Europe is struggling to gather evidence against Amazon for the antitrust case it has opened against the e-commerce giant for its market dominance and anti-competition practices, the Financial Times reported.
Brussels announced the case in the summer of 2019 on allegations that Amazon was manipulating its algorithm to favor its own products over third-party sellers on its websites.
They have reportedly been unable to access the algorithm and the list of detailed questions they sent to Amazon has not yet received a response.
Antitrust lawsuits have become commonplace as big tech companies come under increasing levels of scrutiny, including in the US.
Parler has also filed lawsuits against Amazon while the gaming giant behind Fortnite, Epic Games, has taken on Google and Apple.
“Cases involving algorithms are complex,” a Brussels-based legal expert told the Financial Times. “But the EU doesn’t have to dictate how a computer code works. It is for the company that uses the algorithm to deliver a fair result.”
If Amazon is found to have breached European law, the company could be fined up to 10% of its annual revenue. The figure stood at $233 billion for 2018, meaning a fine of up to $23 billion, but has since increased.
The lawsuit was followed by a second one in November 2020 over the way Amazon uses data from third-party sellers on its websites.
The Financial Times said the EU had been given evidence that Amazon may not gain anything from disadvantaging third-party sellers as they generate large amounts of profit for the company.
“Why would Amazon want to worsen the customer experience if customers will realize they can get better quality products for cheaper elsewhere?” an insider with knowledge of the defense told the Financial Times.
Those familiar with the case said an investigation could still take years and may still result in a successful outcome for the EU.
Amazon did not respond to the FT’s request for comment and the EU said it was still investigating.
Facebook has motioned to dismiss two lawsuits that aim to break up the tech giant.
The firm filed motions asking to dismiss lawsuits filed by the Federal Trade Commission and 48 state attorneys general on December 9. The suits alleged Facebook neutralizes competitors – like by buying WhatsApp and Instagram – before they can threaten the social media giant’s dominance.
Facebook argued the suits fail to provide enough evidence that the tech giant engaged in anticompetitive practices. For instance, the social media giant does not have monopoly power over prices because it offers products for free, the motion argues.
Regarding the attorney general suit, Facebook argues the states waited too long to act, and cannot prove that Instagram and WhatsApp would have been competitors to the social media giant.
“Over the many years since the government cleared the Instagram and WhatsApp mergers, this competition has only gotten more fierce, and consumers have benefitted enormously from Facebook’s investments in these free apps,” a Facebook spokesperson said in a statement to Insider. ” The government ignores these realities and attempts to rewrite history with its unprecedented lawsuit.”
The US has threatened to break up tech giants, including Facebook, Apple, Amazon, and Google, for years. The Department of Justice filed an anticipated lawsuit against Google’s alleged exclusionary business deals in October.
Experts previously told Insider the suits are unlikely to lead to a break up of WhatsApp and Instagram from Facebook but will pave the way for greater tech oversight.
President Joe Biden is planning on stacking his administration with antitrust advocates as insiders expect him to strengthen tech regulation.
Vaccines are rolling out and picking up speed. There’s finally a light at the end of America’s long coronavirus tunnel as massive advances in public health provide reason to be optimistic about 2021.
But the world that reopens won’t be the same one that shut down nearly a year ago, and the good news could go beyond a return to “normalcy:” the American economy of the 2020s could be the best in decades, with real optimism about enough jobs being created to put 10 million-plus Americans back to work.
The pandemic has already transformed the personal and professional worlds in ways that will have long-lasting repercussions.
First, the Biden administration wants to “go big” on a $1.9 trillion stimulus that could supercharge the economy when the world comes out of lockdown (without overheating it), following more than $3 trillion of stimulus spending in 2020. Second, regulatory actions announced at the end of the Trump era have the potential to reshape the tech sector that dominated the first two decades of the 21st century and still dominates the stock market.
And finally, the world of work was changed to a largely remote one, with ripple effects for both worker productivity and across the housing market. With office workers doing their jobs from home, the era of the “superstar city,” where New York and San Francisco hoovered up the best jobs and talent, may have ended in 2020.
President Joe Biden promised in mid-February that big stimulus spending would bring the economy “roaring back” but all of these changes may add up to more than just a new “roaring twenties,” but a whole new economic era.
Because of prior stimulus, American consumers are sitting on approximately $1.6 trillion of pent-up spending after 11 months of solitary leisure activities, according to Commerce Dept. figures released on Friday.
In other words, the boom is coming. And based on the three drivers outlined below, the ensuing recovery could usher in a wholly unique era of American economic prosperity.
(1) Wall Street sees stimulus sparking a boom
As momentum gathered for Democratic passage of Biden’s stimulus in February, Wall Street banks began to upgrade their projections for economic growth, factoring in expectations of a successful vaccine rollout.
A team of JPMorgan strategists led by John Normand wrote on February 12 that the economic expansion over the next year “will be much stronger than average” on account of pent-up demand, augmented incomes through stimulus, and support from the Federal Reserve including quantitative easing. US strategists at the bank believe the consumer’s recovery will be the dominant theme for 2021 with “blowout expectations for the rest of the year.”
Bank of America strategists led by Candace Browning Platt wrote that the service sector is “like a coiled spring waiting to be let loose,” with a reopened economy not just meeting demand repressed by the pandemic but also boosting employment since some services sectors account for an outsized share of jobs.
BofA’s Michelle Meyer agreed, writing that it was time to “fasten your seatbelts” as evidence pours in to support the view of strong economic growth in 2021 – in fact, “the strongest in nearly four decades.” Rather than a coiled spring, she wrote of a “rubber-band” cycle, with a big decline leading to just as fast a snapback.
The recovery should avoid the sluggishness of the post-2008 decade, according to Meyer, because of healthy household savings and aggressive stimulus, two interrelated factors. Finally, BofA’s Ethan Harris wrote that while the 2010-2019 recovery was the slowest in history, the 2021 recovery may be among the fastest.
The Commerce Dept. data from January show consumer finances are strong, as the $900 billion stimulus passed in December boosted spending by 2.4% and personal household income by 10% – the second highest on record.
(2) A tech breakup could create (a lot) more jobs
The FAANG (Facebook, Apple, Amazon, Netflix, Google) stocks drove 40% of the stock market rebound in July 2020, per BofA Research, but what if they get broken up in the 2020s?
As the Trump administration drew to a close in 2020, the Dept. of Justice and Federal Trade Commission launched respective actions against Google and Facebook. The case against Facebook, in particular, seeks a true break-up including the forced separation of Instagram and WhatsApp. These cases wouldn’t reach the trial stage until well into the new decade, but they have the potential to transform the economy.
Scott Galloway, professor of marketing at NYU and well-known tech industry pundit, told Insider that Facebook, WhatsApp, and Instagram could be worth more if they were forced to break up into three separate companies – and this could translate into more jobs for workers, more opportunities for entrepreneurs, and more value for investors.
As independent companies, Instagram and WhatsApp could engage in aggressive hiring that they previously couldn’t do under Facebook, he said. What’s more, with Facebook and other monopolies weakened, investors would be more willing to allocate more funds to more companies that challenge these big tech players.
“Consider that two years after the federal government broke up Rockefeller’s Standard Oil into 34 separate firms, their combined value had doubled,” Galloway added. “The companies spun out of the breakup of AT&T in 1983 outperformed the S&P 500 for the next decade. We’ll see the same thing in big tech.”
A 2018 report by anti-monopoly think tank Open Markets Institute, called “America’s Concentration Crisis,” revealed just how many industries have come to be dominated by certain power players in recent years. Three companies hold 85% of social networking site market share – Facebook comprises 70% of that share alone. It’s a similar story for the search engine industry, where the two largest firms own 97% of the market share, with Alphabet leading the way at 91%.
Matt Stoller, director of American Economic Liberties Project and author of “Goliath,” a 100-year history of antitrust policy, also said that a tech break-up would benefit the economy.
“Facebook is suppressing the growth of new and vital sectors of the economy by refusing to allow anyone else to create innovations within the social networking space,” he told Insider. “It’s similar to IBM, which blocked the creation of a software industry until the antitrust case of the late 1960s forced the company to unbundle its hardware from its software.”
(3) The work-from-home revolution could bolster new cities
Around the 1990s, the “superstar effect” became a feature of the American economy. The concept explains the vast difference in earnings between a star and a superstar in the same field. Think: Michael Jordan, Bill Gates, and New York City.
But there’s another word for the dynamic when a superstar gobbles up most of the gains: monopoly. Stoller has argued for years that a shift in antitrust regulation since the 1970s has allowed for the rise of more monopolies across the economy, resulting in less competition and greater inequality. Starting in the 1970s, Stoller wrote for Vice in 2019, regional inequality widened as a result of airlines cutting routes to the rural, small, and medium-sized cities they no longer needed to serve in a more concentrated economy.
New York City, the country’s media and finance hub, had 10.1 million employees in its metropolitan area in November 2019, and Los Angeles, center of the entertainment industry, had 6.2 million employees. San Francisco, the heart of tech, has 2.5 million employees, although that doesn’t account for the millions more in the Bay Area’s other cities: Oakland and San Jose. These three superstar cities house more jobs than some entire states have alone: Consider Alabama’s 2 million employees in the same time period.
Such job concentration leads to a higher cost of living. The median home value in the US is $266,104, but that jumps to $512,941 in the NYC metro area and $1.3 million in San Francisco.
But when it comes to cities, the pandemic may have snapped that thread, freeing up remote work for white-collar employees on a massive scale. So what happens when the workers that were locked for decades into superstar cities – especially San Francisco and New York – are free to fan out around the country? The answer could well be a new era of more broadly shared prosperity and a correction to decades of increasing regional inequality.
The labor and real-estate markets both still have underlying inequities. Service workers still have to physically report to their jobs while remote workers don’t, and some of those who have fled expensive addresses have endured salary cuts. Meanwhile, the housing market got so expensive in 2020 that it’s discouraged many from the dream of homeownership for good.
“I have long said that we will see the rise of the rest, given the incredible expensiveness and affordability of existing superstar cities,” he said. “But it’s not going to be the rise of everywhere. It’s going to be the rise of a dozen or two dozen places.” These places will consequently attract new talent, changing economic development.
Florida doesn’t see bigger cities going away, though, predicting a resurgence as we inch closer to widespread vaccination, even if remote work is likely here to stay. He did predict that post-pandemic cities will be reshaped and revived by a newfound focus on interpersonal interaction that facilitates creativity and spontaneity.
“Even as offices decline, the community or the neighborhood or the city itself will take on more of the functions of an office,” he said. “People will gravitate to places where they can meet and interact with others outside of the home and outside of the office.”
Insider’s Josh Barro has already argued that 2021 should be great for the economy in general. Indeed, markets hit record highs at the turn of the year, seemingly pricing in a vaccine-led recovery. Just a few months later, it’s beginning to look like the biggest boomtime for the US economy in a generation. Some experts have even floated the idea of a new “Roaring ’20s,” with animal spirits unleashed after roughly 18 months of isolation, as pent-up capitalist energy explodes when lockdown finally lifts.
Instead of flappers and a jazz revolution, we’ll have digital nomads and zoom concerts, but one thing is certain: increased competition among cities and technology companies, if done right, has the potential to improve life for all Americans over the next decade.
James filed the antitrust case against Facebook in December, alleging the company has illegally stifled competition to protect its monopoly power. She is leading a bipartisan group of 48 attorneys general from around the country.
Users, she said, have no alternative to Facebook. The company acquired the photo-sharing app Instagram in 2012 and messaging app WhatsApp in 2014.
“Facebook used its power to suppress competition so it could take advantage of users and make billions by converting personal data into a cash cow,” James said in a December statement.
James is also leading several attorneys general in a bipartisan antitrust investigation against Google parent company Alphabet for its alleged monopoly. “These companies are not too big to fail or to break up,” she told Bloomberg.
In early 2020, Democrats in the US House of Representatives concluded that Facebook, Alphabet, Apple, and Amazon had a monopoly of power. In October last year, the Justice Department introduced an antitrust lawsuit against Alphabet. Google was then the first tech company to see major antitrust action, since the federal government sought to break up Microsoft in the 90s. The action posed a threat to other tech giants such as Facebook, Apple, and Amazon, who could face sweeping changes as a result.
Slaughter began her term at the FTC in May 2018, after being nominated by President Donald Trump. Rosenworcel was first nominated to serve on the FCC by President Barack Obama in 2012, and is the longest-serving Democratic commissioner at the agency.
The appointments signal that Biden’s administration will likely continue to get tougher on regulating tech and telecom companies, building on the Trump administration’s mix of increasing antitrust enforcement, attempts to roll back Section 230’s legal protections for internet companies, and laissez-faire approach to telecom regulations.
Slaughter has supported the FTC’s increasingly hard line on antitrust issues as well as privacy, but she has also argued the agency should have taken action earlier and issued harsher penalties more likely to deter companies from future law-breaking, including holding executives personally liable for their companies’ privacy violations.
Slaugher has also said that the FTC’s enforcement efforts should be “anti-racist” through ensuring markets aren’t racially discriminatory and protecting consumers from algorithmic bias.
Rosenworcel’s appointment to the FCC, however, marks an even greater departure from her predecessor, the outgoing Chairman Ajit Pai.
Rosenworcel has pushed for the FCC to use its authority and resources to expand internet access, particularly to students whose lack of home internet has prevented them from keeping up in school while participating in remote learning during the pandemic – the so-called “homework gap.” She has also voiced support for net neutrality in the past, and will likely face pressure to reinstate the policy.
Slaughter and Rosenworcel will likely play a key role in any efforts to modify Section 230, which some Democrats say lets tech companies off the hook for not doing enough to disincentivize hate speech, harassment, and violence on their platforms.
The appointments aren’t final, as Biden will still need to decide whether to nominate Slaughter and Rosenworcel as permanent chairs. They will also likely face delays implementing their more ambitious plans until Biden nominates additional commissioners to break the current 2-2 split between Democrats and Republicans at both agencies.
Both the FTC and FCC are led by as many as five commissioners, appointed by the president, and neither is allowed to have more than three members of one party. Biden’s appointments will need to be confirmed by the Senate, a likely prospect as Vice President Kamala Harris could break any tie between the evenly divided upper chamber.
Parler CEO John Matze Jr. fled his home receiving death threats, a lawyer for Matze said in a court filing on Friday.
The attorney, David Groesbeck, wrote in the document that Matze had to “go into hiding with his family after receiving death threats and invasive personal security breaches.” The filing was part of Parler’s antitrust lawsuit against Amazon Web Services to put the platform back online.
The current filing aimed to seal parts of the suit filed as a safety measure.
Amazon Web Services stopped hosting Parler after it said the platform had violent content that was tied to the January 6 siege at the US Capitol. In its own court filing last week, Amazon alleged that Parler was both unwilling and unable to remove “content that threatens the public safety, such as by inciting and planning the rape, torture, and assassination of named public officials and private citizens.”
Supporters of President Donald Trump breached the building and clashed with law enforcement, halting the joint session of Congress as lawmakers were debating challenges to electoral votes.
Five people died, including a Capitol Police officer and a woman who was shot by law-enforcement officials while participating in the riot.
Trump’s Twitter account was subsequently suspended and conservatives urged their followers to join Parler afterward. The app jumped to No. 1 on Apple’s App Store before the company pulled it. Google also yanked Parler from its store.
In the Friday court filing, Groesbeck didn’t specify who was threatening Matze, but said his position “as the CEO of the company AWS continues to vilify,” put him in danger.
Bloomberg reported earlier this week that Amazon said Parler users were threatening their staff.
“Both sides of this dispute have shown that their employees have suffered real harassment and threats-including, on both sides, death threats-owing to the charged nature of this litigation,” Groesbeck said in his filing.
Amazon is facing fresh antitrust scrutiny after consumers filed a lawsuit Thursday accusing the company of illegally colluding with major book publishers to drive up prices for ebooks.
The lawsuit claimed that Amazon negotiated anticompetitive deals in 2015 with the “big five” publishers — Hachette, HarperCollins, Macmillan, Penguin Random House, and Simon & Schuster — that allowed them to “inflate” prices by up to 30%.
Amazon, which controlled nearly 90% of the ebook market as of 2018, was able to benefit immensely from the higher prices by charging consumers more, according to the lawsuit.
Apple was found guilty in 2013 of colluding with the same five publishers — using a similar pricing practice — to illegally fix ebook prices, and lawmakers in the US and EU have previously criticized Amazon’s alleged use of the so-called “most favored nations” clauses.
Several ebook customers on Thursday filed a lawsuit against Amazon accusing it of violating antitrust laws by illegally colluding with the “big five” publishing houses to drive up the prices of ebooks.
The lawsuit alleged that Amazon entered into anticompetitive pricing agreements in 2015 with Hachette, HarperCollins, Macmillan, Penguin Random House, and Simon & Schuster that allowed the companies to artificially increase prices by as much as 30%.
Amazon, which controlled 89% of the ebook market as of 2018, according to a Bloomberg analysis cited in the suit, then used its dominance to benefit from those prices hikes by charging consumers more.
“Time and again, Amazon’s response to competition is not to compete on a level playing field, but to try to eliminate the competition – and that’s not how things are supposed to work,” Steve Berman, managing partner of Hagens Berman, the law firm that brought the suit, told Business Insider in a press release.
Amazon and Hachette declined to comment. The other publishers did not respond to requests for comment.
The lawsuit alleged that Amazon illegally inflated prices using a tactic called as “pricing parity,” which relies on “most-favored-nation” clauses. MFNs are, in the business context, agreements between buyers and sellers that ensure a buyer gets as good of a deal on that seller’s products as any other buyer in the market.
But the lawsuit – similar to previous investigations by lawmakers in the US and EU – accused Amazon of using MFNs to instead prevent publishers from selling their ebooks to consumers at a lower price on websites that compete with Amazon.
“Amazon’s behavior is astonishingly brazen, especially in light of past litigation and recent government actions in the US and abroad,” Berman said.
The EU reached an agreement with Amazon in 2015 over its use of MFNs, saying at the time that the practice “may have made it more difficult for other e-book platforms to innovate and compete effectively with Amazon.” That agreement barred the practice for five years, but only in the EU.
In its landmark antitrust report in October 2020, the House Judiciary Committee also slammed Amazon over the issue, saying: “Amazon has a history of using MFN clauses to ensure that none of its suppliers or third-party sellers can collaborate with an existing or potential competitor to make lower-priced or innovative product offerings available to consumers.”
Amazon previously used a similar pricing tactic to prevent other third-party sellers on its online marketplace from charging customers more on competing sites, ending the practice in March 2019 amid heightened antitrust scrutiny.
The scheme Amazon and the big five publishers are accused of employing isn’t new to the ebook industry, either.
The court also barred publishers from colluding with each other or using MFNs for five years. According to Thursday’s lawsuit, that led to lower ebook prices in 2013 and 2014, before Amazon’s renegotiated deals in 2015 caused prices to surge again.
The lawsuit, filed in the Southern District of New York, is seeking class-action status, and the plaintiffs are asking the court to reimburse consumers who were overcharged by Amazon competitors as a result of the alleged price-fixing as well as force Amazon and the publishers to abandon the practice.
Video-sharing site Rumble has accused Google of “unfairly rigging its search algorithm” to favor YouTube’s videos in search results, marking the tech giant’s latest in a series of antitrust headaches.
Rumble, based in Toronto, filed a lawsuit in California on Monday claiming that Google’s actions, including unfair search algorithms and the pre-installation of the YouTube app on Android devices, had cost it viewers and advertising revenue.
The complaint reads: “Google, through its search engine, was able to wrongfully divert massive traffic to YouTube, depriving Rumble of the additional traffic, users, uploads, brand awareness and revenue it would have otherwise received.”
Currently Rumble’s list of most-watched videos include conservative political commentator Dan Bongino, Fox presenter Sean Hannity, and conservative YouTubers Diamond and Silk. Its CEO, Chris Pavlovski, regularly posts updates on Twitter about right-wing figures joining the platform.
In its complaint, Rumble accuses Google “willfully and unlawfully created and maintained a monopoly in the online video-sharing platform market in at least two ways.”
It adds: “First, by manipulating the algorithms by which searched-for-video results are listed, Google insures that the videos on YouTube are listed first, and that those of its competitors…are listed way down the list…
“Second, by pre-installation of the YouTube app as the default online video-sharing app on Google smart phones, and by entering into anti-competitive, illegal tying agreements with other smartphone manufacturers to do the same.”
The firm indicated it was seeking damages of at least $2 billion.
Rumble’s complaint comes shortly after Parler sued Amazon, and marks a potentially troubling new antitrust for the major platforms. Amazon had hosted Parler’s service on its cloud service AWS, but booted the firm off after the US Capitol riots last week. Parler claimed in its subsequent suit that Amazon was behaving anti-competitively. Parler’s lawsuit indicates that sites and apps banned or penalized by the US tech giants for hate or violent speech are willing to use the emerging antitrust sentiment in court.
A Google spokesperson told the Wall Street Journal: “We will defend ourselves against these baseless claims.”
Business Insider approached Rumble and Google for further comment.
Separately, other watchdogs said they would hold talks with Alibaba’s affiliate fintech company Ant Group. The Chinese government is increasing its oversight of large tech companies and, in particular, has cracked down on Jack Ma’s tech empire.
US-registered shares in Alibaba, an e-commerce platform founded by Ma, were down 7.1% at $238.02 in pre-market trading on Thursday. This echoes the losses overnight in Asia, where the company’s Hong Kong-listed shares closed 8.1% lower. This was the largest one-day drop in Alibaba’s Asia-registered shares since mid-November, when Ant’s IPO, which would have been the world’s largest, was pulled at the last minute after China introduced stricter regulations for financial services.
A group of state attorneys general filed a lawsuit against Google on Wednesday accusing it of engaging in anticompetitive behavior by abusing its dominance in online ad sales.
“The state of Texas is filing a multistate lawsuit against Google for anticompetitive conduct, exclusionary practices, and deceptive misrepresentations,” Texas Attorney General Ken Paxton said in a Facebook post on Wednesday announcing the suit. “Google repeatedly used its monopolistic powers to control pricing” and “engage in market collusions to rig [ad] auctions.”
The lawsuit is the first to focus on Google’s control over the real-time auctions that determine how much advertisers pay to reach consumers, and is separate from two additional antitrust cases being brought against the company.
In a statement to Business Insider, a Google spokesperson called Paxton’s ad tech claims “meritless,” and accused him of pushing ahead “in spite of all the facts.”
“We’ve invested in state-of-the-art ad tech services that help businesses and benefit consumers. Digital ad prices have fallen over the last decade. Ad tech fees are falling too. Google’s ad tech fees are lower than the industry average. These are the hallmarks of a highly competitive industry. We will strongly defend ourselves from his baseless claims in court,” the Google spokesperson said.
In October, the US Department of Justice filed a lawsuit against Google, accusing it of using a network of illegal, exclusionary business deals to disadvantage smaller competitors and build an unfair advantage in search and online advertising. Several states including California have since joined that case.
On Tuesday, Politico reported that another bipartisan group of state attorneys general – led by Colorado and Nebraska – plan to file a complaint against Google as early as Thursday, according to Politico. That lawsuit is expected to accuse the company of unfairly modifying its search engine to boost results for its own products while disadvantaging results for competitors.
Federal and state regulators have grown increasingly aggressive in probing major tech companies over potential monopolistic behavior, and in recent months have filed major lawsuits that could have huge impacts on those businesses as well as their users, customers, and competitors.
Last week, Facebook was hit with two massive antitrust lawsuits – one from the Federal Trade Commission and one from a group of 46 states – both seeking to spin off Instagram and WhatsApp from the social media company.
European regulators, which have long been ahead of their US counterparts in taking on tech companies over antitrust concerns, have also filed lawsuits, opened investigations, and issued fines this year against tech giants including Amazon, Apple, and Facebook.