Amazon And Google May Face Antitrust Scrutiny Under Trump

 

Two recent papers sound the alarm about Amazon’s market power and control over much of the infrastructure of modern commerce. In Amazon’s Antitrust Paradox, Lina Khan explains that antitrust law, originally intended to check political power, has evolved to measure harm predominantly through consumer prices. Amazon grew through predatory underpricing strategies that distorted competition, but antitrust doctrine’s single-minded focus on price left these tactics unchecked, argues Khan.

Power, not just prices, is the point of antitrust law, she asserts, quoting Senator John Sherman during the 1890 passage of the Sherman Act: “If we will not endure a king as a political power, we should not endure a king over the production, transportation, and sale of any of the necessities of life.”

Like Khan, Olivia LaVecchia and Stacy Mitchell of The Institute For Local Self-Reliance (ILSR) urge “a hard look at Amazon’s growing stranglehold on commerce and the consequences of that power.” Their exhaustive report, How Amazon’s Tightening Grip on the Economy Is Stifling Competition, Eroding Jobs, and Threatening Communities, likens Amazon to the 19th century railroad baron.

Weak U.S. antitrust scrutiny of powerful tech platforms has been more an issue of political will than lack of legal foundation. Under Trump, that political will may be shifting.

Not only does Trump have an antagonistic relationship with Amazon’s Jeff Bezos, but he has also criticized Amazon’s market power and is now pitted against Silicon Valley on immigration issues. ILSR’s arguments that Amazon hurts jobs may resonate with Trump, despite Amazon’s recent promise to create 100,000 new jobs.

As for platform privilege, Amazon has reportedly prioritized its own products and services as it vertically integrates into a wide range of industries. For example, Khan writes that sellers who use Fulfillment By Amazon tend to be ranked higher in Amazon search results than sellers who use other delivery methods.

The Capitol Forum similarly reported that, for Amazon’s private label clothing, Amazon disproportionately promotes its own brands over competitors’ brands in the carousel “Customers Who Bought This Item Also Bought.”

And Bloomberg told the story of the laptop stand maker whose sales nose-dived and search rank plummeted after Amazon manufactured its own version (having learned from its data that the stand was a hot item). If Amazon did not account for nearly 1 out of every 2 dollars spent online, the laptop stand maker could viably sell their wares elsewhere when faced with such disfavored treatment.

To check the market power of Amazon and other tech platforms, Khan offers two main options for regulators: 1) promote competition by policing predatory pricing and vertical integration, or 2) prohibit discrimination, as is done with utilities and common carriers. The latter method was proposed by fellow Washington Bytes contributor Hal Singer, who suggested the FCC should police discrimination by edge providers to the same extent it polices discrimination by ISPs.

Such a non-discrimination standard is already on the horizon abroad. In one of its three Google antitrust cases, the European Commission charged Google with abusing its dominant position in search to steer traffic towards Google Shopping and away from competing comparison shopping services. “To remedy the conduct, Google should treat its own comparison shopping service and those of rivals in the same way,” stated the Commission. When the Commission issues its decision, antitrust regimes around the globe are likely to follow suit.

Although comparison shopping may not seem like a big deal, the Commission’s strategy may have far-reaching implications. If it can establish one narrow type of abuse of dominance, the Commission creates legal precedent to use against Google in other verticals, such as travel, local and maps. A recent WSJ report that Google prioritizes its own products in top Google search ad spots reveals yet another example of platform privilege that either the Commission or private litigants could challenge using such precedent.

E.U. abuse of dominance law is tougher on dominant firms than is U.S. jurisprudence, but bringing a similar case to Google Shopping is still possible in the U.S. (think U.S. v. Microsoft), though not a slam dunk. Leaked documents from the FTC’s Google investigation included staff findings that supported enforcement, and Attorneys General have called on the FTC to reopen the investigation.

If the Trump administration heeds such calls against Google or sets it sights on Amazon, any legal precedent that imposes a non-discrimination standard on one tech giant will ultimately impact the platform privilege of all.

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