Taken, not Earned

Anti-monopoly hits Davos

Welcome to The Counterbalance, the newsletter of the Balanced Economy Project.

Oxfam gained wide global media coverage on Monday for its report Inequality Inc., a rich and powerful anti-monopoly document that breaks new ground in a grand new narrative. We are delighted to have collaborated on this, notably on Chapter 2, entitled A New Era of Monopoly Power.

We follow this today with an extensive anti-monopoly package of our own, in partnership with SOMO, Global Justice Now, and LobbyControl. It’s called Taken, not earned: how monopolists drive the world’s power and wealth divide.

How Monopolists Drive the World’s Power and Wealth Divide

It exposes how the world’s biggest companies, and the world’s richest people, all have a dirty secret: monopoly power. It also publishes brand new global research and data on markups (the gaps between prices and costs) and on lobbying in the EU and United States. It also points to new research published today on how top regulators have failed to tackle rising corporate concentration.

This is more than just a report, in fact:

1. Our main report Taken, not earned: How monopolists drive the world’s power and wealth divide

2. Media briefing - a shortened version of the main report - also In French

3. Case Study: Finance and Monopoly Power

4. Case Study: Big Tech and Monopoly Power

5. Case Study: Big Pharma and Monopoly Power

6. Case Study: Big Agriculture and Monopoly power

7. Case Study: How monopolists dominate retail

8. Case Study: Monopoly Power in our Energy markets

Now, the Press Release:

WEF’s wealthiest exploiting consumers and small businesses with 50% markups

• Over a five-year period, the average markup for the world's top 20 companies is reported to be 50% compared to 25% average for smaller firms.

• Amalgamated market value of the top 20 companies is equivalent to the GDP of France, Germany, India, Brazil, South Africa and the United Kingdom combined.

• Wealthy billionaires and top companies, including WEF partners, use their power to effectively rip off consumers, workers, citizens, and suffocate smaller businesses.

Davos, Switzerland, Jan 17, 2024 — The world’s top companies are using their monopoly power in their markets to hike prices and keep them high amid inflation and a cost of living crisis. In the five years to 2022¹, for the world’s top 20 companies, the average “markup”² has risen to around 50 per cent. This is double the 25% average markup for the bottom 50% of firms studied. Of these 20 companies, 14 are partners of the World Economic Forum³, which says it is committed to improving the state of the world⁴.

The findings are part of a new report, Taken, not earned: How monopolists drive the world’s power and wealth divide, released to coincide with the Davos gathering, by four non-governmental organisations: the Balanced Economy Project, SOMO, Global Justice Now and LobbyControl. The research focuses on the 20 biggest firms by market capitalisation in the world – many of which are owned or controlled by the top 20 billionaires on the Forbes Rich List. Of the world’s top 20 firms, at least 14 are WEF partners, meaning they sponsor the event and are involved in shaping the debates at the annual meeting in Davos, which in turn have wider ramifications for society.

These WEF partners are Apple, Microsoft, Alphabet/Google, Amazon, Meta/Facebook, Eli Lilly, Visa, Novo Nordisk, Walmart, ExxonMobil, JP Morgan Chase, Johnson and Johnson, LVMH Moët Hennessy Louis Vuitton and Saudi Basic Industries (SABIC). Behind these companies are many of the world’s wealthiest and most powerful monopolist billionaires, including Bernard Arnault, Elon Musk and Jeff Bezos.

The research also shows the rising lobbying power of these firms, which rely on a lobby network of 236 organisations, confederations, business associations and think tanks in Europe. Of this, they spend €118.3 million in the US and €36.9 million in the EU annually.⁵ Big Tech is by far the biggest spender on lobbying among the world's top 20 corporations, making up 82 percent of the total (€30.3 million) in the EU, and 58% (€61.1 million) in the US. But these numbers underestimate the scale of spending on political influence by the world’s 20 biggest corporations. The structural power of monopolies adds to their political influence, as they can exert great pressure on politicians due to their position in the economy and society, even without direct advocacy work.

In spite of the severity of the world’s monopoly problem, regulators across the world have been mostly unwilling to tackle the root of it.⁶

Nicholas Shaxson, a director at the Balanced Economy Project and a co-author of the report, said: “The new data reveals how some of the world’s richest billionaires use their power to extract money from society. Monopoly is pivotal to the enduring and extreme power and wealth of the world’s billionaires and biggest companies. These firms are able to set prices in the markets they dominate significantly higher than the bottom 50% of companies. Our governments have let this power grow almost unchecked for decades: this report shows how we can turn the tide.”

The Taken, not earned report exposes how the biggest companies charge the highest markups while many smaller firms struggle to eke out any profit. Markups for the top 100 averaged 43 percent since 1995 versus 24 percent for the smallest 50 percent of firms studied. In the past three pandemic-hit years, markups rose to almost exactly 50 per cent for the biggest companies versus 25 per cent for the smallest.

Nick Dearden, director of Global Justice Now, said: “The extreme wealth of the multi-billionaires meeting at Davos is bad for us all. These robber barons have subverted our democracy, making decisions about the food we eat, medicines we use and information we receive. Meanwhile, the public effectively pays a private tax to these billionaires through the excessive profits they demand, even amid a devastating cost of living crisis. Billionaires' wealth is not built on brilliant entrepreneurship, but rather on having too much power over society - it's time we regulate them and their monopolies out of existence.”

The report's authors found that the average markups of the biggest companies have seen a steady rise over the period of 1995 to 2022, while the average markups of smaller companies have barely changed. Beyond higher prices, the research exposes how monopolists hurt small businesses, affect people's fundamental rights and distort democratic processes.

Margarida Silva, SOMO researcher, said: “The world’s richest individuals and their companies have built positions of market and strategic dominance where they've become too big to fail, ‘too big to care’, and too big to trust. Tech billionaires, like Jeff Bezos and Mark Zuckberg, are the poster boys of it. As Amazon, Meta, and others descend upon Davos to clean up their image and shore up their power, we must not forget their wealth is built through monopolisation without really caring about who it hurts - whether it be workers, users or democracy itself.”

The report also shows the different dimensions of the harms caused by monopoly beyond higher prices, as well as how far monopoly power⁷ extends across the world economy, the tricks monopolists use, the hidden ‘system of monopoly’ that protects billionaire power, and what can be done about it.

Max Bank, Researcher and Campaigner at LobbyControl, said: “The world's top 20 corporations spend more than €155 million annually on lobbying to influence political institutions in the US and the EU. The structural power of monopolies adds to their political influence. The combination of monopoly and lobby power undermines the democratic process.”

Laws, such as competition policy, can be used to challenge harmful monopoly power by breaking dominant firms up, or by enforcing tighter merger controls. The Balanced Economy Project, SOMO, Global Justice Now, and LobbyControl are also calling on governments to use public interest regulation, such as bringing into public ownership and / or control dominant firms that provide a public good or essential service, and treat them as a public utility; rewriting international trade, investment and finance regimes to curb excess concentrations of corporate power and associated harms; and, restricting corporate monopolies’ lobbying influence by strengthening conflict of interest rules and by enhancing transparency of political institutions. 

Notes to editors

Taken, not earned: How monopolists drive the world’s power and wealth divide
Release date: January 17 2024.

Additional resources

Monopoly by numbers

Sources are referenced in the Monopolists and Markups Media Brief, which accompanies this press release and the Taken, not earned report:

• Five of the world’s richest 20 billionaires are in retail and luxury, while two of the world's biggest companies are in that sector.

• Seven of the world’s richest 20 billionaires are in Big Tech, along with seven of the world's biggest companies.

• One of the world’s richest 20 billionaires is in finance, while three of the world's biggest companies are in that sector.

• Two billionaire families on the top 20 billionaire list are linked to Energy, and two of the world's biggest companies are in the energy sector.

• No billionaires in the top 20 billionaire list are from Big Pharma, but five of the world's biggest companies are in the sector.

• The amalgamated market value of the top 20 companies on the Taken, not earned report list is US$18 trillion. This is equivalent to the GDP of France, Germany, India, Brazil, South Africa and the United Kingdom combined.

• The US$5.1 trillion market value of the two biggest companies in the world, according to the report authors, is equivalent to the combined wealth of 53 per cent of the world population – or 2.8 billion people.

• The world’s 2,640 billionaires collectively own significantly over twice the wealth of the bottom 2.8 billion.

• The world’s richest person, Bernard Arnault, of the world's largest luxury goods company, LVMH, has well over a million times the wealth of the average person in the poorest half of the world’s population.

1. Authors’ calculations based on Worldscope / Refinitiv data. The list of top 20, top 100 and bottom 50% of firms was calculated separately for each year from 2018-2022, and ranking was according to market capitalisation. The total number of firms in our sample in 2022 was 33,953 (the number was different in different years). The total population of firms in the relevant database was approx. three times larger, but we excluded many firms because they did not have a recorded market capitalisation.

2. One of the clearest ways to show how monopoly power is used to extract wealth is through what economists call “markups”: the difference between how much a company charges for a good/service versus how much it pays to produce it. Excessive markups are like private taxes, paid by the poor to the rich.

3. Saudi Aramco is described as a partner since Saudi Aramco owns 70% of Saudi Basic Industries (SABIC) shares. https://www.weforum.org/partners/#search

4. “For more than 50 years, the Forum has engaged global Partners to drive significant impact – creating historic initiatives, industry breakthroughs, economic solutions and tens of thousands of projects and collaborations – improving the state of the world.” https://www.weforum.org/impact/

5. LobbyControl analysis of the 20 largest corporations' lobby power in Europe and the US, based upon transparency registers in the European Union and the United States, for 2021, 2022 and 2023.

6. For example, ground-breaking new research from the Hertie School shows that the European Commission only prevented 0.7 percent of mergers between 2005 and 2023. ‘Merger review intervention rates in the EU’ by Brianna Rock, Hertie School, published January 17, 2023.

7. Dictionaries often define monopoly as a single seller in a market, but this is too narrow to capture reality, and inaccurate in law. The report authors define it as some regulators do: a monopoly is shorthand for a firm with significant and enduring market power, and which can act independently without needing to worry too much about the responses of competitors, customers, workers, or even governments. Additionally, for example, profit-maximising firms with enough market power can charge higher prices without worrying that competitors will undercut them and steal market share For example, the US Federal Trade Commission says: "Courts do not require a literal monopoly before applying rules for single firm conduct; that term is used as shorthand for a firm with significant and durable market power - that is, the long term ability to raise price or exclude competitors. That is how that term is used here: a "monopolist" is a firm with significant and durable market power." See Monopolization Defined, FTC, undated. The European Commission has defined dominance as "a position of economic strength enjoyed by an undertaking, which enables it to prevent effective competition being maintained on a relevant market, by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of consumers." See also Competition is Killing Us, Michelle Meagher (2020), especially pg79-83.