The Corner Newsletter: July 28, 2022
Welcome to The Corner. In this issue, we explore the ramifications of Amazon’s takeover of One Medical, which broaches both antitrust and privacy issues.
Amazon Invites Antitrust Scrutiny with Takeover of One Medical
Luke Goldstein
Last week, Amazon announced a $3.9 billion plan to buy One Medical, a network of primary care clinics that provide in-person and virtual care to almost 800,000 patients around the country. The online retail and distribution giant took the action even as it faces an investigation by the FTC into its purchase of iconic studio MGM, a lawsuit filed by Washington, D.C. Attorney General Karl Racine, as well as heightened scrutiny from Congress in the form of an antitrust bill designed to stop the corporation from steering buyers to its own products.
Amazon may believe it can sneak the deal past antitrust agencies since its footprint in healthcare remains small compared to its retail and entertainment arms. But there's a number of reasons to believe law enforcers will move to block the deal. Two concerns especially stand out.
First, the corporation already controls a business called Amazon Care, which started as an internal health program but has since expanded to offer service to outside businesses. Amazon has also launched a diagnostics service that sells its own medical supplies in the company’s vast online marketplace. And in 2018, Amazon paid $752 million for PillPack, an online pharmacy provider.
The potential problem here is simply that Amazon would leverage One Medical to promote other medical devices, pharmacy services, and health care services that the corporation already controls. Or, similarly, that Amazon might wield its existing power over the businesses that rely on the platform to reach customers to induce them to use One Medical to serve their employees, as Senator Amy Klobuchar warned about in this letter to the FTC.
“Amazon has a history of engaging in business practices that raise serious anticompetitive concerns, including forcing small businesses on its site to buy its logistics services as a condition of preferred platform placement," Klobuchar's letter reads. Indeed, Amazon has long used similar tactics to strong-arm merchants to sign agreements giving the corporation access to their internal data and sales numbers so that it can compete against them.
The second major concern is that Amazon would use One Medical and related services as a way to gain access to patients' health data. One Medical – both through its app and through in-clinic services - already collects vast amounts of health information on its patients. Amazon could use patient’s personal information to target advertising of their own medical and pharmacy services while undercutting other distributors through predatory pricing. Similarly, but even more disturbingly, Amazon might use such information to buttress the personal profiles the corporation uses to manipulate the purchasing decisions of the people who buy and sell on its platforms.
"Amazon wants access to as much personal information as possible to push even more invasive advertising onto its users," said Daniel Hanley, senior legal analyst at the Open Markets Institute.
It's unclear to what extent HIPAA — a federal law that generally prohibits healthcare businesses from sharing patient information with outside entities — will be able to restrict Amazon's use of One Medical data. Google's recent acquisition of health fitness monitor Fitbit, for example, has revealed the limitations of HIPAA protections for personal data when it comes to new health technology companies that have been able to play by a different set of rules.
As a recent whistleblower report showed, Google has already started to pair non-anonymized Fitbit data with patient information from the nonprofit health system Ascension, with which Google has forged a partnership. Typically, a primary health provider wouldn't be allowed to share that kind of information. But Google has been able to circumvent HIPAA by exploiting a loophole that allows health care companies to share patient data with third parties, as long as the data is used to help “carry out its health care functions," according to Mona Sobhani, director of research at the University of Southern California Center for Body Computing.
Read the Open Markets statement calling on enforcers to block Amazon’s purchase of One Medical here.
🔊 ANTI-MONOPOLY RISING:
The Federal Trade Commission announced this week that it would sue to block the acquisition of virtual reality company Within Unlimited by Facebook. Within is the creator of the virtual reality fitness app Supernatural. According to the FTC, Facebook, which has its own fitness VR app, is attempting to acquire its competitor as opposed to competing on merits to obtain greater market share. The FTC also notes that this will reduce competition in the VR fitness app market. (CNBC, New York Times)
The Department of Justice this week announced an agreement with Cargill, Sanderson Farms, and Wayne Farms over claims that they colluded to suppress wages of workers. The corporations exchanged wage and benefit information and collaborated on compensation decisions, violating the Sherman Act. The corporations agreed to a $84 million settlement to workers harmed by the actions. Sanderson paid $38.3 million, Wayne paid $31.5 million, and Cargill paid $15 million. The settlement also prohibits data consulting firm Webber, Meng, Sahl and Company (WMS) from providing services that facilitate sensitive information-sharing and also prohibits the firms involved from further sharing compensation. The decree will also create a court-appointed compliance officer who will ensure oversight of the terms of the decree. (Reuters, DOJ)
The National Labor Relations Board (NLRB) and the Department of Justice signed a memorandum this week that cements greater cooperation between the two agencies in combating collusion by employers in the labor market and ensuring worker rights. The agreement also aims to allow the agencies to train each other’s staff. The NLRB also entered into a similar agreement with the Federal Trade Commission last week to work together to investigate mergers that hurt competition in labor markets and train each other’s staff. (Wall Street Journal, JD Supra)
The New York Attorney General’s office has filed an antitrust lawsuit against CVS Health alleging the corporation forced safety net hospitals that participate in the 340B Drug Pricing program, which discounts drugs purchased from manufacturers, to use the administrative services of a CVS-owned company, third-party administrator Wellpartner LLC. The scheme was implemented in 2017 when CVS purchased Wellpartner. (The Hill)
Affinity Credit Union filed a class action lawsuit against Apple last week claiming that the company is violating the Sherman Act by preferencing Apple Pay over rival payment apps and charging card issuers higher fees. Rival payment apps are unable to launch tap-to-pay iPhone apps comparable to Apple Pay. Because of this, users are more likely to use Apple Pay which charges issuers, such as Affinity, 0.15% on credit card transactions and 0.05% on debit card transactions, generating $1 billion from the practice in 2019. If this were not the case, Apple would not be able to charge these fees, according to Affinity. (Bloomberg)
📝 WHAT WE'VE BEEN UP TO:
Brian Callaci and Sandeep Vaheesan co-authored an article published in Dissent discussing the labor market in light of economic developments. The article states, “With the Federal Reserve Board’s decision yesterday to raise the federal funds rate by 0.75 percent, the fourth rate increase this year, workers’ recent gains are under threat.“
Sandeep Vaheesan was quoted in The New York Times discussing the FTC’s recent lawsuit blocking Meta’s deal within the emerging Virtual Reality technology space. Vaheesan stated the lawsuit was a “step toward making building, not buying, the norm for Facebook.”
The Washington Post quoted Executive Director Barry Lynn critiquing Amazon’s latest move in the health care market: “Amazon’s takeover of One Medical is the latest shot in a terrifying new stage in the business model of the world’s largest corporations. The deal will expand Amazon’s ability to collect the most intimate and personal of information about individuals, in order to track, target, manipulate and exploit people in ever more intrusive ways.” This quote was also mentioned in The Miami Times and Oregon Live.
Senior Fellow Johnny Ryan was featured in RTE for his complaint filed against the European Commission for its monitoring of Ireland's application of data protection rules. This sparked an investigation, led by Ombudsman Emily O'Reilly, who is now demanding more information from the EU Commission. Ryan’s work was also covered by Euractiv.
Claire Kelloway’s interview with Vox on price gouging with in the meat industry was cited in GoBanking Rates. Noting Tyson Foods, America’s largest meat producer, has raised prices by $2 billion on $1.5 billion in increased costs, she said, “That is a solid half a billion dollars that is not related to an increased cost of business. That’s purely an exercise of their market power and ability to charge more, and their profits really speak to that.”
A Current Affairs article cited Open Markets Institute for its view on the harms monopolization has on workers throughout every industry: “A situation in which a local economy is dependent on a single place of employment means that workers have even less bargaining power than normal.”
Brian Callaci’s study, “The Effect of No-poaching Restrictions on Worker Earnings in Franchised Industries,” was cited in Newswires as a source for analyzing recent impacts on low-wage worker income.
📈 VITAL STAT:
10%+
Market share controlled by JetBlue and Spirit after their merger, behind American Airlines (18%), Delta Air Lines and Southwest Airlines (17%), and United Airlines (14%).
📚 WHAT WE'RE READING:
“Internet for the People. The Fight for Our Digital Future.” (Ben Tarnoff): In his newly published book, tech writer Ben Tarnoff makes the argument that a ‘deprivatization’ of the Internet is required to break the dominance of the Big Tech giants Google, Facebook, Amazon, and others.
Nikki Usher’s Book:
News for the Rich, White, and Blue: How Place and Power Distort American Journalism
Nikki Usher, a senior fellow at Open Markets Institute’s Center for Journalism & Liberty, has released her third book, News for the Rich, White, and Blue: How Place and Power Distort American Journalism. In her latest work, Usher offers a frank examination of the inequalities driving not just America’s journalism crisis but also certain portions of the movement to save it.
Open Markets Employment Opportunities
You can find the full job listings here.
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