Welcome to The Corner. In this issue, we review the historic series of lawsuits targeting Google and Facebook the past two weeks and discuss why these moves don’t go far enough. We also explain our recent amicus brief to the Supreme Court to head off a legal threat to the FTC’s authority.
Biden — and the American People — Must Now Build on Landmark Cases Against Google and Facebook
The past two weeks saw one of the greatest triumphs of American democracy in many decades, as attorneys general representing almost every state and territory in the nation filed three antitrust lawsuits that target the core business models and structures of Google and Facebook. The state investigations also helped to force the Federal Trade Commission last week to bring its own case against Facebook, much in the way the state investigations helped force the Justice Department to file an antitrust lawsuit against Google in October.
The Open Markets Institute has long been a leader in calling for such actions and in advocating for both the breakup of these corporations and the complete re-regulation of online platforms and networks. Open Markets was, for instance, the first to call on agencies to split Instagram and WhatsApp from Facebook. Open Markets was also the first to insist on a fundamental overhaul of the business models of Google and Facebook, which are based on the dangerous and extortionary manipulation of the people and businesses that depend on their services.
The U.S. actions stand in stark contrast to those of the European Commission, which this week approved Google’s plans to take over Fitbit and its vast cache of highly personal data. The commission did so despite strong opposition by rival businesses, European parliamentarians, and public interest groups including Amnesty International, which said the takeover posed direct threats to human rights.
The European Commission did propose two major pieces of legislation this week, the Digital Services Act and the Digital Markets Act. The DSA would require large platforms to reveal to regulators how their algorithms work and how they target ads to their users. The DMA aims to halt anti-competitive practices. But the laws won’t take effect for at least two years. Worse, they appear likely to repeat many of mistakes of Europe’s General Data Protection Regulation (GDPR) law, which in key respects has buttressed the power of Google, Facebook, and other dominant tech corporations.
The actions of the last two weeks were almost unimaginable only three years ago, when Open Markets was expelled from the New America think tank for demanding anti-monopoly action against Google. They illustrate the ability of the American people to take dramatic and decisive action, once awakened to a threat. They also illustrate the strength of U.S. anti-monopoly institutions, especially the 1914 decision to use the Clayton Antitrust Act to empower every U.S. state with the same anti-monopoly authority as the federal government.
In these dark days, the five lawsuits against Google and Facebook represent a true reason to celebrate. But Americans must keep in mind that these cases simply mark the end of the first stage of the effort to update our thinking and regulatory regimes to ensure that the 21st-century digital economy is safe for American democracy and prosperity. President-elect Joe Biden and the states must both bring additional cases against Google and Facebook and must also begin to act soon against Amazon. And the American people must together begin the complex task of rebuilding market structures for journalism, retail, health care, housing, transportation, the arts — indeed, just about every aspect of life — for the digital age.
· Read the Open Markets statement on the FTC and states’ lawsuits against Facebook.
· Read the Open Markets statement on the states’ lawsuit against Google’s advertising monopoly.
· Read the Open Markets statement on the states’ lawsuit against Google’s search monopoly.
More Than100 Organizations and Scholars Urge Biden to Appoint FTC Commissioners Committed to Outlawing Noncompete Clauses and Exclusionary Contracting
The Open Markets Institute sent two letters on Thursday to President-elect Joe Biden requesting him to appoint commissioners to the Federal Trade Commission committed to using the agency’s power to prohibit noncompete clauses and exclusionary contracting by dominant firms. The letters also call on his administration to affirmatively endorse the agency’s use of its rule-making authority to prohibit unfair methods of competition in general.
The first letter was signed by 30 labor and public interest organizations and 47 scholars, and the second letter was signed by 41 labor and public interest organizations and seven scholars. Both letters follow and affirm previously submitted petitions to the FTC.
In the noncompete letter, Open Markets and its partners wrote that “banning noncompetes advances the commission’s mission of protecting workers, independent businesses, and consumers from unfair practices.” In the exclusionary contracting letter, we wrote that “the FTC has long recognized the harms from exclusionary contracts. Over the past decade, it has brought a number of enforcement actions against monopolists for exclusionary contracting. … We believe the commission should build on its litigation activities and enact a bright-line rule prohibiting exclusionary contracts by dominant firms.”
· Read the full exclusionary contracting letter here.
Open Markets Asks Supreme Court to Affirm FTC’s Power to Recover Illegal Gains
Open Markets Institute filed an amicus brief on Dec. 7 in a case before the Supreme Court, AMG Capital Management, LLC v. FTC. Open Markets urged the court to protect the FTC’s ability to recover money from violators of competition law and consumer protection law, as current law allows, through an injunction. Our brief argues that AMG seeks to overturn the established, centuries-old meaning of an injunction, in an effort to neuter the FTC’s power to recover ill-gotten gains from corporate lawbreakers. The brief was mentioned in Politico and Law 360.
“If the court accepts the specious arguments of AMG and narrows … the established definition of injunction, corporations would be free to profit from collusion, monopolization, and other unfair methods of competition,” said Open Markets Legal Director Sandeep Vaheesan. “Consumers, workers, and businesses injured by antitrust violations obstacles face growing judicial obstacles to enforcing the law and obtaining compensation from corporate wrongdoers.”
🔊 ANTI-MONOPOLY RISING:
· A federal judge approved class-action status for a group of about 1,200 mixed martial arts fighters last week, allowing the fighters to sue the Ultimate Fighting Championship over abuses of its alleged monopoly power. The fighters charge that the promotion company’s parent "engaged in an illegal scheme to eliminate competition" and substantially drove down fighters’ wages for years. (Bloomberg)
· The German Federal Cartel Office announced last week that it’s investigating Facebook for requiring users of its virtual reality product, Oculus, to have a Facebook account. According to German regulators, Facebook’s “tying arrangement” may constitute an abuse of dominance, given the company’s dominant position in Germany and its growing footprint in the market for virtual reality products. (TechCrunch)
📝 WHAT WE’VE BEEN UP TO:
· Barry Lynn wrote the cover article in the new issue of the Washington Monthly, explaining how President-elect Joe Biden can break up and rein in monopoly without Congress. “An anti-monopoly agenda would enable Biden to frame, direct, and drive deep structural reforms tailored to deliver everything from better health care to better jobs to real solutions to the climate crisis, and to create opportunity and stimulate investment and innovation across the entire economy. Such an agenda would even offer ways to steer political debate in a more constructive and civil direction.”
· Claire Kelloway published a piece in The Intercept cataloguing Agriculture Secretary nominee Tom Vilsack’s record of aggressive corporatism and USDA failures during his tenure in the same post under former President Barack Obama. “Vilsack had eight years and numerous opportunities to right historic wrongs within the USDA and put protecting farmers, workers, and the environment ahead of agribusiness profiteering, but he chose not to.” She was also quoted in Washington Monthly commenting on Vilsack.
· Garphil Julien and Daniel Hanley wrote an article in American Banker arguing that Visa’s attempted acquisition of Plaid highlights the need for more merger enforcement. “The DOJ’s lawsuit against Visa’s acquisition of Plaid represents a vital reversal of a decadeslong trend of anemic merger enforcement in the financial industry. But the agency must also pursue a vigorous merger enforcement environment as Congress intended — the Biden administration should instruct the DOJ to implement bright-line merger rules.”
· Daniel Hanley published a piece in Washington Monthly critiquing the FTC’s lawsuit against Facebook, examining two FTC decisions that substantially weakened the suit. “The FTC decided to restrict its claims to fit within the Sherman Act rather than its Section 5 authority … [and] the FTC made an additional error by bringing the case in federal court rather than initiating its suit against Facebook in its own administrative forum.”
· Sandeep Vaheesan published a piece in WIRED about the Facebook lawsuit, this time articulating the flaws of the litigation and pushing for President-elect Joe Biden to do more. “Litigation, while important, is … costly, complicated, and time-consuming… even with a potentially divided government through 2022, the Biden administration — through the FTC — can begin fixing the law immediately.”
· Rachel M. Cohen published a piece in The New Republic proposing that local journalism be treated by the federal government as a public good. “If we believe local journalism is a public good, essential for citizens in every democratic community, then we need to ensure everyone has access to it.”
· Open Markets Institute published a new paper, “Scrambled Eggs and Paralyzed Policy: Breaking Up Consummated Mergers and Dominant Firms,” authored by the economists John Kwoka and Tommaso Valletti, demonstrating how to break up consummated mergers and dominant firms such as Facebook. “The usual response to the idea of breaking up dominant firms or consummated mergers is to argue that the costs and difficulties are overwhelming,” the authors write. But “many of these experiences with actual breakups are in fact successful restructurings, with major widely recognized benefits in terms of price, innovation, and investment.”
· Barry Lynn was featured in The New York Times’ DealBook policy roundtable on privacy, competition, and Big Tech. “Barry Lynn of the Open Markets Institute sees privacy and competition on a continuum. By focusing on what companies can do with data and restricting it, the competitive threat they present lessens, he said, so enhancing privacy rights also promotes competition.” He was also quoted in NewStatesman making a similar statement.
· Barry Lynn was quoted inThe Washington Post andLos Angeles Times emphasizing that it is possible to break up Facebook. “Folks figured out how to break AT&T apart, which had a far more complicated physical network,” said Lynn. He called Facebook’s claims about insuperable integration “spin.”
· Sandeep Vaheesan was quoted in S&P Global examining the impact of consolidation on the wireless market. “Consolidation, on the other hand, usually leads to large-scale job losses," as companies seek to eliminate redundancies, he said.
· Open Markets’ Twitter account was quoted in BBC and India Narrative for asserting that although the Facebook lawsuits are a critical step forward, regulators must still take a more aggressive stance against tech companies. “There’s still more to do, but this is a big moment," Open Markets tweeted.
· Open Markets Institute’s statement in response to the lawsuits against Facebook filed by attorneys general and the FTC was featured in The Washington Post, MediaPost, Washington Times, and Adweek. “The Open Markets Institute was among the first to call for the breakup of Facebook, and we are happy to see America’s law enforcers have embraced our thinking.”
· Johnny Ryan was mentioned in The Irish Timesfor his work to stop surveillance capitalism. “Johnny Ryan noted that the widespread targeted advertising business model of the web [is] toxic, unacceptable and at the root of many of the web’s worst anti-democratic, disinformation-pushing, discriminatory and threatening norms.”
· Open Markets was mentioned inThe American Prospect for joining a coalition of 20 groups in sending a letter to President-elect Biden urging him not to put tech lobbyists in the Office of the U.S. Trade Representative (USTR). “David Roth and Arrow Augerot have previously held roles at USTR, when top USTR priorities were the passage of trade agreements like T-TIP and TPP.”
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📈 VITAL STAT:
The amount pharmaceutical corporation AstraZeneca is paying to acquire biopharmaceutical company Alexion. The deal is the largest takeover in the health care industry in 2020. AstraZeneca would expand into the rare disease drug market, in which Alexion is a leader. Alexion manufacturers Soliris, a blood disorder drug that is one of the world’s most expensive drugs.
📚 WHAT WE’RE READING:
· “The Political Face of Antitrust,” by Spencer Weber Waller, Brooklyn Journal of Corporate, Financial, and Commercial Law: Waller, one of the premier antitrust scholars in the United States, provides an important and well-reasoned review of the rise of antitrust as a central topic in public discourse.
· “Monopolization Remedies and Data Privacy,” by Erika Douglas, Virginia Journal of Law and Technology: Douglas argues that antitrust analysis should consider effects on user privacy when courts or enforcers consider and implement remedies to monopolization cases.
Liberty From All Masters
The New American Autocracy vs. The Will of the People
Liberty is Lynn’s first book since 2010’s Cornered. In his new work, Lynn warns of the threat to liberty and democracy posed by Google, Amazon, and Facebook, because of their ability to manipulate the flows of information and business in America. Barry then details how Americans over the course of two centuries built a “System of Liberty,” and shows how we Americans can put this system to work again today. Lynn also offers a hopeful vision for how we can use anti-monopoly law to rebuild our society and our democracy from the ground up.
Liberty from All Mastershas already made waves for its empowering call to restore democracy by resurrecting forgotten tools and institutions. “Very few thinkers in recent years have done more to shift debate in Washington than Barry Lynn. In Liberty from All Masters, he proves himself as a lyrical theorist and a bold interpreter of history. This book is an elegant summoning of a forgotten tradition that can help the nation usher in a new freedom,” says Franklin Foer, author of World Without Mind and national correspondent for The Atlantic.
7 Ways Big Corporations Rule Your Life and How to Take Back Control
Simon & Schuster published Monopolies Suckby Sally Hubbard on Oct. 27. The book is the first by Hubbard, who is Open Markets’ director of enforcement strategy. Hubbard examines how modern monopolies rob Americans of a healthy food supply, the ability to care for the sick, and a habitable planet, because monopolies use business practices that deplete rather than generate. Monopolists also threaten fair elections, our free press, our privacy, and, ultimately, the American Dream, Hubbard shows. In Monopolies Suck, Hubbard reminds readers that antitrust enforcers already have the tools to dismantle corporate power and that decisive action must be taken before monopolies undermine our economy and democracy for generations to come. In Monopolies Suck, Sally provides an important new view of America’s monopoly crisis and of the political and economic harms of concentrated private power. Order your copy here.
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Written and edited by: Barry Lynn, Michael Bluhm, Jackie Filson, Daniel A. Hanley, Udit Thakur, and Garphil Julien
Image credit: pabradyphoto and sharrocks via Stock