Famous Monopolies: Historical & Modern Examples

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The biggest monopoly in American history is usually considered John D. Rockefeller’s Standard Oil, which controlled about 90% of U.S. oil refining in the late 1880s. Its closest rival for the title is U.S. Steel, the world’s largest company when it was formed in 1901, with a market capitalization of $1.4 billion. Today the clearest monopoly in America is not a private company at all. It is the United States Postal Service, which holds a legal monopoly on delivering letter mail. Firms such as Google, Amazon and Apple have faced monopolization lawsuits, but they are better described as dominant firms facing antitrust challenges than as proven monopolies.

What makes a company a monopoly

A pure monopoly is the only seller of a product with no close substitutes, protected by barriers that keep rivals out. Very few markets meet that test. In practice, economists and regulators talk about monopoly power: the ability to raise prices or reduce quality without losing enough customers to make the move unprofitable. That power depends on how readily buyers can switch or go without, which is why elastic vs. inelastic demand matters.

Size alone is not illegal in the U.S. Section 2 of the Sherman Act targets monopolization: acquiring or keeping monopoly power through exclusionary conduct rather than through a better product or lower costs. That distinction explains why some giant firms were broken up while others, equally large, were left intact.

Monopolies arise in a few recognizable ways:

• Consolidation, where one firm buys or merges with its competitors (Standard Oil, U.S. Steel, American Tobacco).
• Control of a scarce resource, such as mines or refineries (De Beers).
• Government grant, where law reserves an activity for one provider (the USPS) or the state owns the industry (Saudi Aramco).
• Natural monopoly, where infrastructure costs make a single network cheaper than several competing ones (local electricity and gas utilities).

Early American monopolies

American monopolies date back to exclusive contracts awarded by colonial administrators, but the most famous examples came out of the Gilded Age, a period of rapid industrial growth in the late 19th century when government regulation of dominant firms was essentially absent.

Standard Oil grew by acquiring competitors during the oil boom until it controlled roughly 90% of American refineries in the late 1880s. Owning the refining stage gave it a bottleneck in the petroleum supply chain: producers had to sell to it and distributors had to buy from it. The company also negotiated favorable shipping contracts with railroads, which lowered its costs below what smaller refiners could match and accelerated its growth.

U.S. Steel was assembled by financier J.P. Morgan, who merged Andrew Carnegie’s steel company with many other major producers in 1901. The combined firm was valued at $1.4 billion, making it the largest company in the world at the time.

American Tobacco was created in 1890 when five major tobacco firms merged. Scale gave it lower costs in a highly profitable industry, and it went on to acquire an estimated 250 firms between 1890 and 1907.

These companies could hold prices for oil, steel and tobacco well above what competitive markets would have produced. Congress responded with the Sherman Antitrust Act in 1890, but the first major cases took years to move through the courts. In 1911 the Supreme Court ordered both Standard Oil and American Tobacco to be dismantled and restructured. Standard Oil was split into 34 separate companies, several of which grew into today’s major oil firms.

U.S. Steel had a different outcome. The government challenged it, but the courts did not find it to be the sole supplier of steel to the U.S. market, and it was not broken up. It kept a large market share for decades, but by 2022 it ranked only 27th among the world’s steel producers.

AT&T: the 20th-century breakup

The American Telephone and Telegraph Company is the best-known later case to share the fate of Standard Oil and American Tobacco. AT&T faced lawsuits going back to the 19th century, and for much of the 20th century it operated the U.S. telephone system as a regulated monopoly.

In 1974 the U.S. Department of Justice sued AT&T, alleging that it had monopolized American telecommunications and prevented fair competition. The company settled in 1982. Under the agreement it divested 23 local telephone companies, representing 67% of its assets, which were reorganized into seven regional companies known as the Baby Bells. In return, AT&T was allowed to enter the computer business, which earlier restrictions had kept it out of.

Modern near-monopolies

De Beers is the leading example of a near-monopoly from recent history. The diamond mining, production and retail company dominated the global diamond trade for almost a century, holding close to 90% of the market in the late 1980s. Market changes and regulatory pressure cut that share to 29% by 2023. In the 2004 U.S. Department of Justice case against the company, De Beers pleaded guilty to conspiring to fix industrial diamond prices and was ordered to pay $10 million.

Big Tech companies now draw the same kind of scrutiny:

• Google has faced federal antitrust suits alleging that it uses anticompetitive practices to favor its search platform and that it monopolizes digital advertising technology.
• Amazon was sued by the Federal Trade Commission, which accuses it of illegally maintaining market power through tactics such as penalizing sellers who offer lower prices on other sites.
• Apple was sued by the Justice Department in March 2024, which alleged that it monopolizes smartphone markets by restricting competitor products and making them perform worse on Apple devices.

These are allegations being contested in court, not settled findings. Companies in technology, consumer products and food and beverage manufacturing are often called monopolies in the media, but courts have rarely concluded that a company is an illegal monopoly.

Government monopolies and nationalization

Many of the strongest monopolies today exist because a government created or owns them. They usually dominate a single country rather than a global industry.

The USPS is the main example of a government monopoly in the U.S. Congress gave it two monopolies: the delivery of letter mail and access to mailboxes. The purpose is to protect the revenue that funds universal service, including delivery to addresses that private carriers would find unprofitable. Package delivery, by contrast, is open to competitors such as private couriers, so the USPS monopoly covers letters, not shipping in general.

Nationalization occurs when a state takes ownership of major assets, most often in energy, transportation and banking, a choice tied to broader debates about communism vs. socialism and the role of the state in markets.

The largest example is Saudi Aramco, the Saudi Arabian Oil Company, founded in 1933 by the Standard Oil Company of California and taken over by the Saudi government during the 1970s. Its revenues have historically supplied most of the government’s budget. Its 2019 initial public offering, then the world’s largest, raised more than $25 billion from the sale of 3 billion shares, but the state retained majority ownership and control. Its market capitalization places it among the largest companies in the world alongside Apple and Microsoft.

Natural monopolies: utilities

Natural gas, electricity, water and similar utility companies are natural monopolies. Building power lines, pipelines or water mains requires enormous upfront investment, and once one network exists, the incumbent has economies of scale that a new entrant cannot match. A second network would duplicate the costs without delivering the service more cheaply, so a single supplier serving the whole area is often the lowest-cost arrangement.

Because competition does not discipline these firms, governments typically either regulate the prices they can charge or run the service directly. This is one case where economists broadly accept a monopoly as efficient, provided its pricing is controlled.

Do true monopolies exist?

Pure, unregulated private monopolies are rare today, for three reasons visible in the examples above:

1. Antitrust law in the U.S. and elsewhere makes monopolization through exclusionary conduct illegal, and enforcement has broken up firms from Standard Oil to AT&T.
2. Markets shift. U.S. Steel and De Beers both lost share without being broken up, as competitors, new supplies and new technologies arrived.
3. The surviving true monopolies are mostly legal or natural ones: the USPS letter-mail monopoly, state-owned energy companies and regulated local utilities.

FAQs

The Bottom Line

Investors, students and consumers trying to judge whether a big company is a monopoly should look past size and media labels. Under U.S. law, the question is whether a firm gained or kept power through exclusionary conduct. Courts rarely reach that finding, and markets often erode dominance on their own. The durable monopolies that remain are mostly legal or natural ones, such as letter mail and regulated local utilities.