This article is taken from the February 2025 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issues for just £10.
The stocks were a powerful deterrent in medieval England. The offender was physically constrained in a heavy wooden trap for hours, humiliated in front of the community. “There was a reason why the stocks were placed in the market square,” explains Tim Cowen, a leading competition lawyer at the firm Preiskel, who lectures in the history of regulation at Oxford. “They punished people who tried to rig the market.”
Long-forgotten offences such as “engrossing”, “forestalling” or “regrating” were economic crimes already well established in 12th and 13th century England, as the economic historian Sir WJ Ashley recounted in 1888.
“Engrossing involved price-fixing by rigging the supply side of a market, and as a crime dates back to Roman times,” says Cowen. “St Thomas Aquinus talks of a ‘just price’; and for many scholars that is taken to mean a market price.”
Today, on parts of the academic left, the market is regarded as a malevolent phantasm, or “some ghostly force”, as the sociologist William Davies puts it. But the medieval citizen took a far more nuanced and practical view. Looking at those ancient crimes and punishments today, several remarkable things stand out.
One is the widespread acceptance that whilst the market may be an abstract concept, it nevertheless has clear rules. Attempts to manipulate markets will be made, but policing them is important, since market manipulation makes the wider community poorer in some way. In other words, rigging the market was a crime against the people. This shows a remarkable sophistication and moral clarity. Is that something we have lost sight of today?
Maurice Saatchi thinks so. He writes, “The unintended consequence of globalisation has been cartelisation — a huge imbalance of power between the individual customer and the giant corporation.”
And of all these powerful forces, it is the largest technology companies who wield the most clout. Big Tech companies enjoy a turnover larger than many nation states. Less well known is how they have done it: by replacing an open market, or by subsuming an open marketplace into a privately controlled exchange.
For Amazon, it is Amazon Marketplace, where consumers buy from third-party traders.
Amazon enjoys a unique ability to manipulate both supply and demand, something the Soviet Union’s Gosplan department could only envy. The giant retailer conspires with China in the destruction of Western industrial capacity. We get cheap goods, of dubious quality, and at an enormous external cost in economic resilience.
Where the market rigging is most evident, however, is in the giant electronic trading places where online advertising is bought and sold. As the influential legal scholar Dini Srinivasan puts it, “these are the largest unregulated exchanges in the world”. Over half of the $800 billion spent globally on digital ads is sent to two companies: Google ($305 billion annual revenue in 2023) and Meta ($134 billion), which owns Facebook and Instagram.
The remaining portion is contested in an open marketplace. Tim Cowen is helping litigate on behalf of an alliance of small, largely British, web companies that operate in the open market. Google and Meta call these exchanges “auctions”, and so they ought to be the easiest market to understand, for what could be simpler than an auction? Except they’re not really auctions at all.
Former Harvard and Microsoft economist Ben Edelman says, “I have a PhD in economics and wrote the first paper on the game theory of online auctions — but my head was spinning with the complexity. There were the rules of how this market was supposed to work and how Google said it worked, versus the ways I could see Google was cooking the bids, including fake bids and adjustment factors.”
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These practices have emerged into the daylight, via the courts. The United States has two antitrust lawsuits against Google. The first of these, filed at the end of Trump’s first term, concluded that Google enjoyed a monopoly in search. The second US v Google trial should interest us even more, as it explores Google’s real money-making engine, the advertising “auctions”. What the Court heard last autumn was a revelation.
In a competitive marketplace, buyers and sellers of advertising vote with their budgets for the best deals. That would oblige Google, as the middleman, to reduce its margins to compete. Instead, Google fixed very high margins, simply because it could. As one executive admitted privately in an email disclosed as evidence to the Court, “I think we are all in agreement that ‘exchange functionality’ is not worth 20 per cent [margin].”
This was “an extraordinary admission of anti-competitive conduct”, wrote Tom Blakely, an attorney at the global law firm Proskauer Rose, on the Big Tech on Trial substack.
Medieval peasants would be bewildered by it all and reel at modern jargon such as “demand-side platform”. But they would instinctively recognise that a market was being rigged. Supermarkets can only look at margins of 20 per cent or more with envy: in big retail, the margin is closer to five per cent.
The most damning subplot of the trial reveals how, when publishers innovated and introduced using a method called “header bidding” for a very short time, a purer market emerged. Both buyer and seller were better off, because the middleman’s margin was reduced. Google and Meta then colluded to snuff out the attempt.
One reason we don’t notice is because Big Tech’s swollen margins are hidden in the price of goods
“We see that over and over across many markets,” says Edelman. “Tollbooth middlemen putting themselves between businesses and their customers and extracting a lot from both sides — because they can.”
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One reason we don’t take more notice is that the harm is invisible: Big Tech’s profits are reflected in the prices of the goods and services that we use. We just don’t immediately feel the pain. “If Google were forced to charge lower prices for advertising, through market competition, the price of your hotel room — and car, and laptop, and even plumber and shoes — should come down,” says Edelman.
Our own regulator, the Competition and Markets Authority, attempted to put a number on this excessive profit, over and above what it would be in a competitive market. It estimated that in 2018, the excess profit from the digital advertising market cost each household around £500.
Since then, the Google-Meta duopoly’s revenue and profits have more than doubled, so it’s not unreasonable to put this figure at over £1,000 today. That’s even more than Net Zero costs us. The CMA’s new Digital Markets Unit, beefed up with extra powers, has opened a probe into Google’s search business.
The historian Fernand Braudel wrote of a layered world, with markets in the middle, and capitalism above it.
The market was easily understandable, he wrote, “a sunlit world”, whilst the machinations of capital were not. Here, “certain groups of privileged actors were engaged in circuits and calculations that ordinary people knew nothing about”. Perhaps the genius of the Big Tech platforms may be in making the market just as opaque, and just as difficult to understand.
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But obscurity only tells part of the story of how these practices have flourished. Another is the Panglossian utopianism of the free market theorists, who insist that policing markets is more harmful than any crime they may harbour. For 40 years the Chicago school of laissez-faire held sway. But this period now looks like the anomaly.
At the end of the 19th century, the United States revived market manipulation as an economic crime: Theodore Roosevelt made it the centrepiece of his Square Deal. He established agencies to break up the giant cartels and monopolies enjoyed by Carnegie and Rockefeller and the other “robber barons”. (The phrase comes from German: Raubritter, the feudal robber knights who charged illegal or excessive tolls for using a road.)
“In the twentieth century, monopolies were either regulated or nationalised. The United States passed the Sherman and Clayton Acts. We preferred nationalisation and direct control,” explains Cowen. Nationalisation isn’t an option now, but as globalisation is reassessed, the pendulum has swung back. Today, Donald Trump and his vice president JD Vance fulminate against tech monopolies: Vance wants Google broken up.
Cowen agrees that the era of laissez-faire, where policing economic crimes was out of fashion, was a historic error.
“Adam Smith’s context was sociological: the basic principle of his Theory of Moral Sentiments was that people would be honour bound because they had made a promise, and they cared about the opinions of their peers,” he says.
Encouraged to think of themselves as pioneering supermen, today’s technology CEOs don’t really regard the rest of us as peers. So we shouldn’t be surprised then that market rigging proliferates in a regulatory environment that doesn’t deem it worth punishing: “Liberalising the world market without a policing system is insane. You’re opening up your economy to be hollowed out, and you get nothing from it.”
Today, British conservatives are in opposition, and must restore their historic reputation for economic competence. Yet they remain cowed by the utopian, theoretical dogma that defends the monopolists, cartels and crony capitalists of Big Tech and environmentalism. They only need to look to their American counterparts to see how the public has responded to taking on the market-riggers. They should make it a priority and perhaps, for good measure, bring back the stocks.
