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The Corner Newsletter: July 15, 2021

Open Markets

Welcome to The Corner. In this issue, we take a closer look at the White House’s executive order on competition, Amazon’s far-reaching surveillance practices, building resilient food supply chains, and the systemic risks of cryptocurrency.

To read previous editions of The Corner, click here.

Biden Revolutionizes Fight to Rebuild Democracy and Break Monopoly

Last Friday, President Joe Biden ordered his administration to use its regulatory powers to combat monopolization across the whole U.S. economy. Biden’s executive order was the most important move against monopoly since the New Deal, due to its focus on protecting “democracy,” “liberty,” and the “free press” and its harsh denunciation of neoliberal competition philosophy. The order was especially sweet for Open Markets. As you know, we’ve led the fight against monopoly since first sounding the alarm more than a decade ago. But even today — when we have thousands of allies — Open Markets remains unique in always focusing foremost on the fight to control the language and ideas we use to understand power and purpose in our political economy. Our prime goal, in many ways, was to get a president to speak words precisely like those Biden spoke. The order was based largely on research, reporting, testimony, advocacy, and strategies published by Open Markets, and it built on our groundbreaking work on Big Tech, Big Ag, Big Pharma, Big Hospitals, and the exploitation and manipulation of working people. In many ways, the EO reads as a testament to the work of Phillip Longman, Sally Hubbard, Sandeep Vaheesan, Alexis Goldstein, Claire Kelloway — and every Open Markets’ team member and alum — and of key allies like the Washington Monthly. The breadth of the directive made very clear how long a fight still lies ahead, but this executive order was our biggest victory yet. Read the order here; view Biden’s speech here; read our statement here.

Open Markets Releases Report Detailing Amazon’s Extensive Surveillance of Customers and Competitors

Open Markets policy analyst Daniel Hanley authored a new report Wednesday examining the full breadth of Amazon’s consumer and competitor surveillance. The report, Eyes Everywhere: Amazon’s Surveillance Infrastructure and Revitalizing a Fair Marketplace, is a sequel to Open Markets’ first report on Amazon released in September 2020 examining the corporation's brutal worker surveillance practices. The report explores how Amazon uses its monopoly power to impose coercive and broad contracts that grant it the right to harvest as much data as possible from customers. For example, Amazon’s Marketplace e-commerce site tracks every action a user takes, collecting upward of 2,000 data points from a single purchase. Amazon also vigorously tracks every action of third-party businesses that independently sell their products on Amazon’s site. While highly dependent on Amazon, these third parties are also Amazon’s competitors as the corporation also sells products on its own site in direct competition with its third-party businesses. The report examines how Amazon uses the data from its surveillance to extend and fortify its monopoly power. Specifically, we detail how the corporation uses the data to copy competitor products, boost its own products over those of rivals, and to manipulate customers and competitors. Our report proposes five solutions that would fundamentally restructure Amazon’s operations and dismantle its surveillance infrastructure. 

The full report is available here. Open Markets’ statement on the release of the report can be read here. 

Goldstein Testifies Before House About Systemic Risks in Cryptocurrency Markets

On June 30, Open Markets’ Financial Policy Director Alexis Goldstein testified at a hearing on the risks of cryptocurrencies before the House Financial Services Oversight and Investigations Subcommittee. Her testimony was mentioned in Law360, ThinkAdvisor, and Truthout, among others. In her presentation, Goldstein spoke of gaps in consumer and investor protections, growing concentration and centralization, and how a lack of transparency in the market may interfere with regulators’ ability to manage any emerging systemic risks. Goldstein highlighted the potential for spillover effects to the broader economy, as under-regulated hedge funds that do business with too-big-to-fail banks move into cryptocurrency. In her written testimony, Goldstein noted a recent survey that showed North American funds expect to have over 10% average exposure to cryptocurrency by 2026. Such a presence by hedge funds in crypto “may produce dire risks to the financial system such as future crises, as sharp swings in the volatility cryptocurrency markets could lead to forced liquidations of other assets,” Goldstein wrote. Read Goldstein’s full written testimony here. View the hearing here.

Open Markets’ Report Underscores Importance of Resilient Food Systems

Last week, Open Markets released a report detailing how the Department of Agriculture can promote more resilient food supply chains. The report was based on an official comment Open Markets filed with the USDA, as part of the agency’s effort to learn from massive COVID-19 disruptions to U.S. food systems. Staff members Claire Kelloway, Alex Spring, and Garphil Julien contributed writing and research, and allies Friends of the Earth and Food & Water Watch co-signed our comment. In the report, Open Markets argues that corporate consolidation and Wall Street-driven austerity make for especially fragile food systems, as a shrinking handful of corporate decision-makers prioritize short-term returns for shareholders over worker safety, diversity, and capacity building. “A truly resilient food system will promote food sovereignty, allowing all communities to have a say in what they eat and how its produced, including greater opportunities for all communities to directly participate in their own food production and distribution,” the comment says. To this end, Open Markets recommends policies that support more regional and cooperatively-run food businesses. This includes strengthening fair competition rules in the livestock industry, rebuilding USDA’s cooperatives department, and prioritizing community-focused organizations in procurement contracts, among other actions.

See Open Markets’ report based on this comment, “Building Food Systems Resiliency Through Different Business Scales and Forms,” for more.


Ohio State AG Seeks to Declare Google a Common Carrier, After Open Markets Testimony

The attorney general of Ohio, Dave Yost, recently asked an Ohio court to declare Google to be a public utility, in order to impose common carrier rules on the corporation. “When you own the railroad or the electric company or the cellphone tower, you have to treat everyone the same and give everybody access,” Yost wrote in a statement. The action appears to be based largely on Open Markets testimony delivered before Yost and his team, along with the Judiciary Committee of the Ohio Senate, in October 2019. Executive Director Barry Lynn said in his testimony: “What allowed these three corporations to build such powerful and effective manipulation machines was the absence of common carrier rules. The liberty to price what each seller must pay for basic services, and what each end buyer must pay for the good or service being sold, is what allows Google, Facebook, and Amazon to individually target and exploit each seller and buyer.” (The New York Times)

🔊 ANTI-MONOPOLY RISING:

  • This week, French antitrust regulators fined Google $593 million after finding that the company’s negotiation with news publishers to display their content was not in “good faith.” Early last year, Google was ordered by the watchdog, under a new European Union digital copyright law, to pay news publishers for showcasing their content on Google News. According to publishers, Google did not provide them with payment information and attempted to circumvent the payment process by introducing a new product called News Showcase, which would have excluded publishers from getting income from search results. (TechCrunch)
     

  • Last week, attorneys general from 36 states and Washington D.C. filed an antitrust lawsuit against Google, alleging the abuse of market power over developers of mobile apps through the Google Play store. The lawsuit claims that Google’s 30% commission for apps through its Play platform is anti-competitive. Google illegally exercises its market power by cutting off alternate channels that app developers can use to sell their products, according to the lawsuit. The plaintiffs say Google, which distributes 90% of Android apps in the U.S., has offered incentives to and stopped efforts by other app stores to distribute Android apps. (CNBC)
     

  • This week, Dominion Energy announced that it would terminate a deal involving the sale of its Questar Pipelines business to Warren Buffett’s Berkshire Hathaway after the Federal Trade Commission (FTC) began to scrutinize the deal. In a statement by the FTC, the deal would have stopped competition between Questar and Berkshire’s Kern River Pipeline in the Rocky Mountain area that provides energy to Central Utah. (Bloomberg)

📝 WHAT WE'VE BEEN UP TO:

  • Open Markets Institute was extensively cited by Amazon and Facebook in the corporations’ respective petitions to evade strict antitrust enforcement by requesting that FTC Chairwoman Lina Khan recuse herself from antitrust investigations against them. The corporations both acknowledge Khan’s academic scholarship at Open Markets, and while the corporations mention Khan’s academic scholarship at Open Markets as attempts to prove her biases, the corporations, in turn, demonstrate Open Markets’ scopious impacts and achievements.

  • Sandeep Vaheesan published a piece in Slate Magazine about how the FTC can still go after Facebook despite losing its recent antitrust complaint against the social network. “Despite the loss ... [The FTC] could file an administrative complaint and litigate the case in house at the FTC, instead of in federal court.”

  • Daniel Hanley spoke with Bloomberg Law about how the FTC can revive its antitrust case against Facebook. “’What the FTC needs to do is come up with a much more specific methodology on what market Facebook is actually in,’ said Daniel Hanley, an analyst at Open Markets Institute, an anti-monopoly organization in Washington. ‘There’s a million ways to cut this, and the agency has a mountain of evidence to draw from to draw the appropriate market.’” The story also ran in Bloomberg.

  • Barry Lynn spoke at an economics conference sponsored by the Circle des Economistes of France in Aix en Provence, the first major conference in France since the beginning of the COVID-19 pandemic. Lynn addressed the threats to human liberty and democracy posed by Google, Facebook, and Amazon, and the growing threat posed by Chinese control over key supply chains. Other speakers at the conference included European Central Bank chief Christine Lagarde, French Minister of Economy and Finance Bruno Le Maire, and German Minister for Economic Affairs and Energy Peter Altmaier. 
     

  • Sally Hubbard was interviewed by Vox about how Big Business exploits small business and what needs to be done about it: “It’s not just antitrust, it’s not just breaking them up, but it’s rules like nondiscrimination and neutrality rules,” Hubbard said.
     

  • Daniel Hanley authored a piece in ProMarket about the history and harms of exclusive deals by dominant firms, and the legal mechanisms available to ban them. “Left unchecked, dominant firms will continue to use exclusive deals to entrench their market position, supplant competition, and coerce smaller firms into working exclusively with them. There are legal mechanisms available to restrict and prohibit these legal instruments. History shows that the law can be used to ban these agreements. The FTC can take action to do so now.” Real Clear Markets also ran the article.
     

  • Garphil Julien wrote a piece for The Washington Monthly about how the assassination of Haitian President Jovenal Moïse highlights the nation’s monopoly-dominated economy. “If Washington wants to avoid further political instability in Haiti and other countries, it should send ideas as well as aid. Promoting economic democracy through an anti-monopoly policy and conditioning at least some economic aid on anti-monopoly reform would be an essential first step.”
     

  • Sandeep Vaheesan testified at a D.C. Council Committee hearing on non-competes, urging the District not to carve out additional workers and instead amend the law to extend its protection to all workers in the District: “Non-compete clauses are classic contracts of adhesion presented to workers by employers on a take it-or-leave it basis.”
     

  • Barry Lynn was interviewed by NPR about the growing anti-monopoly movement. "'This is a revolutionary moment,’ said Barry Lynn, the director of the Open Markets Institute, a left-leaning think tank that has helped lead the charge for a new era of trust-busting. ‘Now we're waking up to the fact that we live in a world in which the monopolists govern, and unless we actually use what tools we have right now, it's kind of all over. Our democracy is over, it's done with.’" He was also featured in a similar piece by Time Magazine.
     

  • Johnny Ryan and his group, The Irish Council for Civil Liberties, continued to receive coverage on their privacy lawsuit against IAB Tech Lab for allegedly breaching EU privacy rules. “The case brought by Johnny Ryan centres on the data shared between ad brokers and other firms while ad space is being auctioned as a site loads.” Coverage included: DataProtection.news, GRC World Forums, and Media Street.
     

  • Sandeep Vaheesan was quoted in The Washington Post commenting on the importance of the FTC vote to revoke a policy that constrained its role in regulating unfair methods of competition. “We want companies to compete by making better products, investing in new equipment and tech — not purely relying on their financial advantages to capture market share.” 
     

  • Barry Lynn was quoted in Politico commenting on the pros of Biden’s competition policy executive order. “’This is far better than what most people expected,’ Barry Lynn, executive director of the Open Markets Institute in Washington and one of the leading anti-monopoly intellectuals, told West Wing Playbook.” Lynn’s statement about the executive order was also quoted in The Economist, Truthout, The Financial Times, Common Dreams, Mashable, Bloomberg Law, and JD Supra. 
     

  • Alexis Goldstein was featured on the “By Any Means Necessary” podcast discussing the economic crisis. “In the first segment, Sean and Jacquie are joined by joined by Alexis Goldstein, former Wall Street professional turned financial reform advocate, to discuss the historic 9.5% contraction of US GDP in just three months, whether the GOP plan for the next relief package will bring any actual relief to those who need it most, and the economic implications going forward if little or nothing is done to address the public health or economic crisis.”
     

  • Nikki Usher was interviewed by the Illinois News Bureau about her new book, News for the Rich, White, and Blue: How Place and Power Distort American Journalism: “It is a well-accepted premise that local journalism is inherently good for democracy, and that it is something that we absolutely need for democratic life to function and flourish,” Usher said. “But, as newspapers continue to rely on subscription revenue, they need to hold the interest of those willing and able to pay for news. This leads to journalism that perpetuates an elite democracy, where news is about elites for elites.” Usher’s book was also mentioned in CNN, Columbia Journalism Review, EurekAlert!, IndiaEducationDiary, and ABC10.
     

  • Barry Lynn was interviewed by America Magazine commenting on Facebook’s monopoly power. ‘“Facebook talks about building community,’ said Barry Lynn, executive director of the Open Markets Institute. ‘But really what they do is extract from community.’” 
     

  • Daniel Hanley was quoted in The Tennessee Tribune explaining the impacts of harmful vertical mergers. “Dominant firms can use vertical mergers to foreclose competitors from accessing essential inputs, distributors, or customers,” Hanley said. “This lack of access could lead to competitors exiting the marketplace, or shutting down their operations entirely, or deter future competitors from entering the market for no reason other than the fact that a firm increased its market power from a merger.” 
     

  • Phillip Longman was mentioned in The Washington Monthly for his 1985 prediction about the politics around the generational divide. “Phil was right that a generational split would define American politics. It just didn’t turn out to be a fight over Medicare and Social Security benefits. It turned out to be a fight about everything else.”
     

  • Open Markets’ concentration report was cited in The Wall Street Journal in an article about the Biden administration's recent executive order on competition policy. “In mobile-phone services, four firms control 98% of market share; in airlines, four firms control 76% of the market; in hearing aids, four firms control 84% of the market; in eyeglasses, three firms have a 61% share; in diapers, two firms have a 64% share; in dialysis, two firms have a 92% share, according to Open Markets.”
     

  • Barry Lynn was featured on KCRW speaking about Amazon’s harmful surveillance. “They're using the services that they provide to other companies that are storing their data online to basically spy on those companies. That's a problem.” Lynn says. “Amazon uses its power to favor certain companies over other companies in a rather arbitrary way. And that's actually not how a marketplace is supposed to work.”
     

  • Open Markets’ FTC petition to ban non-compete clauses was mentioned in The Huffington Post. “A host of progressive and labor groups, led by the Open Markets Institute think tank, have been calling on the FTC to ban the clauses through the rule-making process.”

📈 VITAL STAT: 72

The number of initiatives included in the “Executive Order on Promoting Competition in the American Economy” signed by President Joe Biden last week.


📚 WHAT WE'RE READING:

Nikki Usher’s New 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.

Barry Lynn’s New Book:

Liberty From All Masters

The New American Autocracy vs. The Will of the People

St. Martins Press will publish Open Markets Executive Director Barry Lynn’s new book, Liberty From All Masters, on September 29. The book is Barry’s first since Cornered, in 2010. In it, he details how Google, Amazon, and Facebook developed the ability to manipulate the flow of news, information, and business in America, and are transforming this power into autocratic systems of control. Barry then details how Americans over the course of two centuries built a “System of Liberty,” and shows how we Americans can put this system to work again today. Purchase your copy here. 

Open Markets Employment Opportunities

You can find the full job listings here. 

🔎 TIPS? COMMENTS? SUGGESTIONS?

We would love to hear from you—just reply to this e-mail and drop us a line. Give us your feedback, alert us to competition policy news, or let us know your favorite story from this issue. 

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