You may not have paid attention to the UK government’s decision this week to replace the chair of a regulatory body, the Competition and Markets Authority (CMA). But this decision really matters, because the CMA is our strongest line of defence against the power of Elon Musk and the other tech barons – and it illuminates just how dangerous Labour’s economic agenda in office is proving to be. To understand why, we need to talk about monopolies.

You might think that as a company like Amazon has grown bigger, its services would become cheaper as it reaps economies of scale. Not so: research shows that the price of sending a standard parcel via Amazon in the UK has more than doubled since 2017. Meanwhile, the income from the advertising fees that independent sellers must pay to stay visible to customers exploded: a nearly 17-fold rise from 2017 to 2022. International research even shows that Amazon uses its chokehold over sellers to pocket more than half of sellers’ revenues in fees. Half!

Who ultimately pays? You do, because those sellers must jack up their prices to stay afloat. The fees are like private taxes that consumers and sellers pay to Jeff Bezos and Amazon’s shareholders. Worse, Amazon’s pricing rules encourage sellers to increase their prices off Amazon. A lawsuit by the US Federal Trade Commission calls this a “one-two punch” where sellers must “use their inflated Amazon prices as a price floor everywhere else”.

The UK body directly tasked with protecting us from such predation is the CMA, which for years was regarded as one of the world’s smartest and bravest regulators against market power. When the CMA forced Meta to sell the graphics firm Giphy in 2021 it was the first time any regulator anywhere in the world had broken up a big tech firm – and this UK breakup (even if just a fragment was broken off) had a worldwide effect.

Now, as the Trump administration gets aggressive with its economic partners, we need to back the CMA more than ever, to protect the UK economy and the wider public interest.

But this government has become captive to the opposite idea. On Tuesday it sacked the CMA’s chair, Marcus Bokkerink, after complaints from big-business lobbies – and instead appointed Doug Gurr, a former country manager of Amazon UK and president of Amazon China. Then on Thursday, news emerged that the CMA was cutting 100 staff. This followed Keir Starmer’s veiled threat at an investment summit in October, when, in a hall full of US big tech officials, he warned that the CMA should “take growth as seriously as this room does” – implying that it should treat tech giants with kid gloves. Then, he appointed Clare Barclay, a top Microsoft official, to chair the Industrial Strategy Advisory Council.

A strange assumption has taken hold, including in the chattering classes: that there is a trade-off between good things like regulatory protections, and economic growth. Britain must tie the CMA’s protective hands, this idea holds, to entice investors.

There is no such trade-off. Endless research shows us that deregulation fostering monopolisation reduces growth, harms innovation, undermines resilience and destroys small businesses. It also sucks money out of the economy: in his book Vassal State, the entrepreneur and investor Angus Hanton estimates that US firms pay dividends back home from their UK operations equivalent to £2,100 per UK household, much of it as excess profits not from productive activity but from monopolisation.

The healthy alternative – the pro-prosperity case for a more balanced economy – was recently outlined by the sacked CMA chair Bokkerink. Whenever the CMA has stepped in to stop monopolists locking down markets, he explained: “We have seen new investment flow in, from healthcare and pharmaceuticals to construction to railway equipment to gaming to educational software to digital and AI.” Fostering choice and tackling corporate power drives down prices, drives up innovation, and ensures a diverse, resilient economy that can “recover rapidly from external shocks and … avoid becoming hostage to single points of failure”. It also keeps more wealth circulating locally rather than being sucked out and away to shareholders overseas and offshore.

In rejecting this vision of a healthy and balanced economy, this pro-monopoly government has revealed itself to be anti-business and anti-growth.

Labour is playing with fire. Trump and his big tech allies will now weaponise the awesome power of social media firms and broader “surveillance capitalism” – honed to manipulate us first as shoppers, now as voters – to export a hard-right agenda to the UK and elsewhere. That agenda is economic, too, and rather imperialist: they will try to bludgeon open our economy to deregulate it further so as to make it easier for US firms to exploit us even more. Not in living memory have we needed these protections more than today – and voters feel this need, urgently. A government bent on wrecking them will face annihilation.

• Nicholas Shaxson is the author of The Finance Curse: How Global Finance is Making us all Poorer