Secrecy, Deceit & Redactions: Inside Amazon & Google's Antitrust Wars
Monopolies are screwing consumers, crushing competition, and in the case of Amazon, harming small businesses on its platform. We break down these historic antitrust cases.
“Lina Khan Needs to See Shark Tank” bristled a Wall Street Journal headline for an op-ed piece.
“Lina Khan’s Artificial Intelligence” blared another.
“The Many Abuses of Lina Khan’s FTC” alleged a WSJ headline published on Valentine’s Day of all days!
There seems to be no love for Lina Khan, the chair of the Federal Trade Commission (FTC), on the opinion pages of one of America’s leading propaganda outfits for big capitalism—one that champions the country’s increasingly dystopian oligopolistic regime.
With so much wealth and power concentrated at the top, we don’t think the above statement is actually hyperbole. According to an Oxfam report published earlier this year: “$26 trillion (63 percent) of all new wealth was captured by the richest 1 percent [since 2020], while $16 trillion (37 percent) went to the rest of the world put together.”
And while much of the world has been suffering through decades-high inflation—much of it tied to corporate greed—billionaires have made off like bandits. These ghoulish raiders don’t even have the decency to hide their tracks—they’ve been openly confessing on earnings calls to raising prices on consumers, essentially using inflation as cover to pad the pockets of their designer slacks.
As Oxfam reported: “Billionaire wealth surged in 2022 with rapidly rising food and energy profits.”
What does this all have to do with Khan, the leader of a regulatory agency that has mostly sat back as our corporate overlords ran roughshod over taxpayer-funded agencies at the same time that the income inequality gap yawned ever wider?
Well, Khan, who famously rose to stardom with her 2017 paper in the Yale Law Journal titled “Amazon’s Antitrust Paradox,” is enraging elites and some of the most powerful corporations in the world by targeting mega businesses for their monopolistic practices, moving more aggressively to block mergers, and challenging—as best as one could operating within the confines of a US government agency—the neoliberal establishment.
They say imitation is the sincerest form of flattery—but perhaps if you’re Khan, watching as legacy papers like the WSJ obsess over your every decision may very well be more enjoyable. According to the good people at the American Economics Liberty Project, as of May 2023, the WSJ has published 76 pieces about Khan since her rise to FTC chair under the Biden administration. AELB counted one particularly impressive—or gross?—stretch in February 2023 in which Khan was the focus of 11 (!!!) different op-eds. See for yourself:
That overall number is likely greater now considering the waves Khan has been making on Wall Street, Silicon Valley, and other pockets of the country where corporate heavyweights plot more devious ways to become indispensable components of our daily existence.
We’ve watched several of Khan’s interviews in producing this podcast, and this much is clear: She mostly sees her agency’s role as one that’s following the laws set forth by Congress—a novel concept, we know. We’ll interpret it another way: She’s just doing her job—another novel concept.
With this in mind, let’s get into the heart of this episode.
Why We Covered This Topic
You can probably guess why.
The FTC in late September sued retail giant Amazon, saying the Seattle-based firm uses its “monopoly”—the FTC’s word—to crush competition, raise prices across the internet and take ever-greater profits from the third-party companies, mostly small businesses, that sell their wares on the platform. And much more.
This comes as yet another company so omnipresent in our lives, Google, is currently in court defending itself against a Department of Justice (DOJ) lawsuit for its own monopolistic behavior.
A hallmark of both these cases—aside from the whole monopoly problem and societal decay wrought by obscene amounts of wealth concentration—is secrecy. In Google’s case, they’ve successfully petitioned in the courts in some cases to keep company information secret, despite this being a public trial in which the alleged monopoly is a public company.
On Sept. 26—the same day the Amazon suit was announced—The New York Times wrote: “Now as the case, U.S. et al. v. Google, enters its third week in court, it is shaping up to be perhaps the most secretive antitrust trial of the last few decades.” The article noted that there was one period in which “more than half of the testimony in the trial was given behind closed doors.”
As for Amazon, the FTC’s complaint is so thoroughly redacted that it’s difficult to make sense of some of the allegations. Again, this is a public filing from a regulatory agency—not the Senate Intelligence Committee’s Torture Report. Take a look:
And there’s this gem:
There’s another critical reason why we produced this episode: In both cases, consumers are getting crushed. When it comes to Amazon, the company sets policies that effectively drive up prices across the internet, according to the FTC complaint. Here’s how the FTC explains it in a corresponding press release announcing the suit: “For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.”
What You’ll Learn in This Episode
The Biden administration, through the FTC and DOJ, is increasingly challenging the monopoly power of some of the nation’s most powerful corporations. Our guest for this episode, David Dayen, executive editor of The American Prospect, characterized the government’s actions as a sea change: “Since the 1980s, the government has defined down antitrust enforcement to be really concerned with consumer prices only,” he told us.
The pivot toward a more aggressive posture, especially as it relates to mergers, is largely attributed to an infusion of “new blood,” as Dayen calls it. He specifically mentioned the FTC’s Khan; the DOJ’s chief antitrust enforcer Jonathan Kanter, who began his career at the FTC; and Timothy Wu, who served as the White House’s special assistant to the president for technology and competition policy, a position he has since left.
Amazon, according to the FTC complaint, has genuinely convinced wide swaths of the population that its site is the mecca of bargain prices. In reality, Amazon sets policies and uses its power to raise the cost of products across the web through relationships with third-party sellers, the complaint alleges. These small businesses buy ads on the platform to appear higher in searches and utilize Amazon’s fulfillment services to ensure they’re Prime-eligible. They’re also penalized if they sell their goods at a cheaper price elsewhere. Here’s a particularly relevant portion of the complaint: “Most sellers must now pay for advertising to reach Amazon's massive base of online shoppers, while shoppers consequently face less relevant search results and are steered toward more expensive products.”
In another example of how Amazon allegedly raises prices across the internet, a secret project codenamed “Nessie,” which is highlighted in a section of the complaint littered with redactions, is an algorithm the company reportedly deployed to inflate its prices and monitor whether competitors do the same—meaning further driving up the cost of goods for consumers. According to the Verge: “Nessie allegedly helped Amazon increase its profits by artificially increasing its prices across different shopping categories until the company reportedly stopped using it in 2019.”
Third-party sellers, which rely on Amazon because of its overwhelming market concentration, give up nearly half their profits to Amazon in the form of fees, the FTC says. As a consequence, those sellers are effectively forced to raise their prices. Here’s from the complaint: “Amazon's one-two punch of seller punishments and high seller fees often forces sellers to use their inflated Amazon prices as a price floor everywhere else. As a result, Amazon's conduct causes online shoppers to face artificially higher prices even when shopping somewhere other than Amazon. Amazon's punitive regime distorts basic market signals: one of the ways sellers respond to Amazon's fee hikes is by increasing their own prices off Amazon.” There’s so much more we get into.
And there’s Google, which is currently on trial for monopolizing the search engine industry through a practice known as “Defaults.” The company has long been in business with top mobile phone makers, such as Apple, to ensure its Google browser is the default option when people search the web. It’s difficult to underscore how significant this case is. This headline to a recent Verge article sums it up: “The Google trial shows that Apple’s search deal is the most important contract in tech.”
The Google-Apple search engine deal is estimated at at least $10 billion per year. It’s such a large sum that other tech giants like Microsoft, the last tech company to face an antitrust suit of this magnitude, haven’t been able to compete. Bing, Microsoft’s search engine, reportedly commands only 3 percent of the search market. Google’s dominance gives it an advantage over its competitors and harms consumers who are routinely forced to navigate a web of paid search results and fewer privacy protections, says Dayen.
Who We Interviewed & What They Said
David Dayen is the executive editor of The American Prospect, a progressive online and print magazine.
“I think that there has been an absolute change in the way that antitrust enforcement is conducted. This change started in 2021 with the ushering in of Khan and Kanter under the Biden administration, but it may well continue through future administrations. We are already seeing a wave of these kinds of cases…There have been mergers that have been blocked. There have been other cases that had been brought. And I think the proof of the success of this, in my view, is the fact that merger activity is at a 10-year low. So companies out there know, if we're going to try to merge and monopolize markets, we're going to have some friction, we're going to have some trouble getting this past the FTC or the Justice Department's Antitrust Division. And so that creates a deterrent in of itself. And I think, ultimately, that's good for competition.”
Read the FTC’s complaint against Amazon
Here’s the DOJ Antitrust Division’s suit against Google, a case currently in trial
A report from Dayen himself about how Amazon takes profits from third-party sellers
In a previous episode, we covered the concept of “Chokepoint capitalism,” which refers to the ways in which Amazon and other behemoths screw over artists and consumers.
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