Vanguard’s mutual structure, which claims to be owned by over 50 million investors, actually hides a complex web of control that loops back on itself. As the largest shareholder in both BlackRock and State Street, Vanguard can indirectly influence its own biggest competitors. Meanwhile, BlackRock and State Street also own significant stakes in each other and in Vanguard’s parent company, creating a closed system where the Big Three essentially own and govern one another. This circular ownership allows them to strengthen their collective power while avoiding scrutiny from antitrust regulators.
This feedback loop of control is reinforced through their dominance in passive index funds. For example, Vanguard’s S&P 500 ETF alone holds about 8% of every company in the index, and together, the Big Three control roughly 20% to 25% of the votes in roughly 90% of the major U.S. corporations. Their cross-ownership means they can form a self-reinforcing voting bloc, Vanguard’s votes on the boards of BlackRock and State Street help maintain loyalty, and BlackRock and State Street do the same for Vanguard.
When it comes to environmental, social, and governance (ESG) issues, alliances like Climate Action 100+ and the Net Zero Asset Managers Initiative are not just about ideology; they are powerful tools for shaping markets. By coordinating emissions targets, the Big Three can restrict energy supply, such as coal, which drives up prices and shifts investment toward sectors they already dominate, like renewables and technology. Internal communications have shown that major clients, such as Japan’s massive pension fund and Scottish Widows, pressured BlackRock and State Street into joining these alliances, suggesting that the ESG agenda may actually serve as a cover for profit-driven collusion.
On a global scale, the Big Three’s largest clients, including sovereign wealth funds from Norway and Saudi Arabia, major banks like JPMorgan, and large public pension funds, form what amounts to a shadow board that influences corporate policy. For instance, Norway’s fund pushed BlackRock to divest from Exxon, while California’s pension funds demanded fossil fuel divestment, which indirectly boosted the value of renewables ETFs managed by the Big Three. This network effectively turns the Big Three into intermediaries, allowing foreign governments and institutional elites to exert influence over U.S. markets.
The end result is a kind of technocratic oligarchy, where traditional capitalism is quietly replaced by a system of centralized control. By owning shares in competing firms, like Ford and GM, the Big Three reduce incentives for competition, innovation, or labor disputes, stabilizing profits but limiting consumer choice and wage growth. Through real estate and infrastructure funds, they are also acquiring public assets like toll roads, airports, and housing, turning essential services into sources of private profit. While individual investors might believe they have a voice through their ETF holdings, the reality is that the Big Three’s cross-ownership ensures that proxy votes reflect the wishes of their institutional clients, not everyday people.
This theory is believable, though difficult to prove, because of real-world events like the Texas antitrust lawsuit alleging explicit collusion to manipulate energy markets, and academic warnings that the Big Three’s combined ownership in S&P 500 companies has quadrupled since 1998, creating what some call a “de facto oligopoly.” Vanguard’s mutual ownership structure, where no single investor is in charge, provides plausible deniability. Critics can’t point to a single puppet master, but the system is designed to ensure collective action. In this scenario, the true power doesn’t lie with a secretive group of elites, but with a self-perpetuating financial machine that rewards size, suppresses competition, and disguises control as democratized investing. The Big Three don’t just run the world, they are the world, and everyone else is simply along for the ride.
