Ted S. Warren/AP Photo
Amazon and other Big Tech firms are calling in the big legal guns as investigations into their business practices mount in multiple jurisdictions.
In the early weeks of the coronavirus pandemic, the rise of Amazon as Americans had their goods delivered, and the ascent of other tech platforms as communications engines led some to say that the “Techlash” against these giants had ended. This bank shot prediction seem premised on the fact that inadequate state capacity to provide basic services demanded almost a merger of Big Tech with government. The entrenchment of tech platforms inside government would insulate the industry from antitrust or regulatory charges, or so the theory had it; attacking Big Tech would be akin to destroying the public sector from within.
The problem with this argument is that Big Tech has faltered just as badly as any other institution during the crisis. Amazon can’t get its deliveries out on time, and that vaunted Google/Apple joint contact-tracing app project doesn’t really work and can be accomplished much more efficiently with good old-fashioned shoe leather. But even more worrying for Big Tech, as investigations and cases mount, is that their defenses are increasingly absurd and lacking in credibility. The platforms can throw money at building a fortress of protection around themselves, but you really can learn something about them by who they associate with.
In a letter written last month but just released publicly last week, an array of the usual status quo Tech guardians insisted that “the American economy—including the digital sector—is competitive, innovative, and serves consumers well.” I’ll rebut that in a moment, but first, let’s scroll down to see the names of the aforementioned status quo guardians.
Richard Epstein from the NYU School of Law graces the list. When America last heard from Epstein, he was boldly predicting that the United States would experience no more than 500 deaths, in all, from COVID-19, a prediction that was outdated as early as March 23, and is now off by a factor of 230 and counting. This should have been a career-ending moment for the good professor, especially considering that his wildly wrong views informed the White House in the critical early stages of the crisis. But here he is, undaunted, lending his tarnished record to the proposition that Big Tech isn’t really so big.
Epstein, one of the giants of Chicago school economics, already bears some responsibility for the soaring inequality and loss of worker power that has accompanied corporate consolidation. His view that markets are “naturally” competitive and required no intervention was always absurd, and has now been thoroughly discredited by events as tech has become more and more concentrated. But his meandering into disciplines where he is not presumed authoritative has demolished his pretensions to wisdom in either field. Reality denial is his thing, in economics and epidemiology.
I asked a handful of co-signers to the document—George Mason University professors Tad Lipsky, Joshua Wright, and John Yun; International Center for Law & Economics founder Geoffrey Manne; and former acting commissioner of the Federal Trade Commission Maureen Ohlhausen—if they also agreed with Epstein on the coronavirus, and whether they stood behind their decision to highlight their authority on public-policy matters alongside one of the most intellectually disgraced legal academics in recent memory. None of them responded.
Maybe if the letter wasn’t so Panglossian, noting the participation of Epstein would be a cheap shot. Instead, the letter offers the usual dismissal of the rising economic concentration over the past 40 years through tortured statistical analysis that defines “markets” aggressively narrowly and distrusts the use of one’s eyes to simply witness the reduced choice across the economic landscape. It defines digital markets as “intensely rivalrous” (just look at all the search engines out there) and characterizes any antitrust practice without Chicago school economics at the center as “incoherent,” as if the coherence of unrestrained capitalism is what recommends it.
The authors make no attempt to wrestle with contrary information on concentration and the litany of disturbing applications of that market power. It’s a propaganda document written largely by scholars at a university (George Mason) that has taken hundreds of thousands of dollars from Big Tech, to say nothing of the money several of these co-signers have personally received. It’s the kind of letter where the citations are mostly to papers by the writers themselves, including, in three cases, Richard Epstein.
Their defense does not reckon with Big Tech’s recent acquisitions, now occurring at their fastest rate in five years, with multiple expansions on numerous fronts in a bid for even more power. It does not reckon with the daily examples of misinformation on Google and Facebook sites, which because of their power have extraordinarily dangerous reach, and which because of their deliberately and strategically absentee ownership are impossible to stop. It does not reckon with Amazon stealing data from its partners to use in their future destruction, and forcing workers to toil in unsafe environments. It does not reckon with the platforms’ takeover of digital advertising markets and social media channels through anti-competitive means. It exists in a hermetically sealed bubble where power cannot be amassed or wielded, where Facebook can never create a workplace chat tool that they tout can blacklist words like “unionize” from worker conversations, and have it get widespread pickup from such mega-employers as Walmart and Starbucks.
Big Tech is finding it hard to use its normal tools of buying off politicians, regulators, and academics and rallying them to protect its profits.
Richard Epstein, alas, isn’t the only hack running to the defense (and pocketbooks) of Big Tech. A Monday letter from Amazon to the House Judiciary Committee relating Jeff Bezos’s willingness to testify in its investigation into the company (in which a top Amazon lawyer appears to have already committed perjury) had a curious signer: attorney Robert Kelner of Covington & Burling. This is a white-collar defense firm that represented practically every large bank during the foreclosure fraud investigation, and in one of the more underrated scandals of the Obama era, kept a corner office ready for then–Attorney General Eric Holder, whose office was actively negotiating settlements with Covington clients, until his triumphant return. Now it’s lead counsel for Amazon.
Numerous other top officials from Holder’s Justice Department also landed at Covington. Lanny Breuer, former head of the criminal division under Holder, has routinely cited his skill in defending corporations for Covington in marketing materials. Breuer states in his Covington bio that he serves as “Counsel for many corporations before Congress.” A query as to whether Breuer was representing Amazon in the House Judiciary matter was not returned.
Facebook, meanwhile, has helped stand up a dark-money political action group called American Edge, stacked with consultants and former lawmakers of both parties (including a former top aide to Senate Majority Leader Mitch McConnell), to influence regulatory and policy decision-making. As a 501(c)(4) organization, American Edge can dump money from concealed donors into elections, a practice employed by the likes of the Koch network and the National Rifle Association.
Fortunately, the efforts of these rogues’ galleries have thus far been unsuccessful. Amazon, already facing looming antitrust charges in the European Union for using data gleaned from third-party sellers against them, is also under scrutiny in California and Washington state over the same matter. (This may be the wrong tactic, in my view: The problem with Amazon has more to do with collecting monopoly rents from its trapped sellers and using predatory pricing to knock out rival outlets.) There will be antitrust action at the federal level against Google as early as this summer, and private litigation sure to accompany it has already begun, on behalf of advertisers who allege that they’ve been ripped off by Google’s dominant ad network. As with Amazon and Google, practically every state attorney general is investigating Facebook, too.
Big Tech is finding it hard to use its normal tools of buying off politicians, regulators, and academics and rallying them to protect its profits. One reason is because the obvious nature of platform dominance cannot be explained away. But it especially cannot be explained away when the remaining explainers left to defend the industry have so many spectacular failures of their own.
