The Corner Newsletter: October 25, 2024
Welcome to The Corner. In this issue, we look at Amazon’s failure to evade any of the three antitrust lawsuits that target its monopoly manipulation of prices across the internet.
Momentum Builds in Antitrust Lawsuits Targeting Amazon’s Retail Monopoly
Karina Montoya
Ever since the Federal Trade Commission filed an antitrust lawsuit against Amazon in September 2023, Big Tech lobbying groups have tried to spin the case as an example of regulatory overreach, and have predicted the courts would toss out the charges. But in recent weeks Amazon learned that not only must it indeed prepare to defend itself against the federal government, but also against charges filed by officials in Washington, D.C.
In the federal decision, a court in Seattle in September did toss out a few counts primarily about common law and consumer protection statutes. These had been filed by four of the 17 states attorneys general offices that joined the FTC complaint. But the court denied all of Amazon’s primary requests. The trial is set to begin in October 2026.
The ruling came hard upon the D.C. Court of Appeals decision in August reversing a lower court’s dismissal of a lawsuit brought by the D.C. Attorney General against Amazon for violating the city’s antitrust law. That complaint, originally filed in May 2021, was the first in the nation to lay out evidence of Amazon’s abuse of its monopoly power. The trial is scheduled to start in January 2027.
In that case, the D.C.’s the AG Karl Racine targeted Amazon’s terms of service that prohibited merchants who sell on the Amazon Marketplace from selling the same goods at lower prices anywhere else online. Given that Amazon charges sellers fees that can top 40 percent of a product’s final price, D.C. said the restrictions resulted in higher prices across the internet, and less real competition between Amazon and other online retailers.
In its lawsuit, the D.C. attorney general’s office detailed how Amazon continued to force the sellers to fix prices across the internet even after it theoretically adopted a new approach in 2019, which it called its “Fair Pricing Policy.” As a result, the suit read, Amazon was still able to impose an “artificially high price floor” across the retail sector that the corporation controlled.
In its appeal, Amazon argued that its policies did not expressly prohibit merchants from lowering the prices of goods anywhere else. But in ordering the proceedings reinstated, the Court of Appeals concluded that the trial court should look “past the express terms of the fair pricing policy to glean its effects in competition.”
In California, the state AG filed a lawsuit similar to the D.C. case in September 2022, and Amazon used similar arguments to get it dismissed. But a state court there ruled in March 2023 that the California AG had detailed “adequate factual allegations” to claim Amazon’s policies were anticompetitive. The court also noted Amazon weakened its own arguments when it admitted that no court has yet examined whether such pricing arrangements actually promote competition, as the corporation claims. Currently, that trial is set for August 2026.
In their cases, D.C. and California both focused on Amazon’s draconian terms of service and actions such as punishing merchants who lower their prices in Walmart, Target, eBay, or elsewhere. This includes demanding compensation from the sellers if other online stores lower prices on those same products. It also includes shutting off Amazon’s “Buy Box” — a prominent feature on a product page of Amazon Marketplace with buttons marked “Add to Cart” and “Buy Now.” Without this feature, shoppers have to go through extra steps to discover how to add a product to their cart. This practice can dramatically suppress a merchant’s sales.
The FTC in its inquiry also focused on such practices, and also brought forward new evidence of other tactics that reinforce Amazon’s monopoly over online retail. For example, how Amazon tied merchant participation in Amazon Prime with the signing of contracts to use Amazon’s fulfillment services; how the corporation designed its advertising business to extract additional profits from merchants; and even the algorithms used to raise prices of goods on and off the Amazon Marketplace.
All three cases — the FTC's antitrust suit and the ones in D.C. and California — hinge on arguments that Amazon is raising and manipulating prices to maintain its monopoly power, engaging in tactics that directly contradict the claim that the Everything Store has made goods more affordable for Americans.
Open Markets and Mozilla Report Aims to Stop Big Tech from Monopolizing AI
The Open Markets Institute and Mozilla coauthored a report, entitled "Stopping Big Tech from Becoming Big AI: A Roadmap for Using Competition Policy to Keep Artificial Intelligence Open for All," urging governments and regulators to take immediate steps to ensure that AI remains a competitive and innovative field, rather than being dominated by a few tech giants. The report, written by Open Markets EU director Max von Thun and OMI senior legal analyst Daniel Hanley, detailed how smart competition policy can ensure a diverse and competitive market where AI is developed by a wide range of participants — public, private, and non-profit — in ways that serves the broader public interest. The report was mentioned in Digiday and DigWatch. Read the full report here.
Open Markets Calls on EU Law Enforcers to Break Up Google AdTech Monopoly
The Open Markets Institute and its partners in a pro-democracy coalition of prominent civil society organizations in a letter called on the European Commission to separate and restructure Google’s dominant AdX online advertising monopoly. To justify the action, OMI and its partners expressed deep concern over the impact of Google’s monopoly on democracy, the news media, and the digital economy in Europe. The coalition singled out Google’s acquisition of Doubleclick in 2007 as a turning point that allowed the tech giant to control the digital advertising market, from ad buying and selling to the ad exchange itself. The result was an “inherent conflict of interest” that over time has devastated Europe’s news media. Google is being sued by the U.S. Department of Justice for its monopolization of the ad tech industry. Other members of the coalition include the Balanced Economy Project, Foxglove, and Article 19. Read the full letter here. Also read OMI senior fellow Cori Crider’s op-ed in Politico amplifying the letter. Crider also spoke to Bloomberg.
📝 WHAT WE'VE BEEN UP TO:
In an article for Tech Policy Press, Center for Journalism & Liberty director Courtney Radsch warns that tech giants have built up monopolies in AI data, making it harder for new smaller players to enter the AI space. “Big Tech firms have access to vast troves of data to develop, train, fine-tune, and ground their AI models,” Radsch writes. “The structural advantages these players enjoy… have put up huge barriers to entry for newcomers to the AI market or those who want to play fair.”
OMI policy counsel Tara Pincock participated in Project Syndicate’s Big Question panel, which included other prominent experts like former Greek finance minister Yanis Varoufakis and law professor Anu Bradford. Asked whether current antitrust law is fit for purpose, and if not, how it needs to change, Pincock responded, “U.S. antitrust laws, as written, are broad enough to cover a wide range of unfair competition practices. While the laws themselves remain fit for purpose, we need the courts to interpret them as Congress intended.”
CJL director Courtney Radsch moderated a panel at the Thomson Reuters Foundation's Trust Conference, held in London this week and entitled “Safeguarding Information: Accessing Facts in an AI-driven World,” in which participants discussed the ethical and practical considerations necessary to prevent the spread of misinformation and the further erosion of trust.
Open Markets executive director Barry Lynn joined KPFA Radio to discuss his October cover story in Harper’s magazine, in which he sounds the alarm on how Big Tech threatens democracy. On the show, Lynn calls on lawmakers, judges, and enforcers to go further in restoring our antitrust laws in order to protect democracy from today's monopolists.
The Telegraph quoted OMI Europe Director Max von Thun in an article on UK Prime Minister Starmer’s coziness with Big Tech. “Labour seems to have confused having a plan for the digital economy with handing the keys to Big Tech monopolists,” said von Thun. The article was reprinted in MSN.
Tech Policy Press quoted OMI executive director Barry Lynn as part of a panel on the future of U.S. tech policy after the presidential election. Asked about the future of the Federal Trade Commission, Lynn said, “The Trumpies would never keep [Lina Khan] as chair.”
🔊 ANTI-MONOPOLY RISING:
In a crackdown on predatory subscriptions, the Federal Trade Commission finalized a rule allowing customers to easily cancel subscriptions. Under the new Click to Cancel rule, corporations must offer their subscribers cancellation options that are as easy or easier than the process of initially signing up. (USA Today)
An FTC rule banning the use of fake online product reviews went into effect this week. The rule specifically targets the purchase or sale of positive reviews, as well as businesses that fabricate reviews through AI or attribute reviews they wrote themselves to fake or unaware third parties. (Associated Press)
The Consumer Financial Protection Bureau issued a final rule forcing financial institutions to more easily facilitate the transfer of citizens’ information. The new rule counteracts current market concentration by making it much easier for citizens to switch their providers for credit cards, loans, and deposit accounts. (United Press International)
U.S. insurance giant Blue Cross Blue Shield settled a class-action antitrust suit brought by hospitals and providers, agreeing to pay $2.8 billion to affected persons and organizations. The settlement amount is the biggest in history for healthcare antitrust litigation. (The Guardian)
📈 VITAL STAT:
68 hours
The amount of time the FTC estimates its new mergers and acquisitions rule will add to the length of time needed to fill out M&A paperwork, which could dampen enthusiasm for rollups by private equity firms. Earlier this month, the agency voted unanimously to expand the amount of information collected under the Hart-Scott-Rodino Act, including deal structures and any overlapping business relationships between entities affected by the proposed deal, from minority investors down to the suppliers to the companies they own. (Wall Street Journal)
📚 WHAT WE'RE READING:
Play Nice: The Rise and Fall of Blizzard Entertainment — Bloomberg video games journalist Jason Schreier takes an expansive look at the history of legendary video game developer Blizzard. Schreier contrasts the startup’s plucky and creative nature in its early days with its gradual decline in quality and culture as it embraced and pioneered increasingly exploitative pricing models, merged with developer Activision’s brand, and finally was acquired by Microsoft.
Order Sandeep Vaheesan’s forthcoming book:
Sandeep Vaheesan, the legal director at the Open Markets Institute, will publish his first book Democracy in Power: A History of Electrification in the United States on December 3. Vaheesan examines the history—and presents a possible future—of the people of the United States wresting control of the power sector from Wall Street, including through institutions like the Tennessee Valley Authority and rural electric cooperatives.