I knew a thing or two about the concept of "free markets.” I had an understanding that free markets were competitive in nature, prices were determined by forces of demand and supply, there was freedom of choice, and less government intervention, and as a result that promoted economic efficiency, innovation, and social welfare. However, I did not truly appreciate the depth and understanding of the evolution of this concept among economists, until I became a journalist in residence at the University of Chicago’s Booth School of Business.

My time spent during the last three months at Booth - thanks to the Stigler Centre - gave me a new perspective about this evolving concept and why it matters even more today. I had a good time studying with MBA students, to reflect, and ask basic questions that ordinary citizens, for whom journalists like me owe awareness and truth, want to know. Questions like whether markets are free today, free from what?

To be fair, I had read about the work of George J. Stigler, the 1982 laureate in Nobel Memorial Prize in Economic Sciences for whom the Stigler Center was named after. George Stigler is known among many global economists to promote ideals of free markets just like many other University of Chicago faculty members are.

In his 1971 paper, the Economic Theory of Regulation, Stigler said the state is a potential resource or threat to every industry in the society. With its power to prohibit or compel, to take or give money, the state can and does selectively help or hurt a vast number of industries. At the core of his argument was that regulation is acquired by the industry and is designed and operated primarily for its benefit.

Shockingly, this is truer today than it was 50 years ago when he wrote his paper. Increasingly, we see more and more regulations that benefit the few rather than the majority, mainly because big corporations know too well how to capture regulators and politicians.

When Stigler made these arguments, regulations were hurting the masses. Oil import quotas, for instance, were costing American taxpayers $5 billion annually, and the domestic airlines had received "air mail” subsidies worth $1.5 billion, although they did not carry mail. Presently, it is a no-brainer that the shift has gone to Big Tech, which continues to receive billions of dollars in tax subsidies from different states and countries across the world that want to attract them to invest, while ignoring their monopolistic practices.

Giant technology companies such as Amazon, Google, Apple, and Facebook continue to get billions in subsidies. Just recently, Amazon was awarded a $1 billion subsidy in a rural American community of Oregon. The big debate around every Chicago Booth corner that is asked every now and then is whether these kinds of subsidies allow companies to create overall benefits to the economy. It is true that these companies create thousands of jobs, but it is also true that these companies’ core interest is to maximize shareholders wealth, and limit entry of those up-and-coming companies that would otherwise have created greater efficiency in markets.

At the recent Antitrust conference organized by the Stigler Centre, Barry Lynn of Open Markets said and I quote, "Google and Amazon have too much power. They have used this power to arbitrarily deny people their rights.” Perhaps another person who put it better is a Canadian author, Cory Doctorow who said, "Apple buys more companies than we probably buy groceries.”

You would think all these companies are doing better for economies. Take Uber and Lyft whose entry into the market has proven to increase congestion and road usage. Researchers John Barrios, Hanyi Yi, and Yael Hochberg in 2019 showed that Uber and Lyft also increase the number of fatal traffic accidents by approximately 3 per cent (987 lives). At $9.6 million per life, the cost equals $10 billion.

Beyond America

This is not an American or European problem. Too-big-to-fail companies are everywhere. The telecommunications sector is an example where we have seen market concentration in Africa growing. There is a reason why Safaricom is the biggest telecommunications company in Kenya, and why MTN has more power than almost every other player in most markets where it operates. Although this does not imply that these companies’ services and products have not benefited the masses, it means they know all too well how to play the regulatory game.

The story goes a few years back when rival operator Airtel accused Safaricom of using its oversized position to squeeze out competitors, such as charging for cross-network money transfers and not allowing its agents to host rival mobile money services. Safaricom controlled 64.2 per cent of Kenya’s mobile telephony service sector by 2021 with the remaining portion shared among four market players. However, as of the second quarter of 2022-2023, Safaricom dominated the market by 66 per cent share in mobile subscriptions, mobile broadband subscriptions by 65 per cent, and the company’s most selling product M-Pesa was the leader in mobile money services at 96.8 per cent.

The big question is how do we fix the functioning of the markets in a time where everything has gone south.

Professor Luigi Zingales whose "Crony Capitalism” course has become so popular over the years – which myself I had fun attending during this last Spring quarter – has been a strong advocate of how to fix markets and break monopolies.

"The Big Tech revolution poses challenges including to free markets - and it is foolish to ignore them,” he wrote in Imprimis Publication in 2018. "While we no more want to go back to a world without smartphones than we do a world without cars, the question is whether we should manage this technology so that it helps all of us and doesn’t become an end in itself.”

It makes sense to subject Big Tech to antitrust scrutiny because without this technology companies will go away with actions that create barriers to entry of new players to maintain their grip in markets. To eliminate these barriers, Luigi argued, would be pro-competition and pro-free market, not interventionist.

History suggests that Facebook and Google are not part of Microsoft today because of antitrust scrutiny. The same can be said in the case of IBM - if it weren’t for the US Department of Justice IBM wouldn’t have lost its supremacy and we wouldn’t have probably witnessed a PC revolution. Therefore, as Microsoft attempts to acquire Activision Blizzard in the largest gaming deal in history to maintain its power, authorities in South Africa, US, UK, Australia and other markets should not allow this.

There are also lessons we can borrow from Europe where strong antitrust and competition rules have, to a larger extent, helped tame the growing power of Big Tech and other too-big-to-fail corporations.

In Africa, authorities in select countries such as Ghana, Nigeria, South Africa, and Kenya have, over the past few years, been threatening Big Tech such as Meta, Google, Airbnb, and Uber with antitrust lawsuits.

We can perhaps draw a few lessons from the National Communications Authority (NCA) and MTN Ghana case. In 2020, the Authority embarked on breaking the MTN monopoly with "corrective measures.” The Authority classified MTN as a "Significant Market Player” - MTN then controlled more than 57 per cent of the voice market share, as well as more than 67 per cent of the data market share. MTN threatened NCA with a court case but the High Court dismissed the case, allowing the Authority to "review and approve all charges by MTN”, set caps on what MTNcan charge for its services, and also impose a 30 per cent interconnect rate for two years in favour of other "disadvantaged operators.”

That being said, antitrust and competition rules in Africa are lacking and remain less enforced even in countries where they exist.