The Corner Newsletter, November 16, 2018: Open Markets Calls for Communities to Investigate Amazon — Key Committee Chairs in the House of the 116th Congress

 

Welcome to The Corner. In this issue, we condemn Amazon's HQ2 decision, and call on Congress to reopen an Office of Technology Assessment. And we look at who might chair some key committees in the next House of Representatives.

Facebook Must Be Stopped Now

This week the New York Times reported that Facebook had lied to Congress and spread hateful conspiracy theories about its critics including Freedom from Facebook, a coalition Open Markets founded last April. In a press conference Thursday, Zuckerberg acknowledged trying to delegitimize the coalition by attacking the support Open Markets has received from the George Soros’ Open Society Foundation–a frequent target of far-right, anti-Semitic smear campaigns. Zuckerberg made clear that the Open Markets Institute was itself a prime target of Facebook’s attempts to silence its growing chorus of critics.

The Times also reported that Facebook strong-armed political leaders including Senator Chuck Schumer of New York. We at Open Markets believe Congress and the Federal Trade Commission must move immediately and forcefully to protect our democracy from this dangerous and increasingly reckless corporation.

Over the last 24 hours, we have read a number of very encouraging comments by leaders from both parties.

  • Sen. Ben Sasse, R-Neb., said, “Facebook needs to stop treating this like a PR crisis and Washington needs to stop treating this like a partisan opportunity — this is a real national security threat.”

  • Sen. Ron Wyden, D-Ore., said that Zuckerberg lied to Congress and that Facebook’s executives’ actions “threaten not just our safety, but our democracy.”

  • Rep. David Cicilline, D-R.I., said,  “Facebook cannot be trusted to regulate itself.” Appearing on MSNBC’s Chris Hayes, he said, “we should all be very disturbed about… this political campaign to distract, and dissuade, and minimize what are some very serious issues of misconduct.”

  • Sen. Amy Klobuchar, D-Minn., called on the Justice Department to investigate. “If they in fact were taking actions against critics, this could be a campaign finance issue… It could also have other legal ramifications.”

At Open Markets, we are angry. Broadly, Facebook’s actions show a profound disregard for public authority, democratic institutions, and the security of the United States. More specifically, Facebook’s tactics were designed to intimidate us and ruin our professional credibility and personal reputations.

But we are also deeply encouraged. Facebook’s attacks demonstrate better than any statement that Mark Zuckerberg, Sheryl Sandberg and other executives at the corporation are truly scared of the antimonopoly powers of the U.S. government.

Open Markets Calls for Investigation of Amazon’s HQ2 Bait-and-Switch

The Open Markets Institute called on citizens of New York, Northern Virginia, and Nashville, Tennessee to investigate exactly what their governments gave up to Amazon in exchange for its plans to open additional offices in those communities. “Rather than rewarding Amazon for its predatory behavior and dictatorial control over New York’s book business, New York politicians should serve their constituents – the people who actually pay their taxes – by demanding that Amazon be broken up and regulated through public action,” OMI Executive Director Barry Lynn said. Read Open Markets’ statement on Amazon’s deception here.

Read the New York Times editorial agreeing with Open Markets’ position here. And read Sen. Kirsten Gillibrand, D-N.Y., express concern about “the lack of community input and the incentives that Amazon received” here.

  • Listen to Lina Khan and Tim Wu on NPR talk about Amazon, America’s antitrust problem, and the consequences of monopoly power on society.

  • Read the New York Times op-ed by state Assemblyman Ron Kim and former Open Markets board chair Zephyr Teachout on how Amazon will harm New York.

  • Read Open Markets Policy Director Matt Stoller’s op-ed in The New York Daily News explaining how Amazon’s decision is bad for commerce in general.

  • Read Barry Lynn’s interview with Washingtonian magazine talking about what this decision means for antitrust and the revolving door in the federal government.

See further coverage of Amazon’s decision quoting from Lynn in The Washington Post, Variety, Fox News, The Hill, and Technical.ly Delaware, from Khan in NBC News, Axios, and Politico’s “Morning Tech” newsletter, and from Stoller in GeekWire, Mashable, Politico, BuzzFeed, and Slate.

ANTI-MONOPOLY RISING:

  • Australian Member of Parliament Andrew Leigh cited Sandeep Vaheesan and Lina Khan as demonstrating how predatory pricing, contrary to the Chicago school proponents, can have a “chilling effect … on competition and new entry.” Leigh delivered the Lionel Murphy Lecture at the Australian National University last month titled “Competition Policy and Inequality.” Leigh warned, “Australia has a competition problem … The way Australia’s experts think about competition is partly to blame.”

  • Hassan Minhaj’s new Netflix show, “Patriot Act,” devoted a segmentto Amazon and its harms, as well as why the consumer welfare standard is inadequate to deal with Amazon’s immense power. The piece included a short clip of Lina Khan.

  • Tim Berners-Lee released “Principles for a Contract for the Web” in order “to ensure the web serves humanity,” which also calls on companies to “[r]espect consumers’ privacy and personal data.” Berners-Lee, often credited as the “father of the World Wide Web,” recently told Reuters that many technology corporations “end up with one company dominating the field so through history there is no alternative to really coming in and breaking things up.”

  • Reps. Jackie Speier, D-Calif., and Walter Jones, R-N.C., sent a letter to Defense Secretary Jim Mattis calling on the department’s inspector general to block the merger between TransDigm and Esterline, which both make and products for military airplanes. As DefenseNews reports, Esterline is the sole producer of chaff and one of only two producers of flares, which are countermeasures used by military planes and helicopters to evade radar- and infrared-guided missile attacks. Speier and Jones wrote, “TransDigm has repeatedly purchased companies that are sole providers of Department of Defense (DOD)  items and engaged in price gouging.”

Open Markets Calls on Congress to Revive the Office of Technology Assessment

After the midterm elections last Tuesday, the Open Markets Institute recommended that Congress bring back the Office of Technology Assessment (OTA). In its statement, Open Markets said, “The OTA was a congressional think tank that hired some of best experts in America to study complex technology and scientific problems, and gave Congress ‘competent, unbiased information concerning the physical, biological, economic, social, and political effects of such applications.’ The OTA was created in 1972, and shut down in 1995 by Newt Gingrich.”

A new OTA would benefit Republican and Democratic lawmakers alike by providing them with the serious and deep, nonpartisan analysis that they need to debate and deal with technology-related threats to our markets, our democracy, and our wider environment, including the exploitation of data by large corporations and climate change.

WHAT WE’VE BEEN UP TO:

  • The Open Markets Institute signed a letter with Public Knowledge supporting an administrative law judge’s decision to reject Qualcomm’s request to ban certain iPhone models from the American market. The two groups argue that this represents a blatant attempt by Qualcomm to abuse its patent monopoly, and call on the International Trade Commission to uphold the decision.

  • Sandeep Vaheesan spoke at the Washington Center for Equitable Growth’s event “Building a New Consensus on Antitrust Reform”alongside antitrust enforcers from the Obama administration. He called for replacing consumer welfare antitrust with a Brandeisian approach that preserves decentralized market structures.

  • At ClassCrits XI at the West Virginia University College of Law, Sandeep Vaheesan described the pro-monopoly and anti-worker interpretation and enforcement of antitrust that has dominated in recent decades.

  • Sarah Miller spoke at the Center for Global Development’s event, “The Myth of Capitalism: Global Implications of Market Concentration” and pointed out that open markets are critical to democratic health: “Free commerce and freedom of exchange and competitive markets are as critical to a functioning democracy as a free press.”

  • Sarah Miller, speaking on behalf of the Freedom From Facebook coalition, said to Variety, “The FTC has the authority to rein in Facebook today if it wanted to — and it’s a scandal that they have not yet taken meaningful action to do so.”

  • Barry Lynn, talking to Wired about San Francisco’s Proposition C to tax large corporations’ revenues to pay for homeless services, explained that “efforts to address the concentration of tech power have historically started at the local level.”

  • David Leonhardt of The New York Times wrote about Democrats’ need to win over rural voters and quoted Matt Stoller saying the “full-on crisis” in rural areas includes serious threats like “expensive health care, bad transportation options, job opportunities wrecked by chain stores, a struggling agriculture economy and, of course, the opioid epidemic.

The New House Majority and the Fight Against Monopoly

The 2018 midterm elections, like the wave years of 2006, 2008, 2010, 2014, and 2016, reflected Americans’ dissatisfaction with the status quo including the inability of either party to grapple with the growing concentration of profit, power, and control over the U.S. political economy.

Democrats now have a chance to address serious social ills like regional inequality, weakened worker protections, powerful Wall Street financiers, and giant technology corporations that threaten commerce and democratic life. The Trump administration and the Republican-controlled Congress have done little to address these problems, and have sometimes simply made them worse. Democrats might now be able to prove that they can govern for the people.

Many of the new Democratic members are part of the centrist New Democratic caucus, known as the more “pro-business” wing of the party. But progressives also made a strong showing. And this new Democratic House majority is diverse; more than 100 women were elected to Congress, including the first Native American and Muslim women.

Here’s a look at some of key committee leadership changes that will play a pivotal role in determining how well the Democrats rise to the challenge:

Committee on the Judiciary – Rep. Jerrold Nadler, D-N.Y.

Nadler has endorsed strong antitrust enforcement, saying on the floor of the House in May, “Congress should be strengthening … our competition system to protect economic opportunity, innovation, and choice.”

Judiciary Subcommittee on Regulatory Reform, Commercial, and Antitrust Law – David Cicilline, D-R.I.

In April, Rep. Cicilline, along with Nadler, Joe Crowley, D-N.Y., Keith Ellison, D-Minn., Linda Sanchez, D-Calif., and Mark Pocan, D-W.I., introduced a package of bills including measures to prohibit mergers to monopsony, and outlaw non-compete clauses and no-poaching agreements by employers.

Additionally, after The New York Times’ breaking reporting on Facebook’s mismanagement and disinformation campaign yesterday, Cicilline came out strongly against Facebook’s abuses of power, tweeting, “Next January, Congress should get to work enacting new laws to hold concentrated economic power to account, address the corrupting influence of corporate money in our democracy, and restore the rights of Americans.”

Energy and Commerce Committee – Rep. Frank Pallone, D-N.J.

Pallone has criticized Republicans and the FTC for failing to prevent Facebook’s privacy breaches in the Cambridge Analytica scandal, adding that it is important to “hold accountable executives from other tech companies, internet service providers, data brokers, and anyone else that collects our information.” And, as ranking member of the committee, Pallone called for hearings earlier this year on the multibillion dollar mergers between Cigna with Express Scripts and CVS with Aetna.

Energy Subcommittee on Digital Commerce and Consumer Protection – Rep. Jan Schakowsky, D-Ill.

Schakowsky has criticized Facebook strongly for abusing its users’ data, saying on September 28 that “We owe it to the American people to protect their data. Clearly, self-regulation has failed.” To that end, she sponsored the Secure and Protect Americans’ Data Act last year, which would require companies to take measures to protect users’ personal data and inform them in the case of a breach. Schakowsky also wants to target pharmaceutical corporations abusing their market power, telling The New York Times, “Drug costs will be one of the first things on our agenda.”

Financial Services Committee – Rep. Maxine Waters, D-Calif.

Waters has called for tougher regulation on the country’s concentrated banking sector. But earlier this year, she also supported efforts to deregulate the industry. Next term, Waters faces the question of whether and how to allow online platform corporations like Amazon to enter into the business of banking, an issue that poses huge political and economic risks. Whether Waters steers the committee away from its deregulatory bent and toward shaping financial markets to serve the American public will be the defining test of her tenure.

House Committee on Agriculture – Rep. Collin Peterson, D-Minn.

Peterson is one of the most conservative Democrats in Congress and has said that he intends to spend the current lame-duck session of Congress pushing to pass the Farm Bill crafted by Republican lawmakers. Among other controversial provisions, the House version of the bill would increase work requirements for SNAP recipients, which could reduce nutrition assistance for an estimated two million Americans.

Some ballot measures designed to curb corporate power did poorly across the country in last Tuesday’s voting:

  • Washington state outlawed new future soda taxes after the American Beverage Association, which includes Coca-Cola and PepsiCo, spent $20.3 million in support of the ban.

  • Washington state also rejected a carbon tax after Koch Industries-backed opposition raised $31.5 million.

  • Arizona rejected a renewable energy mandate after Arizona’s public utility corporation spent almost $22 million in opposition.

  • Backers of kidney dialysis corporations spent over $111 million in California convincing voters to reject an initiative capping profits of the highly-concentrated, exploitative kidney dialysis business.

In other news, Nevada passed a requirement that state utilities derive 50 percent of their power from renewable sources by 2030. And Michigan, Missouri, and Utah passed marijuana legalization measures.

1st

WeWork’s ranking among private tenants of office space in New York City, London, and Washington, D.C., according to a report by The New York Times. The report notes that WeWork is fast becoming “too big to fail.” WeWork has received at least a $7.4 billion investment from Japanese giant Softbank. If the corporation ever proves unable to pay its rents, landlords might find that evicting WeWork would cause commercial real estate prices to crash. (Open Markets’ office is located in a WeWork space in downtown Washington, DC.)

WHAT WE’RE READING:

  • “When the Tech Mythology Collapses” (The Atlantic, Alexis C. Madrigal): Madrigal compares tech giants’ fall from grace to Americans’ shifting views of railroad tycoons during the Gilded Age.

  • “How AT&T Fooled the Federal Judiciary” (The New York Times, Tim Wu): The author of the recently-published The Curse of Bigness explains how the new AT&T-Time Warner is doing exactly what its critics said it would: use HBO’s programming as leverage against its competitors.

  • “Google’s ‘Smart City of Surveillance’ Faces New Resistance in Toronto” (The Intercept, Ava Kofman): How residents in Toronto began resisting a public-private partnership between the city and Sidewalk Labs, a subsidiary of Alphabet, which owns Google.

 

Written by Barry Lynn, Phil Longman, Matt Stoller, Matt Buck, and Claire Kelloway.
Edited by Barry Lynn, Phil Longman, Katherine Dill, Claire Kelloway, and Matt Buck.

 
NewslettersOpen Markets2018, November 2018