The Corner Newsletter: October 12, 2023
Welcome to The Corner. In this issue, we preview two other antitrust cases against Google, both focused on monopolistic practices related to its Play Store.
Two lawsuits targeting Google Play Store may remake online app market
Karina Montoya
With Google’s first antitrust trial taking place in the District of Columbia, all eyes are focused on the tech giant’s dealings to monopolize the online search market. But two other lawsuits against Google also promise to limit the corporation’s power in other digital markets. Both focus on Google’s anticompetitive practices in the Play Store, a Google-run marketplace that accounts for over 90% of Android app distribution.
The biggest threat to Google is posed by a lawsuit filed by Epic Games, the maker of Fortnite, and Match Group, the company behind dating apps Tinder and Hinge. The case, whose trial is set to begin November 6 in San Francisco, will be Google’s first time facing a jury. The jury’s response to these arguments may provide a good barometer for how average Americans understand and react to prosecutors’ explanations of complex cases in the tech sector. Unlike in the federal trial in Washington, all witnesses’ testimonies will be available to the press and the general public.
The problems cited in the Play Store case date to 2018. Unlike with Apple’s iPhone, Android phones allow users to download apps from non-Google sources of origin, which is known as ‘sideloading.’ When Epic first released its Fortnite app for Android, it chose to both distribute it directly from its own website and to distribute it through Play Store. But in August 2020, Google kicked Epic out for allowing users to make in-app purchases outside the Play Store, which Epic did to avoid the Google’s high commission fees.
According to an unredacted version of the complaint, which was filed in July 2021, Google then altered its practices towards all app developers, in order to prevent others from following Epic’s example. This included paying top game developers such as Activision Blizzard to stay in the Play Store, and sharing additional revenue with phone makers with the condition that they exclusively pre-install Play Store for access to all other apps.
The plaintiffs allege these actions, in combination, torpedoed their efforts to find alternative stores for their apps.
The plaintiffs will be asking the jury to prohibit Google from engaging in all practices that lead to higher costs for app purchases. These include Google’s exclusive deals with phone makers that prevent pre-installation of other apps and app stores, and the obligation of app developers to use only Google’s systems for paid apps and in-app purchases.
The second case, by the Utah attorney general along with 36 other states and the District of Columbia, centers on a similar complaint. The focus here is on Google’s abuse of monopoly power to inflate prices for paid apps and in-app purchases, the ‘hush-hush’ deals that block competition from other app stores, and Google’s use of deceptive prompts to steer users away from ‘sideloading.’
This case, which was also filed in July 2021, is likely to be settled this week. The settlement is expected to include behavioral remedies that will address some of the issues raised by Epic and Match Group, as well as the stipulation that Google set up a consumer relief fund, potentially to reimburse them for inflated app prices.
Open Markets Report Details How Peanut Farmer Cooperatives Are Challenging Monopolies
Open Markets Institute published a report by Detroit-based chef Kiki Louya on the peanut industry, where farmer-owned cooperatives are challenging the powerful corporations that control shelling services. The report highlights the actions of Premium Peanut, a Douglas, Georgia-based cooperative that now shells 10% of the U.S. peanut crop. The aim of the report is to help policymakers better understand how other farmers can use cooperatives to circumvent powerful middlemen corporations in a variety of agricultural industries. Read the full report here.
📝 WHAT WE'VE BEEN UP TO:
Open Market Institute’s legal director Sandeep Vaheesan wrote a piece for the Boston Globe calling for an end to the century-old baseball antitrust exemption, which could soon come under review by the Supreme Court. “The benefits of ending the exemption are likely to be substantial: Dozens of small towns could get their teams back, minor league players could obtain compensation after years of collusion against them, scouts could see teams competing for their services, and fans could watch more games played outside their home markets,” Vaheesan writes.
OMI food systems program director Claire Kelloway coauthored an article with writer Maureen Tkacik for The American Prospect that dismissed the idea that antitrust law enforcers should approve the merger based on corporate promises to divest stores in a few markets. The authors attack the idea that such divestitures actually work for consumers, and point out that they often actually drive up prices. “Divestitures have been regulators’ favored mode of enforcing antitrust law for four decades, and their track record of preserving or bolstering competition is mostly abysmal,” the authors write.
Vaheesan wrote an article for Democracy Journal examining the significance of the Inflation Reduction Act by drawing on the history of the Hoover Dam. “What is the IRA? Is it a continuation of the neoliberal approach to decarbonization, or a progressive outline for the clean energy transition?” Vaheesan ponders. “A century-old precedent offers hope that the IRA may prove to be a political economic project quite different from anything the government has undertaken since the late 1970s.”
Vaheesan also coauthored a piece with former OMI Louis Brandeis fellow Andy Fitch for Yale University’s Law and Political Economy Project on the rampant errors and aberrations discovered in a seminal legal treatise—considered the gold standard for antitrust analysis—compiled by conservative antitrust scholar Herbert Hovenkamp. “Despite the treatise’s renown and influence, digging deeper into the treatise suggests not an impartial review of the law, but a volume that appears to be closer to a defense-side brief clothed in academic garb,” they write.
Writing for the UCLA Law Review, Vaheesan reviewed two books that challenge the notion of money as a scarce private commodity, Destin Jenkins’s The Bonds of Inequality: Debt and the Making of the American City and Jakob Feinig’s Moral Economies of Money: Politics and the Monetary Constitution of Society. “Monetary scarcity has pernicious political and social consequences,” Vaheesan writes, lauding Jenkins’s book for showing how scarce money in the U.S. has led to racialized class conflict and Feinig’s book for demonstrating that money is an elastic public good.
American Hospitals: Healing a Broken System, a documentary prominently featuring Open Market Institute’s policy director Phillip Longman, will be available for streaming November 10 on various platforms, including Apple TV, Amazon, Vudu, and Google Play. In the documentary, Longman discussed predatory practices that have led to the hospital sector’s long decline. The film is based in part on a July 2020 investigation published in the Washington Monthly by Longman and former Open Markets colleague Udit Thakur.
The Examiner News quoted Center for Journalism & Liberty director Courtney Radsch in an article on the Journalism Competition and Protection Act. “Of course we also need to break up their monopolies on digital advertising, cloud services and the like, but news media bargaining codes like the JCPA are an important aspect of redressing power imbalances that are clearly detrimental to democracy.” The article also mentioned last month’s event “Protecting News to Preseve Democracy,” hosted by CJL and Open Markets.
Open Markets Institute and its executive director Barry Lynn featured in an article in The Intercept narrating the recent history of the antimonopoly movement, including its support by Senator Elizabeth Warren. “She had been particularly watching the work of Barry Lynn’s anti-monopoly team at the Open Markets Institute with interest, and it fit with her long-standing focus on breaking up and bringing to heel the big banks,” the Intercept writes.
Tech Crunch highlighted a push by Open Markets’ senior fellow Johnny Ryan, who is also a fellow for the Irish Council on Civil Liberties, for additional commissioners to sit on the Ireland-based Data Protection Commission, which helps enforce Big Tech’s compliance with the EU’s General Data Protection Regulation.
Open Markets’ executive director Barry Lynn released a statement following a move by the Federal Trade Commission and Consumer Financial Protection Bureau to ban hidden junk fees, which can run up the cost of concert tickets or hotel rooms. “Today's monopolists and other powerful private corporations are true experts in exploiting their leverage to rip off the American people, with the harm falling especially hard on the poorest, least educated, and least powerful members of our society,” Lynn said. Commons Dreams quoted from Lynn’s statement.
Food program manager Claire Kelloway commended the Department of Justice for filing a lawsuit against Agri Stats, which compiles data for the meat industry, for collusion. “We applaud the Department of Justice’s action here to stop problematic information exchanges,” Kelloway said. “Agri Stats’ detailed information exchange has been at the center of several price-fixing and wage-fixing scandals that have depressed wages for workers and prices for farmers in the meat industry.” Fence Post cited Kelloway’s statement in a story on the DOJ lawsuit.
Executive Director Barry Lynn appeared on KPFA’s Background Briefing podcast to discuss the FTC’s lawsuit against Amazon for abusing its market power. Lynn was also interviewed by WBUR’s On Point podcast on the recent history of antitrust and his mentorship of FTC Chair Lina Khan. “What's missing from the Borkian focus on the consumer welfare standard is the Declaration of Independence,” Lynn said. “The Constitution of the United States, the goal of equality for all.”
ProPublica quoted OMI’s strategic councilor on democracy and power, Caroline Fredrickson, on the concerted effort to remake America’s courts by the uber-conservative Federalist Society and its chair Leonard Leo. “The left, even though we are somewhat court worshippers, never understood the potency of the courts as a political machine. On the right, they did,” she said.
The Art Newspaper and The Observer listed Open Markets Institute as one of the six groups behind AI Day of Action, held earlier this month to urge Congress to enact a law that would ban corporations from copyrighting art created with significant artificial intelligence-enabled elements.
🔊 ANTI-MONOPOLY RISING:
The European Commission announced it would let a decade-long antitrust exemption that enabled increased collaboration between cargo shipping companies expire next year. (Reuters)
UK communications regulator Ofcom called for the nation’s Competition and Markets Authority to investigate Amazon and Microsoft’s cloud services dominance. (Financial Times)
Washington D.C.’s attorney general launched a sweeping antitrust investigation into real estate price-setting company RealPage. The Department of Justice is also probing the company. (Washington City Paper)
Mexico’s competition authority is probing Walmart, the largest supermarket chain in the country, over concerns that it has abused its market power in negotiations with suppliers and distributors. (Bloomberg)
Google committed to reforms that will give European users more control over their personal data, following objections raised by German antitrust authorities. (TechCrunch)
📈 VITAL STAT:
$19 Billion
The estimated amount Google will pay Apple this year to set Google’s search engine as the default on iPhones and other devices, in a secret pact that was revealed in unsealed testimony from an Apple executive as part of the ongoing Google trial in Washington D.C. (Washington Post)
📚 WHAT WE'RE READING:
Digital Empires: The Global Battle to Regulate Technology: Columbia Law School professor Anu Bradford, who coined the term “the Brussels effect” to describe when corporations end up complying with stringent EU laws outside of Europe, lays out the theories of change driving the global digital regulatory regimes being adopted by the United States, the European Union, and China. In her ambitious overview, Bradford explains how these competing values and market incentives play out in each regime’s battle to reign in technology giants like Google and Amazon.
You can find the full job listings here.
🔎 TIPS? COMMENTS? SUGGESTIONS?
We would love to hear from you—just reply to this e-mail and drop us a line. Give us your feedback, alert us to competition policy news, or let us know your favorite story from this issue.