The New Gilded Age

We've been here before. At the end of the 19th century, large industrial corporations captured key economic sectors and, increasingly, the political systems meant to regulate them. The Gilded Age monopolies—Standard Oil, the railroad trusts, US Steel—concentrated wealth and power in ways that threatened democratic governance. Breaking them up required decades of political struggle, culminating in the Sherman Antitrust Act, Progressive Era reforms, and ultimately the Standard Oil breakup in 1911 [^5]¹.

Europe experienced parallel dynamics during this period. The "New Imperialism" era (1870-1914) saw concentrated industrial capital driving colonial expansion, creating the competitive tensions that culminated in World War I ². As historian J.A. Hobson documented in 1902, the "financial interests of the capitalist class" served as the "governor of the imperial engine," with large firms operating in "trusts and combines" seeking protected overseas markets when domestic concentration limited growth opportunities ². European powers' race for resources and markets, fueled by monopoly capitalism, created precisely the geopolitical instability that exploded in 1914.

Blitzscaling to Monopoly

Today's situation doesn't just rhyme—it replicates the same logic with a modern twist. Instead of conquering Africa, concentrated capital seeks to conquer cyberspace through what Silicon Valley explicitly calls "blitzscaling": sacrificing resilience and safety for speed to achieve "winner-take-all" market dominance before competitors can establish themselves ³.

This structural parallel holds across eras. Then: industrialists with concentrated capital seeking new markets when domestic monopolization limited growth. Now: venture capitalists deploying concentrated capital—from pension funds, sovereign wealth funds, and more than a decade of historically cheap debt—seeking exponential returns through platform monopolies ⁴. Then: monopolies considered dangerous aberrations to be broken up. Now: monopolies are "sought after from the start and are the holy grail for investors" ³.

The strategy is explicit. Reid Hoffman's influential book "Blitzscaling" advocates "the lightning fast path to building massively valuable companies" where "the goal is to scale and be the winner in a winner take all market, i.e., be the company that enjoys monopoly profits" [^10]³. This isn't rhetoric—it's the operating manual. Venture capitalists at firms like Menlo Ventures describe "the rule of marketplace businesses: It's a winner-take-all game. When one company controls a market with strong network effects, it can absorb the majority of supply and demand, generate huge profits, retain customers and keep competitors at bay" ⁵.

Capital as Weapon

The mechanism mirrors Gilded Age tactics: capital as a competitive weapon. Just as 19th-century railroads used concentrated capital to undercut competitors and drive them out of business, modern platforms use "war chests of billions of dollars" to "drop prices so low that they don't even cover costs" in order to "conquer a new market as quickly as possible" ⁶. This strategy "for traditional businesses, would amount to corporate suicide"—but works when you have effectively unlimited capital and the explicit goal of monopoly. The efficiency comes from transferring costs—safety, sustainability, worker protections—onto society while capturing the value privately.

The numbers tell the story. Following the 2008 financial crisis, central banks kept interest rates at historic lows, creating "an environment where capital was not only abundant but exceptionally cheap." Institutional investors "poured unprecedented amounts into venture capital funds, which swelled to sizes previously unimaginable. In 2021 alone, U.S. venture funds raised over $128 billion, nearly double the previous record" ⁴. This capital sought the same exponential returns that drove Gilded Age speculation, creating 1,100 unicorns (startups valued over $1 billion) by 2021, with total raised capital of $700 billion and claimed valuations of $4 trillion ⁷.

The result: "investors, awash in cheap capital, anointed the winners rather than letting the market decide who should succeed and who should fail. This created a de-facto duopoly long before either company had proven that it has a sustainable business model" ³. Yale research documents the systematic elimination of competition: venture capital-backed startups going from 90% IPOs in the 1980s to 90% acquisitions by 2019 ⁸. Big Tech doesn't compete with emerging challengers—it buys them before they can threaten monopoly positions.

The Global Impact

Since the 1980s, industrial concentration has risen dramatically across sectors ⁹. In technology specifically, winner-take-all dynamics create monopoly power that extends far beyond any single product market ¹⁰. Stanford research shows that nearly 80% of publicly listed firms' equity value is now attributable to economic rents rather than competitive value creation, with this concentration particularly acute in the IT sector ¹¹.

The implications extend globally. Wealth has concentrated in technology and financial clusters—San Francisco, Seattle, Boston, New York—while manufacturing regions have been systematically left behind ¹⁰. Tech monopolies effectively impose a "tax on almost all business activities in most parts of the world," redistributing wealth from globally distributed small businesses to shareholders and employees of a few platform companies ¹².

Europe's Response

Europe has attempted regulatory responses absent in the US. The Digital Markets Act (2025) targets "gatekeepers"—large platforms controlling core services like search, social networks, and marketplaces—with fines up to 10% of global turnover for non-compliance ¹³. In March 2025, the EU fined two gatekeepers €500 million and €200 million respectively ¹³. Yet even Europe faces intense lobbying pressure: Corporate Europe Observatory documents how Big Tech-funded organizations are "completely in line" with European Commission proposals that delay AI Act implementation, "giving Big Tech more than 12 months to continue releasing potentially risky systems onto the market without any safeguards" ¹⁴.

The investment gap reinforces these concerns. US private AI investment reached $109.1 billion in 2024—nearly 24 times the UK's $4.5 billion—making it virtually impossible for European firms to compete with American capital concentration ¹⁵.

The Need for Diversity

With AI, the stakes escalate. The race to develop the most powerful AI operates on the same blitzscaling logic: whoever achieves dominance first will "conquer the others in the final battle for supremacy." This isn't hyperbole—it's the strategic logic driving billions in investment and the consolidation we're witnessing. The entire venture capital ecosystem is structurally oriented toward creating monopolies, and AI is being built within this system.

What we need isn't one or a few massive models that will "ultimately drive sameness." We need diverse ecosystems of AI systems—different sizes, different approaches, different governance structures—that can compete, cooperate, and provide genuine choice. Diversity isn't just about innovation; it's about resilience and freedom. Monocultures are vulnerable, whether in agriculture or AI.

To be clear: scale has genuine value. Large AI models benefit from network effects, can amortize research costs across wider deployment, and achieve capabilities that smaller models cannot. The pharmaceutical industry demonstrates that concentrated capital can fund research that benefits everyone. These aren't trivial advantages.

But scale's benefits don't justify unchecked concentration. The externalized costs of monopolistic scale—environmental impact, labor displacement, democratic capture—must be properly accounted for in economic models. When markets fail to price these costs accurately, they systematically favor consolidation over competition, efficiency over resilience, and speed over safety. The question isn't whether scale provides value, but whether current market incentives produce the right balance. History suggests they don't.

References

This article draws on research current as of January 2026.