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Why We Should All Be Worried About ‘Chokepoint Capitalism’

9 minute read
Billy Perrigo is a correspondent at TIME based in the London bureau. He covers the tech industry, focusing the companies reshaping our world in strange and unexpected ways. His investigation ‘Inside Facebook’s African Sweatshop’ was shortlisted for the 2022 Orwell Prize.

Ten minutes into our Zoom call, Cory Doctorow’s voice begins to stutter. His internet connection is giving out—first the audio goes, and then the video too. He fiddles with cables for a few minutes while I, halfway across the world, wait behind a black screen.

When Doctorow reappears, he tells me a story. The city in California where he lives borrowed money to lay high-speed internet cables to serve businesses in the center of town. But the terms of the deal prohibited the city from connecting the cables to people’s homes. A cable carrying a 100 gigabit-per-second internet connection runs directly under the foundation of his house, Doctorow says. But he’s stuck using low-speed Internet—even though his taxes pay for servicing the bond the city took out to build the high-speed network. “I’m standing on the fiber,” he says. “I just can’t use it.”

Cory Doctorow (craphound.com) is a science fiction author, activist, journalist and blogger -- the co-editor of Boing Boing (boingboing.net) and the author of young adult novels like PIRATE CINEMA and LITTLE BROTHER and novels for adults like RAPTURE OF THE NERDS and MAKERS. He is the former European director of the Electronic Frontier Foundation and co-founded the UK Open Rights Group. Born in Toronto, Canada, he now lives in London and is pictured here in his office.
Cory DoctorowJonathan Worth

It’s yet another example, Doctorow says, of a business practice he calls “chokepoint capitalism.”

“That’s the thing,” Doctorow says. “Once you understand this idea of chokepoint capitalism, you begin to see it everywhere.”

Chokepoint Capitalism is the title of a new book co-authored by Doctorow, an internet freedom activist, and Rebecca Giblin, a scholar at the University of Melbourne. The pair coined the term to describe what they say is the defining feature of the modern economy: corporations weaponizing their power to crush competition and lock in customers. The idea behind free market capitalism—that firms would compete fairly and thus drive prices down—has been corrupted in practice, Giblin and Doctorow argue. Chokepoint capitalism, they write, ultimately results in higher prices for customers and lower wages for workers. At the same time, the system diverts record profits to corporations, which they can reinvest to further cement their power.

Rebecca Giblin
Rebecca GiblinIvanna Capture You

TIME spoke with Doctorow and Giblin on Sept. 28 about the themes of their book. “Across so many different industries, workers are all getting shaken down,” Giblin says. “Even if you aren’t paying higher prices at the checkout, the fact that you’re having this downward pressure on your wages from this increased corporate concentration has the same end result: you’ve got less and less capacity to pay for the goods and services that you need.”

This interview has been condensed and edited for clarity.

TIME: What is ‘Chokepoint Capitalism’?

GIBLIN: Companies use all kinds of tools to erect chokepoints, to create hourglass shaped markets that have audiences at one end, creators at the other, and corporations squatting in the middle.

Really, everyone’s making the same play as what Amazon talks about with its self-described “virtuous cycle.” Amazon talks about having lower prices, which attracts customers, and then because the customers are there, more suppliers come, and that brings a better product range, and that attracts more customers. And it all sounds lovely, right? Who could complain about that? But we show in the book that corporations are actually doing everything they possibly can to lock in their customers, and then use that to lock in more suppliers. And these companies get more and more power as this—not virtuous, but anti-competitive—cycle keeps feeding itself. And the share that goes to workers, and suppliers, and creators, goes down.

The message we really want to get out in the book is to show that this is not a problem of people not working hard enough, or of there not being enough copyright. It’s a problem with power imbalance. But we don’t have to put up with it because once we understand the problem, there are interventions that we can make to widen out these chokepoints.

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TIME: Why has it taken so long for people to begin to understand this was all part of the same problem?

DOCTOROW: Partly because it was very slow, but also because the symptoms were different depending on what sector you were in, so it was hard to recognize that it was all the same disease. If you’re angry that ships are getting stuck in the Suez Canal, it’s because there are three giant shipping conglomerates, which get economies of scale when they make the ships bigger, even though they also run the risk of getting the ship stuck in the Suez Canal. And they were able to kind of boss their regulators around, and impose the costs onto the public, because there’s just three of these cartels.

If you’re an American whose insulin prices have gone up 1,000%, it’s easy to think that you’re angry about pharma. But it’s really market concentration that allowed the pharma companies to, on the one hand, raise the prices without worrying about competitors, and on the other hand, suborn their regulators so they could get away with it. When people are atomized that way, it’s very hard for them to make common cause. Diabetics, or people who are angry about shipping delays, or artists, they’re just not big enough to be a political force on their own. But united they are a force to be reckoned with.

GIBLIN: It’s completely unsustainable. I think we need to have a fundamental rejection. And to achieve that, we need to see that we’re all part of the same fight. [The scholar] Jamie Boyle often talks about this parable about the origins of the term ‘ecology.’ There used to be people who cared about owls, and people who cared about the ozone layer. But it wasn’t until this unifying notion of ecology came about that everyone realized that they were in the same fight. And I think we’re really starting to see it. Even Republicans are showing that they’re unhappy now about the levels of corporate concentration. People are noticing and feeling it. And so we’re very close, I think, to being able to have a movement against chokepoint capitalism.

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TIME: Right now, it looks like Western economies are heading toward tough times. What does chokepoint capitalism look like in an era of economic recession?

DOCTOROW: We might very well see what we saw during COVID relief, which is firms getting huge amounts of public money, still making their employees redundant, still squeezing their suppliers, creating huge bonus pools for their executives and then returning the rest in the form of special dividends and stock buybacks.

We have to recognize that these large firms are actually a drag on the economy, and not a source of pride. Shadowy shareholders, located in tax havens and behind numbered companies, can extract value from the American cultural sector [for example] at the expense of both audiences and producers.

TIME: What do you see as the logical end point for this system if it’s allowed to continue without a course correction?

GIBLIN: If you ignore policy, you don’t get positive outcomes, you get policy debt. And that debt has punishing interest. When the interest mounts high enough, you have a default, and those defaults are never pretty. And so I think we’ll see policy defaults all across the board, if we don’t address monopoly.

The sterling example of this is the climate emergency, where, year on year, we’ve known what was wrong. And year on year we’ve been paralyzed on action, even though we knew what we had to do. The climate emergency didn’t go away just because we decided not to do anything about it. In fact, it got worse. I’m supposed to speak at a conference in Miami in October, and now I’m wondering whether there will be a Miami Airport to fly into [due to Hurricane Ian].

TIME: Meta was once a poster child for monopolistic business practices, with its acquisitions of Instagram and WhatsApp. But now TikTok is really putting Meta’s business under threat. What would you say to the argument that the rise of TikTok shows competition is still possible in this economy?

DOCTOROW: It’s possible that you’ll still get a changeover of the giants in these extremely rare punctuated events. But I think this proves that [Meta CEO] Mark Zuckerberg’s dominance was not driven by his singular brilliance. It wasn’t that his insights allowed him to build a service that just out-competed all the rest. He bought his way to dominance. The thing that actually did finally challenge his dominance was a firm that wasn’t for sale. We could make lots of firms “not for sale” just by prohibiting anti-competitive acquisitions. That is the mechanism by which old firms are toppled by new ones.

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TIME: This year, we’ve seen leaps and bounds in AI programs that can turn text into images. Many of these programs, which are owned by big tech corporations, look likely to further disrupt the livelihoods of all kinds of artists. What problems do you foresee with tools like Dall-E being owned by big tech corporations?

DOCTOROW: There are equitable and inequitable ways to arrange the outcomes of automation. This is the lesson of the Luddites. The Luddites were not anti-loom any more than Osama bin Laden was anti-aviation. The Luddites were organized around the inequities of the social arrangements surrounding the products of automation. And in the same way, there are equitable and inequitable ways to arrange the dividends that arise from machine learning-based creativity tools. The large firms that dominate this have a long track record of using automation to abuse workers rather than to share fairly with them. I think it would be naive to expect otherwise, this time around.

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Write to Billy Perrigo at billy.perrigo@time.com

TIME Ideas hosts the world's leading voices, providing commentary on events in news, society, and culture. We welcome outside contributions. Opinions expressed do not necessarily reflect the views of TIME editors.