Launchpad Republic

7The Age and Aging of Incumbents

In the land of the giants, three companies stood the highest. Among the largest enterprises the world had ever known, their combined value dwarfed much of the rest of the economy. By 1907, Standard Oil, American Telephone and Telegraph (AT&T), and U.S. Steel were so big that they each controlled well over two‐thirds of the market share of their respective industries. While the federal government took action against all three companies, the results varied enormously.

Standard Oil was the only one to be broken up, yet the resulting entities went on to dominate the energy sector. AT&T avoided breakup by proactively entering into a compromise with the government, one that secured its natural monopoly in long‐distance telephone. It dominated its industry until deregulation finally restored the right to compete to new entrants toward the end of the century. U.S. Steel won its battle with the government and remained the largest corporation in the world for decades, only to be undone by its internal bureaucracy, challenges with the workers union, and new technologies commercialized by upstarts who never lost the right to compete.

Their continuing market dominance stemmed partly from the broad global backdrop. Government‐business relations in the 20th century took place in the context of two world wars, the Great Depression, and a high‐stakes Cold War. In rising to these challenges, the government intervened more aggressively to bolster these large firms ...