinking Behind Chris Hughes’s New Anti-Monopoly Crusade

(Bloomberg Businessweek) -- The push to rein in internet giants such as Alphabet Inc.'s Google and Facebook Inc. is coming from some unexpected corners. Former tech titans and liberal philanthropists have become some of the most vocal critics of the big internet companies. Now, they're launching a new fund to promote more robust competition in—and regulation of—the tech sector.

Facebook co-founder Chris Hughes stunned observers when he wrote an op-ed in the New York Times in May, calling for the breakup of the social media giant he helped create. The nonprofit group that Hughes co-chairs, the Economic Security Project, is starting a $10 million Anti-Monopoly Fund to support research, public-interest campaigns, and cultural initiatives that will promote stronger antitrust enforcement. It will seek to rein in the big internet platforms as well as companies in sectors that have seen a lot of consolidation, such as health care, agriculture, and finance. The project is modeled on work Hughes has done on a guaranteed basic income through the nonprofit.

“We think the concentration of corporate power in the economy is unprecedented,” says Hughes, who believes that Facebook's dominance of social media is causing a lack of innovation and entrepreneurialism in that sector. “We need a multifaceted approach to rebalance the scales, to make sure markets are dynamic and free.”

High-profile philanthropists are investing in the fund alongside Hughes. They include Pierre Omidyar, EBay founder and co-founder of Omidyar Network, and George Soros and his Open Society Foundations. Other organizations supporting the initiative include the Hewlett Foundation, which was founded by HP Inc. co-founder William Hewlett and his wife Flora to support education, the environment, and arts, among other philanthropic initiatives, and the Nathan Cummings Foundation, which was founded by the family behind Sara Lee Corp. and has grant programs in the U.S. and Israel focused on democratic values and social justice. The fund is hoping to add more donors.

Anamitra Deb, senior director of the Omidyar Network's innovation business unit, which focuses on the power, effects, and accountability of tech platforms, says Hughes's vision for the fund inspired him. Deb hopes the group can act as a clearinghouse for distributing money to numerous players doing research, policy, and advocacy work. “Money fosters ideas,” says Deb. It's time to “change some of the default settings on how tech works. There's no one silver bullet; we need a diversified set of tools.”

Hughes and Omidyar aren't the only ones gearing up for a fight with the internet giants. News Corp. has complained about Google to competition officials in the European Union and Australia, while Oracle Corp. has called on U.K and U.S. enforcers to examine Google's conduct in the digital advertising market.

Google has said it faces "intense competition" in advertising services, in a filing with Australian authorities. It has also said it is continuously innovating and improving search results and advertising products to compete against "numerous alternatives available to users and advertisers."

A Facebook spokesperson says consumers are the best judge of the value of a company's offerings, and that if Facebook stopped innovating, people would stop using it. The spokesperson also says investment and growth in the tech sector can be seen in companies providing streaming video services and the Chinese-owned video app, TikTok, which has 500 million monthly users.   

Not all the money is flowing into anti-tech initiatives. The Koch network, which favors curbs on government power and regulation, has funded ad campaigns against the antitrust investigations of large technology platforms and is pouring money into startups.

Hughes's Anti-Monopoly Fund plans to announce its first grant recipients in November. Some of the fund's partners already have been backing research institutes and think tanks, such as the Roosevelt Institute in New York and the Open Markets Institute in Washington. Both can claim at least some credit for injecting anti-monopoly issues into the 2020 presidential campaign.

Former U.S. Representative Thomas Perriello, a Democrat who runs Open Society-U.S., part of the Open Society Foundations, recalls meeting with Barry Lynn, the founder of Open Markets, when Perriello represented Virginia's 5th district from 2009 to 2011. “It was a real small room of people,” Perriello remembers. Now, he says, Lynn and his associates are the “thought leaders” in the debate about competition and are laying the groundwork to find ways to limit the power and influence of the internet platforms.

Hughes is launching the fund at a unique political moment, one in which both political parties seem to agree on the need to address corporate power. “You can't get Republicans and Democrats to agree on what they had for lunch, and yet they seem to agree about this,” says Hughes, who wants to make sure the fund's work remains ideologically neutral. “They come from different perspectives, even though they're not entirely aligned—and at the same time, both sides agree we need more scrutiny,” he says. “I see that as a good thing.”

To contact the editor responsible for this story: Dimitra Kessenides at dkessenides1@bloomberg.net, Paula Dwyer

©2019 Bloomberg L.P.