The Corner Newsletter: January 19, 2024
Welcome to The Corner. In this issue, we preview what to expect from the antimonopoly movement in 2024, predicting more aggressive actions against mergers and a deflation of the AI hype
Antimonopoly in 2024: Expect More and Bigger Antitrust Cases and Less AI Hype
Karina Montoya
The antimonopoly movement is set to continue picking up steam after a string of milestone victories that revitalized antitrust enforcement in the U.S. and abroad. At home, two monopoly trials brought Google to the bench, the FTC brought a wide-ranging case against Amazon, and the Albertsons-Kroger mega-merger went under review, to name a few examples. In Europe, enforcers charged Google with illegally monopolizing the digital ad industry and targeted the Amazon-iRobot deal. Even Canada jumped into the fight, passing a radical reform of competition policy, Bill C-56, that overturned the consolidation-friendly neoliberal philosophy in place since 1986. Here are some of the key events we expect will move us further in the direction of radical reform over the year ahead:
Deterring platform monopolies from AI. We expect more regulators in the U.S. and across the world to investigate Big Tech’s attempts to capture control over the AI tech stack. In the U.S., the FTC has already requested information on how AI has affected competition in cloud services, as well as how large-scale AI models affect consumers, businesses, and the ability of artists and creators to earn a living. In Europe, early actions include the European Commission launching an investigation into Microsoft’s control over OpenAI, and the UK Competition and Markets Authority requesting information on the same deal. (Open Markets helped to lead calls by civil society allies urging the CMA to formally investigate the Microsoft-OpenAI partnership).
New protections for workers, consumers, and competition. In the U.S., the FTC is expected to vote in April to finalize a ban on non-compete clauses in labor contracts. The agency is then expected to follow with three other potentially transformative policies: the Commercial Surveillance Rulemaking, which could upend basic elements of the advertising-based business models of Google and Facebook; a revamped version of the Children’s Online Privacy Protection Act that would effectively prohibit corporations from profiting off the data of children; and new requirements for businesses to make it easier to cancel online subscriptions. In Europe, meanwhile, 2024 will see the launch of enforcement of the Digital Markets Act, designed to prevent monopolies in digital markets.
New protections for democracy. In Europe, the new Digital Services Act will start to target the spread of online disinformation and hate speech on large digital platforms. And in the United States, the Federal Communications Commission, which is working on restoring net neutrality, could deliver new rules this year that affect how platforms regulate communications, though it remains to be seen if the agency can move swiftly enough to act before the November elections.
Google in the Dock (again and again). The Department of Justice’s antitrust complaint against Google’s control over the digital advertising infrastructure (“ad tech”), upon which both news publishers and advertisers depend, is expected to head to trial this year in Virginia. Meanwhile, the judges in two trials that concluded in 2023 — U.S. vs Google (search and search advertising) and Epic Games vs Google (Google Play Store) — are expected to issue rulings this year as well. In both cases, Google is likely to appeal any loss, adding more years to the litigation. We will also be watching whether Judge James Donato, who presided over the Epic Games vs Google trial, delivers on his promise to prosecute Google for deleting internal chats that would have served as evidence in the case.
FTC cases against Amazon progress. Two key FTC complaints filed in 2023 against Amazon should move to a discovery stage this year. One is a landmark complaint by the FTC and 17 states against Amazon’s monopoly of online retail, which targeted several of Amazon’s price manipulation schemes, including a charge that the corporation is engaging in ad fraud. A ruling is expected in 2025. A second complaint charges Amazon with duping consumers into unwittingly signing up for Amazon Prime and then making it difficult to cancel the subscription. Both cases are headed by U.S. district judge John H. Chun, in Seattle.
More aggressive merger control. In addition to the FTC’s investigations into the proposed Albertsons-Kroger and Amazon-iRobot deals, the Department of Justice also has a full plate this coming year. Indeed, the DOJ started the year with a big win when a federal judge blocked the merger of airlines JetBlue and Spirit. This year will also see the DOJ wrap up its probe on the Live Nation-Ticketmaster monopoly and its investigation of price-fixing by real estate tech company RealPage — an inquiry that traces back to the merger of RealPage and its largest pricing competitor in 2017.
How Fighting Monopoly Can Save Journalism
Open Markets Institute’s policy director Phillip Longman published a cover story titled “How Fighting Monopoly Can Save Journalism,” in Washington Monthly on how to rebuild the traditional advertising-based business model of independent news media by strengthening enforcement of antimonopoly laws. The article dismisses the idea that journalism’s sharp decline in recent years is due to inherent features of the internet or digital technology, as many have come to believe. “By repealing or failing to enforce basic market rules that had long contained concentrated corporate power, policy makers enabled the emergence of a new kind of monopoly” designed to corner “advertising markets, which historically provided the primary means of financing journalism. This is the colossal policy failure that has effectively destroyed the economic foundations of a free press,” Longman writes. The story is based on a pivotal report published by Open Markets and Center for Journalism & Liberty last year.
Open Markets Urges UK’s CMA to Investigate Microsoft/AI Partnership
The Open Markets Institute, along with a coalition of civil society groups, called on the UK’s Competition and Markets Authority (CMA) to launch a full investigation into Microsoft's $13 billion monopolistic partnership with OpenAI. The coalition includes the Irish Council for Civil Liberties, Mozilla, Balanced Economy Project, and Foxglove, among others. The submission outlines the partnership's anti-competitive implications, including Microsoft's considerable influence over OpenAI's decision-making and privileged access to the startup's technology, and OpenAI's dependence on Microsoft's computing infrastructure.
The groups argue that the recent ouster and rehiring of OpenAI CEO Sam Altman made Microsoft’s influence clearer than ever. Reuters quoted OMI Europe director Max von Thun on Microsoft’s suspect relationship with AI. "It is essential that antitrust authorities move quickly to investigate these deals, including unwinding them if necessary, to preserve competition and prevent this critical emerging technology from being monopolized,” von Thun said.
📝 WHAT WE'VE BEEN UP TO:
Open Market Institute’s policy counsel Tara Pincock and legal director Sandeep Vaheesan coauthored an article in The Nation describing how Amazon exerts control over the book industry, and in particular the Top Five book publishers. Amazon ”won’t hesitate to retaliate against publishers that step out of line. These retaliatory games include removing the ‘buy’ button beneath a title’s listing on the site, delaying shipping books to customers, claiming that titles are out of stock when Amazon is actually just refusing to restock the titles, and rejecting pre-sales for new books,” they write.
Open Markets’ senior legal analyst Daniel Hanley wrote an article in The American Conservative explaining how a 90-year-old law - the Robinson-Patman Act (RPA) - can be deployed to root out market bullying. “The wholesale abandonment of RPA enforcement from the federal government by such a miscarriage of prosecutorial discretion is fundamentally at odds with Congress’s intent and the rule of law,” Hanley writes. “Congress has not repealed the RPA,” he added, which means the law “is merely in a dormant state, and thus ready and capable of being revived and vigorously enforced.”
Hanley also published a piece in Tech Policy Press pointing out that Epic Games' victory over Google’s illegal monopolization is a welcome morale boost for antimonopolists, developers, and consumers alike. “It is now clear that even the seemingly invulnerable technology darling can be wounded,” he writes. He also warned that the fight is far from over, citing “the judiciary's hostility to antitrust litigation since the 1970s.”
OMI reporter Austin Ahlman published an article in The American Prospect explaining how deregulation has rendered caps on TV station ownership meaningless and calling on the Federal Communications Commission to unwind broadcast consolidation. “Increased broadcast deregulation over the past two decades has created station ownership conglomerates that hold large shares of stations in highly concentrated metro television markets,” Ahlman writes. “This de facto ownership is giving station owners the power to demand much higher carriage rates from cable providers than in years past.”
Legal director Sandeep Vaheesan published a review of a book tracking Uber’s history in the nation’s capital, entitled Disrupting D.C.: The Rise of Uber and the Fall of the City, in The American Prospect. “Uber’s rise represented America’s diminished public expectations in the 2010s. Governments at the national and local levels would not build a more just economy, and in turn the public began expecting less from government,” Vaheesan writes. “Instead, the state turned to private corporations to deliver a facsimile of justice.”
Open Markets Institute lauded the DOJ and FTC for finalizing their new merger guidelines, which reverse four decades of a consumer welfare approach to antitrust. “The two agencies put fealty to law front and center again and seek to implement congressional intent, instead of their own ideological preferences,” a statement by Open Markets read. Common Dreams covered the statement, while The American Prospect noted that OMI had urged regulators to lower merger review thresholds when the agencies released their draft guidelines last summer.
The Open Markets Institute welcomed the announcement that gene-sequencing company Illumina will sell cancer-test developer Grail. The action came after the Fifth Circuit, in a unanimous opinion, broadly agreed with the FTC’s charge that the acquisition violated the Clayton Act. “A dominant firm should not be permitted to acquire another company when it controls a critical input on which the target company and its rivals depend,” an OMI statement read. “Instead of Grail competing in the multi-cancer early detection (MCED) test market through continued innovation, the combined Illumina-Grail could have competed by withholding critical inputs from rivals or supplying them on unfair terms.”
Marketplace quoted Open Markets’ food systems policy director Claire Kelloway on how the proposed merger between grocery store giants Kroger and Albertsons would increase the company’s negotiating power with brands.
U.S. News and World Report quoted Caroline Fredrickson, OMI’s strategic councilor on democracy and power, on the Supreme Court’s influence on elections. Fredrickson said, “It’s an unfortunate fact of life that the Supreme Court has become an intricate part of our electoral structure — both in terms of the impact that it’s going to have in its substantive rulings but also how it addresses key questions around how our elections are administered.”
Fredrickson was also quoted in a Jacobin article about how the Federalist Society and George Mason University are both closely tied to the conservative legal movement and billionaire donors who have a financial interest in how the federal judiciary interprets laws. “It confirms what we all knew intuitively: the Federalist Society and George Mason have a deep reach into the federal judiciary, and are using it to ensure that a very particular point of view about legal analysis is conveyed to judges,” she said.
Open Markets Institute senior fellow Johnny Ryan was quoted in the Irish Times saying the Euiropean Commission should follow the example set by Irish media regulator Coimisiún na Meán, which he said is “leading the world by forcing Big Tech to turn off its toxic algorithms.” He added, “Users — not Big Tech’s algorithms — should decide what they see and share online.” Ryan’s quote was also picked up by Euractiv.
Open Markets signed onto a joint letter urging government regulators urging to block the planned merger of Alaska and Hawaiian airlines. "Neither the airline industry nor American consumers can afford the further loss of airline competition that Alaska’s purchase of Hawaiian Airlines represents," the consumer groups noted.
🔊 ANTI-MONOPOLY RISING:
A U.S. district court judge blocked JetBlue Airways’ $3.8 billion bid to purchase Spirit Airlines, which the Department of Justice had challenged on the grounds it would harm airline travel competition. (New York Times)
The FTC issued its strongest rebuke yet of a data broker — a company that compiles and sells the personal information of private individuals — by limiting broker Outlogic’s ability to deal in location data. (The Verge)
Kroger’s and Albertson’s announced they would delay their merger after a lawsuit by the Washington state attorney general, amid expectation of similar legal action from other state attorneys general and federal antitrust agencies. (Axios)
Apple will allow links to outside payments within apps in its app store after a final ruling in a case about California’s Unfair Competition Law. The ruling will force the company to allow developers to link to external sites for payment processing and bypass Apple’s current payment commission system, though Apple is reportedly revising their revenue-sharing demands for companies that utilize the option. (Bloomberg Law)
📈 VITAL STAT:
$6 Billion
The amount in antitrust claims the NFL faces after a U.S. district judge ruled the league must go to trial over claims it conspired with broadcast partners to suppress telecasts of out-of-market football games. (Bloomberg Law)
📚 WHAT WE'RE READING:
Making It in America - Journalist Rachel Slade uses the story of one northeastern couple’s fight to build and grow a small union textile company against tough odds as an entry point to look at how globalization and deregulation have hamstrung the American dream and hollowed out our manufacturing capacities.
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