You're Probably Getting Screwed by Musk's Monopolies
The origins of a 21st-century coup
Welcome to You’re Probably Getting Screwed, a weekly newsletter and video series from J.D. Scholten and Justin Stofferahn about the Second Gilded Age and the ways economic concentration is putting politics and profits over working people.
In recent days the power that billionaire Elon Musk intends to wield in the Trump Administration has begun to come into terrifying focus. Musk’s team of 20-somethings, none of whom are actual government officials, gained access to the most sensitive payment systems at the US Treasury Department.
The most high-profile consequence of this so far has been the shut down of the U.S. Agency for International Development (USAID), which provides humanitarian services across the globe. USAID staff, including those in war zones, are unable to access critical internal systems, but where this all goes is not yet known. Nathan Tankus who writes the Notes on the Crisis newsletter has been following the issue closely and has made posts about this issue available to free to readers.
Musk’s actions have drawn lawsuits from law enforcement officials, public sector unions and advocacy organizations, but I want to focus on how we got here because as journalist Luke Goldstein wrote in a piece on Musk’s power a couple years ago, “If federal regulators had done their job, we would never have gotten to the point where one fickle titan has so much unfettered power.”
Lets start with Musk’s bid to monopolize space. His company SpaceX currently controls about two-thirds of all satellites in space with 6,500 satellites in near-earth orbit currently and regulatory approval for up to 12,000. Musk’s ultimate goal is to build the constellation out to 42,000 satellites. These satellites are part of SpaceX’s Starlink program that provides internet coverage across the globe, particularly to rural communities and countries without reliable cell tower service. The service has been critical to Ukraine in the war against Russia, but is also a reliance Musk has exploited before to make geopolitical decisions.
SpaceX has benefitted from lax regulation by the Federal Communications Commission (FCC) which approved those 12,000 satellites with little oversight and also recently gave approval to move them closer to earth than satellites used by governments and satellite TV providers like Dish. This could give SpaceX yet another unfair advantage over future competitors. Anticompetitive practices like predatory pricing and exclusive dealing are also foundational to SpaceX’s monopoly. Starlink is providing below cost services to internet customers (losing 50 percent on its services) as well as through its transporter service that allows small satellite companies to book slots on a rocket launch with deeply discounted prices. SpaceX customers like government agencies and other satellite companies also face exclusionary contract provisions like right of first refusal that blocks rivals from competing for customers.
Space is not the only industry Musk dominates as Tesla accounts for nearly half of electric vehicle sales in the US, which gives Tesla immense control including the ability to restrict repair of its vehicles. A class action lawsuit brought by Tesla customers alleges Tesla has built a monopoly over repair by requiring diagnostic and software updates only the company can provide through a small number of authorized service centers. These are the same kinds of tactics John Deere has used to raise repair costs on farmers according to a lawsuit from the Federal Trade Commission and the states of Minnesota and Illinois.
Tesla, along with SpaceX, have also benefitted from billions in government subsidies and federal contracts, which not only pad a companies bottom line but can enable conduct like SpaceX’s predatory pricing. Think of the strategic advantage Amazon had for years when it was not required to collect sales tax on its online sales. According to Good Jobs First’s Corporate Subsidy Tracker, Tesla has received $2.8 billion in state and federal subsidies and another $466 million in federal loan guarantees. Meanwhile SpaceX holds over $15 billion in federal contracts.
Musk’s acquisition of Twitter might have focused on his plans for reinstating Trump on the platform and debates about speech, but the company fits neatly into what a law review article described as the billionaire’s “corporate data empire.” Big Tech companies at their core are massive surveillance structures that enable the monetization of data. Our privacy and antitrust laws, and their enforcement, have mostly not kept up with this development. While Musk’s access to federal payment infrastructure might be framed as part of his ideological war against federal spending the same way his Twitter acquisition was framed in political terms, it could also unlock a new treasure trove of data for his various businesses furthering his already immense wealth and monopoly power.
Some of the things Musk’s companies have done are truly innovative and revolutionary. What a system like Starlink could do to bring internet service to forgotten corners of the US and the world is extraordinary. Yet as JD has pointed out on artificial intelligence, monopoly power neither guarantees nor is necessary for technological advancement and in fact often threatens it. What happens once SpaceX and maybe Amazon have captured all of the finite space in our atmosphere?
This is why antimonopoly matters. Corporate welfare handed out by states can be the start of enabling democracy-breaking monopolists. Allowing companies to engage in predatory pricing helps shift power from the people to the oligarchs. Elites and many politicians want you to think these issues are arcane or technical, but antimonopoly movements of the past were people-powered movements. It was farmers that gathered together to challenge the rail monopolists of the Gilded Age and small businesses that stood up to the chain stores during the Great Depression.
None of this is necessarily an immediate fix to the crisis, but it is critical to understanding how we got here and how we can avoid it again. And maybe it can be part of the solution in the short-term. What if a group of state attorneys general began launching antitrust investigations into SpaceX’s predatory pricing and exclusive dealing or Tesla’s repair restrictions? Maybe it can help us from getting screwed by the bro-ligarchs.
YOU’RE PROBABLY (ALSO) GETTING SCREWED BY:
Trade Wars
Are there going to be tariffs? Who knows? The trade war with China from the first Trump administration resulted in an agreement with several phases. Phase One was never implemented.
For all things trade, we recommend listening to Lori Wallach (from ReThink Trade) and her podcast.
As previously mentioned, the Ag economy is in a recession. Here’s an example of how the tariffs could hurt agriculture in a state like Iowa, where its agricultural exports are valued at $13.2 billion in 2020.
Alcohol
This one hurts… Alex Falcone has a great series called “Is it a scam, yep…” Here’s his post on the alcohol industry.
Elon Musk Again
Despite Elon’s post, Direct File was still working, if you lived or worked in one of the 25 participating states in 2024.
JBS
JBS, known for their corruption, has agreed to pay $83.5 million to settle antitrust claims that it conspired with other meat-packing companies to curb supply in the U.S. beef market to artificially inflate prices.
Good News
Book Club is Back!!!
February’s book is “Monopolized: Life in the Age of Corporate Power” by David Dayen, the executive editor of The American Prospect.
You can purchase “Monopolized” here. And be sure to send in your questions for David by commenting below.
BEFORE YOU GO
Before you go, I need two things from you: 1) if you like something, please share it on social media or the next time you have coffee with a friend. 2) Ideas, if you have any ideas for future newsletter content please comment below. Thank you.
Break ‘Em Up,
Justin Stofferahn
Please also look into the unusually long “life” of so-called organic soybeans. Despite increasing demand for organic sources for alternate milks and the few organic farmers in Iowa and surrounding states, there seems to be a limitless supply of so-called organic soymilk. Would you look into this? Are we being scammed and possibly risking our health to hidden Roundup on our soy beverages?
Thank you,
DJ Davis
Thank you for promoting Bookshop.