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The Weird Story of Standard Oil

·4 mins
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Once upon a time, the US government enforced antitrust legislation. One of the most famous examples of this is the case of Standard Oil.

To understand what happened to Standard Oil, we need to take a short walk back in time through history. The year is 1890, and the US Congress is a well-functioning body with rational officials who’s brains still function at a high enough level to pass sensible legislation.

The Sherman Antitrust Act passed the Senate by a vote of 52-1, as most politicians agreed that competition is good and business should not engage in anticompetitive behaviour. Few would disagree with that assertion, and those who do tend to be the greedy selfish type who would love to watch the world burn if it means they get a few more dollars to hoard in their bunkers.

The general consensus in the government at the time was that society should move forward for everyone, not just like 3 or 4 guys who own more than 50% of the population.

John D. Rockefeller
John D. Rockefeller in 1872, after founding his new startup.
Fast forward to 1896, when John Rockefeller, founder of Standard Oil, decides it’s time to retire, but he retains his position as president and shareholder. By 1904, Standard Oil has grown to control 91% of refining capacity and 85% of sales for oil & gas products.

Now here’s where it starts to get interesting. Standard Oil was on the radar of antitrust regulators faily early on, but Rockefeller was a slippery man who used some legal tactics and maneuvering to make it harder for the government to do anything about the obvious monopoly Standard Oil had. Some of those tactics included converting Standard Oil into a trust in 1882, 8 years before the Sherman Act passed.

Unfortunately (or rather, fortunately, if you read on) for Rockefeller, US lawmakers didn’t stutter and the Sherman Act explicitly prohibited using trusts to get around limits on monopolies (hence the term “antitrust”).

In 1899 Rockefeller tried one more trick which was to convert the trust into a holding company composed of 41 other companies. That didn’t save them, however, and even though Standard Oil’s market share began to fall, and by 1911 the Supreme Court ordered Standard Oil to be broken up into 34 independent companies.

Up to this point, Rockefeller was already insanely rich. But after Standard Oil was broken up, his wealth grew immensely. By 1913 (2 years after Standard Oil was broken up), his wealth was about 3% of the total US GDP.

To this day, no one (not Elon, not Jeffrey) has come anywhere close to Rockefeller in terms of wealth as a percentage of GDP.

The weird thing that happend after the breakup of Standard Oil was that many of the baby Standard Oils went on to become very successful, and they competed with each other.

Baby Standard Oils
Baby Standard Oils, in 2022

Although Rockefeller’s wealth doubled in a short matter of time after the breakup of Standard Oil in 1911, his wealth peaked in 1913 and he spent the rest of his 40 years or so relaxing on his baller estate in Westchester County.

Even today, some of the Standard Oil babies make up some of the biggest companies in the world. Notably, ExxonMobil, Chevron, and Marathon are among the top 50 companies in the world by revenue.

When those companies aren’t busy purveying climate disinformation, they’re quickly destroying our planet by filling our air, soil, and water with toxic byproducts. Although I guess that’s not really what this story is about.

Fast forward to today #

And now here we are, once again faced with a situation where a few entities control a significant share of their respective markets. Google has a monopoly on web search, advertising, web browers, and Apple and Google together have a duopoly on internet connected mobile computers (aka “cell phones”). There are more examples, but those are the big ones.

App Store
You can have any flavour of ice cream, but only if it's Apple Approved™

You can certainly make some weak arguments against that, but you probably can’t do it without doing a Google search and seeing some Google ads with Google Chrome, and if you’re on mobile you’re either using a Google phone or an Apple phone, and if you’re on iOS then you have to use Apple’s Safari to browse the internet (all the non-Safari branded browsers on iOS are still Safari, with different skins, including Chrome and Firefox and everything else, which is why so many websites don’t work properly on iOS because Safari on iOS is intentionally crippled to force you to install “apps” instead), and you can’t install a proper adblocker on iOS because Apple doesn’t let you choose what software you’re allowed to run on your own hardware that you purchased and own and yet it’s still not really yours because if you do anything with it that Apple doesn’t like it will stop working and you’re SOL.

Okay, I’m done now, thanks for reading.