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The Corner Newsletter, October 17, 2019: Goliath, Matt Stoller’s New Book on American Democracy and Monopoly, Out Now – Bipartisan Senators Introduce Bill Banning All Future Non-compete Clauses

Welcome to The Corner. In this issue, we share some reviews of Matt Stoller’s new book, Goliath. And we discuss the importance of a major new bipartisan bill in the Senate that would free workers from non-compete contracts.

October 17, 2019  |  by Open Markets

Goliath, Matt Stoller’s New Book on American Democracy and Monopoly, Out Now

Simon & Schuster published Open Markets Fellow Matt Stoller’s new book, Goliath: The 100-Year War Between Monopoly Power and Populism on Tuesday. The book details how Americans once understood the connection between corporate monopolies and authoritarianism and successfully opposed both through antitrust and other competition policies.

Farhad Manjoo of the The New York Times reviewed Stoller’s book and called it “deeply researched.” Stoller’s book has also been reviewed in The American Prospect and The National Review (twice). In The American Prospect reviewUniversity of Oregon political science professor Gerald Berk wrote, “Democrats who seek to revitalize their party would do well to study Matt Stoller’s Goliath and incorporate—in a complex and thoughtful manner—its central teachings.” The National Review’s Kyle Sammin wrote that although antimonopolism “has been dormant for decades, the corporate consolidation of this century has given Americans on both sides of the political spectrum reason to wonder if it should be awakened. And Stoller’s treatise is a good place to start in thinking through that question.”

Stoller also has essays out this week in The New York Times, The Wall Street Journal and Wired. In The New York Times, Stoller explained how the business models of Google and Facebook, coupled with American lawmakers’ permissive approach to communications policy, have led to “a radical centralization of power over the flow of information.” “To save democracy and the free press,” Stoller writes, “we must eliminate Google and Facebook’s control over the information commons.” Meanwhile in The Wall Street Journal, he discussed why trustbusting is a “business-friendly trend” and outlined how antitrust prosecutions and breakups of dominant corporations fostered, even “oxygenated” markets. And in WiredStoller argued that the actions of Uber, Facebook, and Google recall the “law-flouting financial empires of the 1920s. We know how that turned out.”

You can order the book online here.

BREAKING: Bipartisan Senators Introduce Bill Banning All Future Non-compete Clauses

Sens. Chris Murphy, D-Conn., and Todd Young, R-Ind., introduced a bill today that would severely restrict the ability of employers to prevent their workers from taking a new job in a similar line of work. The Workforce Mobility Act bans non-compete clauses in employment contracts going forward and puts the Department of Labor and the Federal Trade Commission in charge of enforcing the ban. The bill also grants workers the right to sue an employer for presenting, threatening to enforce, or enforcing a non-compete clause.

In a press release, Murphy called non-competes “economic and innovation killers” while Young touted the benefits of banning non-compete clauses, saying, “A complete reform of non-competes will empower our workers and entrepreneurs so they can freely apply their talents where their skills are in greatest demand.”

Approximately 30 million American workers are presently bound by non-competes and almost 60 million have been forced to sign a non-compete at some time in their career. Employer use of non-compete agreements has become pervasive across industries and occupations, hurting both low-income workers and higher-earning professionals including fast food workers, coffee baristas, engineers, hair stylists, musicians, camp counselors, to name a few.

The threat of non-compete enforcement by employers restricts worker mobility and hurts individuals and communities, as recent research confirms. A new paper by economists Michael Lipsitz, Kurt Lavetti, and Matthew Johnson finds evidence that “increasing the enforceability of NCAs [non-compete agreements] leads to a decline in workers’ earnings and job mobility,” which is associated “with three to four percent lower annual earnings among employed workers, and a nine percent decrease in the monthly probability of changing jobs.”

Even highly skilled professionals are affected. Take the example of neurologist Maria Sunseri.

“Due to a non-compete agreement, I had to take a part-time position 32 miles away from where I live to continue to see neurology patients,” Sunseri says. That’s because her former employer, University of Pittsburgh Medical Center (UPMC) forced her to sign a non-compete clause that prevents her from practicing neurology within a certain distance of any UPMC facility. But it is hard to find anywhere in Western Pennsylvania that the hospital giant doesn’t have a facility. UPMC commands a 43 percent share of the medical-surgical market throughout Western Pennsylvania, operating 40 hospitals with 8,500 licensed beds, 700 doctors’ offices and outpatient sites, while claiming more than 6,000 affiliated physicians,

Sunseri hopes efforts to ban non-competes like the Murphy-Young bill will help others avoid the difficulties she’s had to suffer with. “It’s a disservice to our patients,” she says about the harms of non-compete clauses. “We do not have talent to waste within the healthcare system.”

Young’s co-sponsorship demonstrates that the idea of banning non-competes has begun to enjoy a new degree of bipartisan support.  Previously, Senator Murphy introduced the bill with co-sponsors Sens. Elizabeth Warren, D-Mass., and Ron Wyden, D-Ore., in 2018. Warren, along with fellow candidate for the Democratic nomination for President, Sen. Bernie Sanders, I-Vt., has called for banning non-competes as well.

Open Markets and a coalition of labor and public interest organizations, along with 46 individual advocates and scholars, submitted a petition to the FTC in March highlighting the harms of non-competes and calling on the agency to draft a rule banning all such agreements. Sen. Richard Blumenthal, D-Conn., submitted a letter with six other senators to FTC Chairman Joseph Simons in support of the petition.

🔊 ANTI-MONOPOLY RISING:

2020 Presidential Candidates Agree On Need to Check Big Tech or Reinvigorate Antitrust

At the fourth Democratic presidential primary debate Tuesday evening, most candidates agreed with Massachusetts Sen. Elizabeth Warren that the United States needs stronger antitrust enforcement to rein in the power of the dominant online platforms. Warren said she’s “not willing to give up and let a handful of monopolists dominate our economy and our democracy. It’s time to fight back.”

Sen. Bernie Sanders, I-Vt., who put out a sweeping plan to check corporate power on Monday, denounced the United States’ “rigged economy” in “sector after sector.” (Read Open Markets’ press release praising Sanders’ plan here and Open Markets Fellow Matt Stoller call the plan “pro-business” at Vox here.)

Sen. Amy KlobucharD-Minn., emphasized the bipartisan attraction of antitrust saying, “This used to be a Republican and Democratic issue, because America, our Founding Fathers, actually wanted to have less consolidation.” California Sen. Kamala Harris disagreed with Facebook CEO Mark Zuckerberg that breaking up Facebook would make disinformation worse and noted Big Tech’s “immense” power. Former Texas Congressman Beto O’Rourke said that would be “unafraid to break up big businesses if we have to do that” adding that he would be “fearless in the face of these tech giants.”

And Sen. Cory Booker, D-N.J., nodded to late jurist Robert Bork’s enormous influence over antitrust law, saying, “we have a massive crisis in our democracy with the way these tech companies are being used” and that contemporary antitrust is in such a weak state that “Robert Bork right now is laughing in his sleep.”

(Warren also last week released a set of proposals titled “Empowering American Workers and Raising Wages.” In addition to strong labor reforms, Warren called for “increasing antitrust scrutiny of consolidation that drives down wages” and banning non-compete and mandatory arbitration clauses in employment contracts. “)

  • New York Attorney General Letitia James will lead a bipartisan group of state attorneys general to investigate Facebook for antitrust violations, The Washington Post reported last week. According to three sources, the coalition could expand before the group of enforcers formally announce their inquiry. In September, nine states, including New York, announced an investigation into Facebook for antitrust abuses.
  • California passed a number of bills that would curb corporate power over small businesses, workers, and patients. One sets ground rules for sellers on marketplaces, including requiring terms and conditions to be “drafted in plain and intelligible language” and, if a seller gets removed from that marketplace, they are entitled to receiving an explanation as to why. Another requires kidney dialysis providers to accept Medicare prices and passed despite heavy lobbying by DaVita and Fresenius, or California’s “Dialysis Duopoly,” as The American Prospect reported in September.
  • District of Columbia Councilmember Elissa Silverman last week proposed banning noncompete clauses for workers making up to $86,574 per year. Silverman said, “These non-compete agreements are particularly unfair for low-wage workers and contribute to income inequality in our city.”
  • FTC Commissioner Rohit Chopra sent a letter yesterday opposing a proposed rule by the Department of Housing and Urban Development (HUD) that would make it harder for people to challenge housing discrimination under the Fair Housing Act. “This proposal appears to fundamentally misunderstand how algorithms, big data, and machine learning work in practice,” said Chopra. “If enacted,” he warned, “this proposal would give immunity to companies and individuals when they discriminate against tenants using algorithmic tools.”
  • Democrats and Republicans on the House Energy and Commerce Committee yesterday called on American trade negotiators to remove the legal protection for tech companies like Facebook or Google from trade agreements. Rep. Jan Schakowsky, D-Ill., said that the shield, Section 230 of the Communications Decency Act, “is a uniquely American law, and we’re in the midst of a discussion about it, and this is a gift to big tech to insert it into trade agreements.”
  • The European Commission’s antitrust enforcer Margrethe Vestager yesterday instructed chipmaker Broadcom to cease using exclusivity clauses in its contracts with customers, a rare move since the relevant investigation is still ongoing. Similar orders may come down in the future, she explained, “mean[ing] the tool is on the table.”
  • Earlier this month the European Court of Justice ruled that Facebook is required to remove any post globally if it was found to be in violation of an individual EU member states’ defamation law.
  • The Organization of Economic Co-operation and Development (OECD) announced a set of proposals addressing corporate taxation for multinational companies, ranging from technology platforms to luxury goods makers. As it stands, the proposal would limit the benefits that are gained from current tax havens such as Ireland, and allow countries that house the business activities to benefit from proper taxation. “In a digital age, the allocation of taxing rights can no longer be exclusively circumscribed by reference to physical presence,” the OECD said.

Open Markets Employment Opportunities

The Open Markets Institute is hiring for three positions: a Director of the Center for Liberty and Journalism, a Managing Editor, and a Director of Entrepreneurship and Independent Business.

Open Markets is looking for a Director of the Center for Liberty and Journalism who will help ensure that the news media is fully independent and funded in the 21st century’s digital economy. The Center will conduct cutting-edge research into news media market structures, engage with policymakers and support efforts to design smart policy solutions, and reshapethe national narrative around the market structures that threaten the independence and financial stability of America’s news media.

The Managing Editor will assist the Policy and Editorial Director in managing and editing the work of a team of journalists and policy advocates, helping develop magazine features, op-eds, white papers, and newsletters. Open Markets is looking for a candidate with excellent editorial and project management skills and a strong interest in business, economics and competition law and policy.

Open Markets is also looking for a Director of Entrepreneurship and Independent Business who will help develop Open Markets’ effort to educate the public and other stakeholders on the importance of competition policy to entrepreneurship and strong independent businesses. This Director would track and work on policy developments, educate policymakers and reporters, and organize public or private action.

You can find the full job listings here.

📝 WHAT WE’VE BEEN UP TO:

  • The Open Markets Institute joined a petition, alongside eight other groups, calling on the Federal Communications Commission to pause its review of T-Mobile’s $26.5 billion acquisition of Sprint after the agency learned that Sprint falsely claimed to be serving almost a million low-income customers through the FCC’s Lifeline program, receiving tens of millions of dollars in the process. Citing longstanding judicial precedent, the petition argued that communications law holds “that a company cannot sell or transfer a license when the company’s fitness to hold a license is at issue.”
  • Sandeep Vaheesan wrote an article for The Antitrust Bulletin titled, “The Profound Nonsense of Consumer Welfare Antitrust.” In the article, Vaheesan criticizes the “consumer welfare” standard of antitrust law on three grounds: relying on a “false history,” “a false conception of the market,” and “false assumptions about business conduct.” (If you would like a copy of the article, you can request one by replying directly to this email.)
  • Matt Stoller discussed the 2020 democratic presidential debate with MSNBC, arguing that all of the candidates are not anti-business, they are just responding to the current structural issues in our economic system. “I got the impression that candidates like Elizabeth Warren, like Bernie Sanders, like Cory Booker recognize there is a crisis in business and a crisis in capitalism.” Stoller goes on to say that in his new book he traces this  “to something very simple, which is corporate monopolies.”
  • Claire Kelloway in HuffPost criticized comments by Agriculture Secretary Sonny Perdue who recently dismissed the concerns of small, family-run dairy farms by saying, “In America, the big get bigger and the small go out … I don’t think in America we, for any small business, we have a guaranteed income or guaranteed profitability.” Kelloway said, “There is nothing natural or inevitable about consolidation in agriculture. Farmers are pushed to get big or get out because of policies that enable predatory monopolies to strip wealth from farmers,” while adding that Perdue could “enact policies that would crack down on the abusive agriculture monopolies that are pushing out small producers and independent family farms.” (Read Kelloway’s full statement  here.)
  • Daniel Hanley explained in Vox that in addition to more high-profile behemoths like Amazon and Facebook, Microsoft presents antitrust concerns but “[t]he courts are actually creating a deterrent effect for anticompetitive enforcement because you’re making it so difficult to bring a case, which is not how it’s supposed to work. Antitrust laws are supposed to be a deterrent for anticompetitive behavior.”
  • Sandeep Vaheesan explained to The Guardian that a petrochemical executive’s comments at a recent industry conference raised “real wage-fixing concerns.” The executive cautioned his competitors against fighting a “wage war” for workers, which Vaheesan described as “a prelude to collusion … At a minimum, the remarks should be treated as inviting rivals not to compete for workers.”
  • Sally Hubbard told Axios that Walmart should not be forgotten in the growing antitrust discussions. Walmart is the biggest corporation in the world with $514.4 billion in revenue in 2018. “I don’t think anyone is paying attention to Walmart,” Hubbard said. “It’s just not on people’s minds because it isn’t considered the way of the future. … The government sees brick and mortar as more of a dying industry.”
  • Sally Hubbard spoke with Bloomberg Law about an app developer’s lawsuit against Apple, where the developer claimsApple not only used exclusive tactics, but also stole their intellectual property. As the developer, Blix Inc., weighs cooperating with congressional inquiries into dominant platforms, Hubbard commented that “it’s helpful to have developers come forward publicly like this and it may embolden others to come forward.”
  • Matt Stoller discussed the growing power China has over private markets, public markets and corporate decision-makingon The Hill’s tv programStoller said that China has consolidated economic and political control through trade agreements, and “when you concentrate power into the hands of a small group of people, everyone else becomes less free.”
  • Matt Stoller spoke with Politico about the influence of the Koch network and the growing divide in the Republican party between those that support antitrust scrutiny to protect free speech and those that see it as excessive government oversight. Although the Koch network has played a major role in backing political candidates, Stoller points out how their influence may not be as effective as it once was. “People aren’t afraid of them anymore. It’s not that they don’t have power, they do have power. They don’t carry the same level of fear.”
  • Beth Baltzan spoke with ProPublica about Trump’s tariffs and how easily they are avoided through warehouse centers in Canada and Mexico, which in turn causes jobs to move outside of the US. “De minimis loopholes are basically just another way of unilaterally disarming,” Baltzan said. “Other countries don’t do this to themselves.”
  • Barry Lynn is mentioned in a Fast Company article that highlights individuals and companies who are recreating a healthy economic system; a “New Capitalism.” Barry Lynn is listed as one of “15 people working at the forefront of trying to reinvent our economic system. Together, they’re pursuing important structural reforms and ideas that are bringing fairness, dignity, and democracy to capitalism.” Fast Company points to Lynn as someone “who’s advocating for employing America’s antitrust laws to regulate monopoly and create more democracy and liberty.”

📈 VITAL STAT:

>$2,000,000,000

The total revenue that merging online advertising networks Taboola and Outbrain project to bring in during 2020, according to Recode. The two networks are responsible for many of the ads that run at the bottom of websites and are one of the few options for web publishers who want an alternative to frequenting Facebook’s and Google’s online advertising services.

📚 WHAT WE’RE READING:

  • “The T-Mobile and Sprint Merger Will Only Hurt Customers” (The Atlantic, Jessica Rosenworcel): One of the two Democratic commissioners on the Federal Communications Commission explains why T-Mobile’s $26.5 billion acquisition of wireless competitor Sprint will hurt millions of consumers why the FCC and DOJ’s settlement with the telecommunications giants is filled with “a few unenforceable concessions and hollow promises” and “do little more than camouflage the damage this transaction will cause the competition.”
  • “Jeff Bezos’s Master Plan” (The Atlantic, Franklin Foer):  Amazon’s leader has power and incredible wealth. With that wealth, Foer writes, “and the megaphone that it permits him, Bezos is attempting to set the terms for the future of the species, so that his utopia can take root.”
  • “Is Amazon Unstoppable” (The New YorkerCharles Duhigg): A detailed review of Amazon’s recent scandals, including its deadly next-day delivery system, and how lawmakers are approaching its antitrust issues as well as its power more broadly.
  • “America’s Healthcare System is Failing Because Competition is Disappearing” (Los Angeles Times, Michael Hiltzik): How two developments in California – an antitrust case against California’s Sutter Health hospital system and a newly-passed law capping reimbursements to dialysis chains – demonstrate that concentration among health care providers means “Americans get the worst of all possible worlds.” American healthcare “prices are too high,” Hiltzik writes, and “although big spending should give us better quality of care, it doesn’t.”
  • “Health Care’s Biggest Problem Keeps Getting Worse” (Washington Monthly, Anne Kim): Reports on new research from  showing that three out of four metropolitan area in the U.S. are now facing highly concentrated hospital markets.

Written by: Barry Lynn, Phil Longman, and Udit Thakur
Edited by: Barry Lynn, Phil Longman, Krista Brown, Udit Thakur, Olivia Webb, Sandeep Vaheesan, Daniel A. Hanley, and Matt Buck

Image credit: Piotrekswat via iStock

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In America today, wealth and political power are more concentrated than at any point in our country’s history.

The Open Markets Institute, formerly the Open Markets program at New America, was founded to protect liberty and democracy from these extreme -- and growing -- concentrations of private power.

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