Let’s talk about Amazon’s latest antitrust conflict, which illustrates the way tech companies are now getting hammered from every side of an argument at once.
For the past 40 years or so, the Supreme Court has emphasized consumer welfare — rather than reducing harm to a business’ competitors — as the the primary goal of antitrust enforcement. The main way consumer welfare has been measured has been prices: as long as their mergers, acquisitions and business practices did not make life more expensive for the average person, the Supreme Court has been inclined to leave most companies alone.
Then the internet came along, making it possible to offer free or very cheap services to billions of people while monetizing them in complementary ways. Over the past few years, competition watchdogs began to make arguments that this practice, too, can be anticompetitive. In a now-famous 2017 paper titled “Amazon’s Antitrust Paradox,” then-law student Lina Khan argued that the harms Amazon creates for competition cannot be measured by price. Rather, she said, platform economics incentivize companies to pursue growth over profits, sometimes by offering predatory low prices that drive their competitors out of business.
This line of thinking, which earned the derisive yet undeniably catchy name “hipster antitrust,” is now fully mainstream in the Biden administration. Khan has been nominated to the Federal Trade Commission; her fellow antitrust hipster, Tim Wu, was appointed to the National Economic Council as a special assistant to the president for technology and competition policy.
All of which feels like necessary preamble for understanding the surprise of today’s news, which is this: a US government entity has at long last sued Amazon over antitrust issues, and its complaint is that … Amazon is artificially raising prices. Here are Lauren Feiner and Annie Palmer at CNBC:
Washington, D.C., Attorney General Karl Racine announced Tuesday he’s suing Amazon on antitrust grounds, alleging the company’s practices have unfairly raised prices for consumers and suppressed innovation. […]
The lawsuit, filed in D.C. Superior Court, alleges Amazon illegally maintained monopoly power by using contract provisions to prevent third-party sellers on its platform from offering their products for lower prices on other platforms. The attorney general’s office claimed the contracts create “an artificially high price floor across the online retail marketplace,” according to a press release. The AG claimed these agreements ultimately harm both consumers and third-party sellers by reducing competition, innovation and choice.
Racine’s fuller statement, which he also tweeted, says this: “These agreements also impose an artificially high price floor across the online retail marketplace & ensure high fees charged to third-party sellers by Amazon, as much as 40% of the product price, are incorporated into the price on not only Amazon but also on competing platforms.”
The CNBC story goes on to note that until 2019, Amazon required businesses that wanted to sell on its platform to agree to a “price parity provision,” prohibiting them from selling their wares cheaper elsewhere. These provisions, sometimes called “most favored nation clauses,” were eliminated at the company after regulators in Germany and Berlin began investigating the practice.
They were replaced with Amazon’s “fair pricing policy,“ which is similar but written to emphasize less severe punishments: “If we see pricing practices on a marketplace offer that harms customer trust, Amazon can remove the Buy Box, remove the offer, suspend the ship option, or, in serious or repeated cases, suspending or terminating selling privileges.”
(Don’t ask me why the verb changes tense there at the end.)
This language makes Amazon’s policy feel more editorial than the one it replaced — the kind of prerogative to host content as you see fit that is afforded to internet businesses under Section 230 of the Communications Decency Act. This framing also comes across in the statement Amazon sent CNBC (emphasis mine):
“The DC Attorney General has it exactly backwards — sellers set their own prices for the products they offer in our store. Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively. The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law.”
If I were Amazon, I’d make that argument, too. Section 230 cases can be won relatively easily; antitrust cases brought by the government are much more costly.
Not that this case appears to be particularly daunting on its face. It’s notable that no other attorneys general signed onto the lawsuit, during an era where AGs have happily teamed up to bring joint antitrust cases against Facebook and Google. Assuming the Amazon suit’s status holds, a win by the AG would affect Amazon only within the 68.3 square miles of Washington, DC.
The more important takeaway, I think, is that Amazon — like most of tech giants — is now getting hammered in every direction. Racine argues Amazon’s prices too high; meanwhile, investigators in California, Washington, and the FTC are probing whether they are artificially low. (Specifically, they’re looking into whether Amazon uses data from third-party sellers to see which products are popular, clone them, and undercut the competition.)
Antitrust cases take so long, and the laws around them are so subject to interpretation, that lately I have come to feel like their outcomes may not matter nearly so much as some of their champions suggest.
The DC lawsuit, though, tells a somewhat different story. Antitrust enforcement in the United States, after a long period of dormancy, has entered its spaghetti-against-the-wall phase. And with so many lawsuits about to be in the air, it seems increasingly likely that something will stick.
Elsewhere in Amazon today: The company’s ad revenue is now twice as big as Snap, Twitter, Roku and Pinterest combined. ◦ A petition signed by 640 Amazonians called on the company to address the environmental harms its warehouses create in neighborhoods occupied primarily by immigrants and people of color. ◦ Another employee petition calls for Amazon to voice support for Palestine and end its contract with the Israeli Defense Forces. The company’s annual shareholder meeting is tomorrow, and labor advocates want to put a worker on the board of directors. ◦
Governing
⭐ Russia ordered Google to remove illegal content within 24 hours or face further punishment. If it declines, Russia said it would slow the search giant’s traffic. Here’s Reuters:
The watchdog, Roskomnadzor, said it had sent more than 26,000 calls to Google to remove illegal information, including videos containing information on drugs or violence and material from what it called extremist organisations.
Google will be fined between 800,000 roubles and 4 million roubles ($10,800-$54,000) if it does not restrict access to the banned information, Roskomnadzor said.
⭐ Germany has started two antitrust investigations against Google, focused on its data processing terms. The country recently required Facebook to make changes after a similar review. (Aoife White and Karin Matussek / Bloomberg)
The outcome of the Apple-Epic Games trial is now in the hands of a judge. Apple appears poised to win on the legal merits, but the company’s long-term insistence on a 30 percent cut of digital revenues seems increasingly untenable. (Jack Nicas / New York Times)
A look at how recent internal employee activism at Apple has spilled out into the public, potentially changing its workplace culture forever. “Apple’s secrecy works great for protecting our customers and our products, but it hinders inclusion and diversity,” says an anonymous employee. “There’s a lack of education around what is confidential versus what is your protected speech and you should speak up about.” (Zoe Schiffer / The Verge)
Instagram chief Adam Mosseri renewed his call on Apple and Google to adopt age verification tools at the operating system level. “We could try to ask every app in the world to figure out a solution to that, or we could have the two dominant operating systems figure out how to do that in a privacy safe way, and then figure out how to essentially pass that information to the apps in a way that also respects privacy.” (Sylvia Varnham O'Regan and Kaya Yurieff / The Information)
A profile of the nonprofit FakeReporter, which has seen a surge in disinformation and hate speech in Israel amid the current conflict with Gaza. “They’re monitoring nearly 100 WhatsApp and Telegram channels, most of them in Hebrew.” (Jane Lytvynenko / BuzzFeed)
An account of a woman whose father falls ill with COVID-19 in India, and watches as her family WhatsApp chats come alive with misinformation. Among other things, the story gets at how misinformation is used to comfort the afflicted: the disease is the fault of foreigners, for example, or those who don’t share the family’s diet. (Meghna Rao / Rest of World)
Citizen inadvertently exposed users’ COVID data. The flaw allowed “anyone to view specific users' recent self-reported symptoms, test results, and whether their device had recorded any close contacts with other people using the feature.” (Joseph Cox / Vice)
Related: Here’s James Caspari, CEO of the company Citizen wants to partner with to deliver subscription security services, advocating for the right to arrest people in Los Angeles. (Joseph Cox and Matthew Gault / Vice)
A predictive shooting algorithm identified a Chicago man as both a potential shooter and a victim, drawing him unwanted attention that eventually led him to being shot. A truly dystopi an story about over-policing. (Matt Stroud / The Verge)
The UK spy agency GCHQ violated the right to privacy with its massive data collection scheme, a court ruled. It’s the culmination of a case filed in 2013 after the Edward Snowden revelations. (Haroon Siddique / Guardian)
Correction: These links originally misstated James Caspari’s role; he is not the CEO of Citizen.
Industry
Google’s new operating system for smart devices, called Fuschia, is now running on its Nest Hub displays. They previously ran on a Linux-based system. (Kyle Bradshaw / 9to5Google)
SiriusXM partnered with TikTok on a new music channel featuring popular hits from the app. It also rolled out new TikTok collaborations on Pandora, which it owns. (Sarah Perez / TechCrunch)
TikTok has become the fastest way for young people to become food stars. Along the way, they’ve gotten the entire country to make whipped coffee, Oreo cake, and “the TikTok pasta.” (Taylor Lorenz / New York Times)
Microsoft is now using OpenAI’s GPT-3 natural language model in its Power Apps service to translate spoken text into code. The move turns a low-code tool into a no-code tool. (Frederic Lardinois / TechCrunch)
The Robinhood competitor Public is the latest app to add in-app audio programming. One more Clubhouse competitor for the pile. (Ashley Carman / The Verge)
Turntable came back to life with $7.5 million in new funding led by Andreessen Horowitz. If we’re going to bring back beloved old social audio apps, I hope Rdio is next. (Billy Chasen / Turnable)
“Charlie Bit My Finger” will leave YouTube after selling as an NFT for $760,999. “The owner will also be able to create a parody of the video featuring Charlie.” (Christina Morales / New York Times)
Those good tweets
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Send me tips, comments, questions, and low, low prices: casey@platformer.news.
As someone who has been looking into the world of body-worn cameras & latest trends in policing technology as they are rolled out in Canada, that Matt Stroud Verge piece is a chilling look at an extreme end result of these initiatives. I have a lot of concerns with body cameras in general and while more of the inherent exploits & negative outcomes are being revealed day by day, more than anything I see these as incremental steps toward a deeply technocratic approach to public safety which moves power even further out of citizens' hands.
A bit off-topic; I don't have anything to say regarding Amazon + antitrust but as always I appreciate your writing and curating of links. Thanks!
Fuchsia. I don't know why Google picked a name no one (including Casey, sorry) can spell.