Plus, what do I want my legacy to be?
I’m Isaac Saul, and this is Tangle: an independent, nonpartisan, subscriber-supported politics newsletter that summarizes the best arguments from across the political spectrum on the news of the day — then “my take.”
Today's read: 14 minutes.
- Majority Leader Steve Scalise (R-LA) and Rep. Jim Jordan (R-OH) announced they will run forSpeaker of the House after Kevin McCarthy was ousted. (The decisions)
- Roughly 75,000 health care workers from Kaiser Permanente walked off the job yesterday, marking the largest healthcare strike in U.S. history. (The protest)
- President Biden canceled an additional $9 billion of student debt for 125,000 borrowers yesterday through changes to the income-driven repayment plan and Public Service Loan Forgiveness program. (The cancellation)
- Iranian activists say a 16-year-old girl was put into a coma by morality police after a confrontation over a dress code violation. (The attack)
- The White House waived dozens of federal laws and approved the construction of 20 miles of border wall in southern Texas to address the migrant crisis. (The construction)
The Amazon and Google lawsuits. Last week, the Federal Trade Commission (FTC) filed an antitrust lawsuit against Amazon, accusing the company of monopolizing the online retail space. The FTC alleges that Amazon, worth $1.3 trillion, prevents its sellers from offering their products more cheaply on other platforms, forces sellers to use its warehouses and delivery services, and sometimes inflates costs both for consumers and sellers. It began investigating Amazon in 2019, during the Trump administration.
During a press briefing, FTC Chair Lina Khan declined to say whether she hoped to break Amazon up. "At this stage, the focus is really on liability," she told reporters.
Amazon argues that the lawsuit is going to hurt consumers by leading to higher prices and slower deliveries. It says its practices have spurred competition and innovation across the industry, lowering prices, creating better services, and platforming 500,000 independent sellers. The lawsuit was widely expected from the FTC and is part of a bipartisan push to take stronger regulatory action against Big Tech. 17 state attorneys general joined the lawsuit.
Meanwhile, in September, the Justice Department's case against Google went to civil trial. The DOJ has been investigating Google for three years, and this case is aimed at Google’s internet search and advertisement business, which the FTC says has illegal agreements to sideline its rivals that harm consumers and advertisers. Google has about a 90% market share on search, which it maintains via agreements with smartphone manufacturers and browsers. For example, Google pays billions of dollars to be the default search engine on Safari, the default Apple browser.
The government argues that these deals make Google the default search engine on almost all devices, reducing competition. The exclusive deals also keep other companies from competing for search engine business or improving their products, the FTC argues, which ultimately hurts consumers. Because a company like Microsoft gets so few search queries in comparison, it is much harder to improve its product, which gives Google an anti-competitive advantage.
Google, meanwhile, says these deals give browser providers what they want, which is a single default search option for customers. It compares its practices to a cereal company paying supermarkets to stock its product at eye level. Google also argues that Apple and Mozilla use its search engine because it beats rival search engines, and even Windows users who don't have Google products preloaded on their computers will typically opt for Google search. At the same time, users of Apple products can change their default search option if they want.
While Amazon faces the threat of being broken up, experts believe if Google loses its case, it would more likely face new constraints on how it does business. Both lawsuits are part of a new wave of antitrust enforcement that has not been seen in America for decades. The last major challenge to monopoly power in U.S. court was when the government sued Microsoft in 1998 over its attempt to control the market for internet browsers with Internet Explorer. The Justice Department won that lawsuit, which opened the door for rivals like Google. Now, the Justice Department says companies like Google and Amazon have used the same playbook Microsoft did to maintain its own monopoly.
Today, we're going to examine some arguments from the right and left about this enforcement, then my take.
What the left is saying.
- The left is split on the Amazon lawsuit, with some arguing that the FTC is stretching its authority to bring a case that most consumers don’t want.
- Others say the opposite is true, and these are exactly the kinds of lawsuits the FTC should be pursuing.
- In the Google case, some on the left think the verdict will change the internet no matter the outcome.
The Bloomberg editorial board said Lina Khan and the FTC are “wrong about Amazon.”
“The FTC is wielding fringe antitrust theories with little regard for consumers. One allegation is that Amazon punishes sellers that offer products for lower prices on competing platforms. For instance, the suit says, Amazon blocks such sellers from its ‘buy box,’ which highlights what the company considers the most valuable results to a user’s query. The FTC states (without evidence) that this practice leads sellers to raise their prices on other sites… Exactly what remedy would the government impose?”
“There’s a larger point to bear in mind. Prime has about 150 million members in the US; fully 91% of them report being satisfied with their subscription,” the board wrote. “Amazon routinely ranks among the most trusted brands in the country. It invests more in R&D — $73 billion last year — than any company in the world. More pertinently: It allows consumers to search for any product they desire, select among a bevy of competing alternatives, and expect a neatly wrapped package to arrive within days (or, indeed, hours). If consumer welfare is the FTC’s lodestar — as it should be — a worse target for government intervention is hard to imagine.
In the New York Times, Cory Doctorow wrote that Amazon is “precisely the kind of company” that U.S. antitrust laws are meant to target.
“Today’s tech barons at huge platforms like Amazon, Google and Meta can deploy anticompetitive, deceptive and unfair tactics with the agility and speed of a digital system… And Amazon is the apex predator of our platform era,” Doctorow said. “Having first subsidized end-users and then offered favorable terms to business customers, Amazon was able to exploit its digital flexibility to lock both in and raid them for an ever-increasing share of the value they created. This program of redistribution from platform users to shareholders continued until Amazon became a vestigial place, a retail colossus barely hindered by either competition or regulation.”
“The best time to have fought this power was over the past quarter-century, as Amazon’s founder, Jeff Bezos, used his shareholders’ capital on predatory pricing campaigns, seemingly in plain violation of the Robinson-Patman Act of 1936, and on a string of anticompetitive acquisitions that surely violated the Clayton Antitrust Act of 1914. The second-best time to fight this power is now. Ms. Khan, who is joined by over a dozen states in taking on Amazon, has set herself a monumental, urgent, necessary task.”
Gizmodo’s Thomas Germain argued that Google’s antitrust case “will reshape the internet whether it wins or loses.”
The government’s case “might seem like a simple argument: Google has more money, so it can afford to shut its competitors out of the prime spots on browsers and mobile devices.” Google, however, “argue[s] it’s constantly improving its products and paying to be the default engine is a reasonable and fair practice.” But “win or lose, Google is in trouble,” Germain wrote. “Legal experts talk about the ‘policeman at the elbow effect,’ where the simple presence of government scrutiny forces a company to take fewer chances in the marketplace.
“That’s what happened when the DOJ began a 13-year antitrust battle against IBM in the 1960s. The DOJ lost the case, but IBM was distracted and had to move slowly, and Microsoft and Apple swooped in and knocked IBM off its perch. 20 years later, the same thing happened to Microsoft. Right on schedule, another two decades have passed, and now it could be Google’s turn. Today, AI tools like ChatGPT pose an existential threat to the company’s search business. Google.com is the most popular website on earth, but Google needs to take big risks to fend off competition right now—which is exactly what it can’t do with the DOJ breathing down its neck.”
In Jacobin, Rob Larson said the verdict in Google’s trial is “unlikely to change much,” barring one drastic outcome.
Google has a number of advantages in the case, “above all the weak iteration of US antitrust law in the neoliberal era. Modern antitrust law relies on companies raising prices before government intervention, while Google’s products are free, and the corporate agreements at issue are not exclusive. Google of course wields enormous power over our lives; whatever the outcome of the case, that is unlikely to change. With antitrust action vanishingly unlikely to end its dominance, bringing Google under public, democratic control is a better option,” Larson wrote.
If this outcome doesn’t come to pass, another option is “a breakup… a classically American remedy, as it involves taking the lightest approach to interfering with the sacred market — turning a monopoly into an oligopoly, a small number of giant firms dominating a market instead of just one,” Larson said. “But even an unlikely breakup wouldn’t fix the major problems in these markets, with one or perhaps two gigantic entities ruling over most of our online lives. For something as toweringly important as the internet’s main source and channel of information… public ownership and some form of democratic control should be on the table.”
What the right is saying.
- The right opposes the FTC’s case against Amazon, arguing that the agency is harming the consumers it purports to protect.
- The right is also critical of the case against Google on the grounds that it undermines the freedom to choose preferred products and services.
- Others say that the right should rally behind the government in this case because of the role Google has played in stifling conservative voices on the internet.
National Review’s editors criticized “Lina Khan’s anti-Amazon crusade.”
“As Amazon users know, one of the top reasons to shop on Amazon is lower prices. Yet the FTC alleges that Amazon keeps prices higher than they otherwise would be, by demoting discount sellers in search results. Aside from being contradictory to most people’s experience using Amazon, this charge is also contradictory to past criticism of Amazon on antitrust grounds,” the editors said. “The FTC’s job is to protect consumers, and why should consumers be protected from easy access to lower-priced goods?”
“The mere act of bringing these suits, and suggesting that the FTC ought to be able to tinker with business practices under pretense of antitrust law, will have a negative effect on other businesses who are seeking to innovate and grow,” the editors added. “The message from the FTC to businesses right now: Don’t get too big, or too successful, or too beneficial to consumers, because if you do, we’re coming for you. That’s the wrong message for the federal government to send.”
For the Hoover Institution, Richard A. Epstein argued the FTC “ignores consumers” by punishing Amazon "for what the company does right."
“A close examination of the company’s so-called bad business practices reveals only pro-competitive behaviors that are mischaracterized in the FTC’s complaint. The case here is even weaker than the similar suits against Google and Meta, both of which operate in network industries, where competitive solutions are not possible given the extensive needs for cooperation among competitors. So it appears that this sloppy complaint should fail in court as another of Khan’s ill-conceived forays to push the boundaries of antitrust law outside the consumer-welfare framework that Khan so distrusts,” Epstein wrote.
“But suppose she did persuade a court to find some antitrust violation. What next?” The FTC is cagey about suggested remedies. “Breaking up the company is always infinitely messier than stopping mergers, and thus almost never happens. Banning the pro-competitive practices misunderstood in the complaint is wildly anti-competitive. Damages or fines are not even suggested. So this suit incurs large costs for the government while imposing even bigger costs on Amazon—a lose/lose operation.”
In RealClearPolicy, Mark A. Jamison said the case against Google is a “misguided crusade threatening innovation and consumer choice.”
“In the age of technological innovation, the Department of Justice's antitrust case against Google, now on trial, appears to be a misguided attempt to have lawyers reshape the digital landscape. The government asserts that this case is about the ‘future of the internet and whether Google will ever face meaningful competition,’ and while the concern about how this case will affect the future of the internet is valid, the notion that the government can artificially create competition for Google is fundamentally flawed,” Jamison wrote.
“At the heart of this lawsuit lies the question of whether consumers will retain control over the digital ecosystem they have helped shape and guide. It also raises concerns about whether the next generation of search and online services will evolve through consumer choice or be dictated by antitrust lawyers. Regardless of the outcome, the message sent by the government is clear: any business that pleases large numbers of customers is at risk of being unreasonably targeted and restrained… While vigilance against anticompetitive behavior is important, it should not come at the cost of suppressing market-driven competition.”
In the Daily Caller, Mike Davis wrote about why “conservatives must support the DOJ against Google.”
“I have strong disagreements with the Biden DOJ on many fronts, but I agree with them on the need to prosecute this case against Google,” Davis said. “The case challenges Google’s business practices in the online search and search advertising markets, both of which the company has had a stranglehold upon for almost two decades. Because of Google’s gatekeeper role in these markets, many local newspaper publishers, along with conservative outlets, allege they have been shuttered as their advertising revenues were siphoned off and access was restricted by Google.”
“The second reason conservatives should support the DOJ in the Google case is because, if the DOJ wins, it would hold Google accountable under federal antitrust law for the first time in the company’s history. The case should be an antitrust slam dunk if the court applies the antitrust law as drafted by Congress, but those laws have been radically rewritten by Members of Congress under influence of legal scholars and jurists in recent decades,” Davis said. These issues are of vital importance, and even if Google wins this case, conservatives should still “renew our calls for legislation to rein in not just Google but also the other Big Tech platforms before it is too late.”
Reminder: "My take" is a section where I give myself space to share my own personal opinion. If you have feedback, criticism, or compliments, don't unsubscribe. Write in by replying to this email, or leave a comment.
- I have a really hard time divorcing my assessment of these lawsuits from my personal feelings about Google and Amazon.
- Contrary to a lot of the commentary, Amazon’s practices seem a little more suspect to me.
- I’m not sure what the outcome will be, but I do think this case is going to impact a lot of people’s day-to-day lives.
One of the odd things about these lawsuits is just how difficult it is to divorce your personal feelings about the companies from the actual law.
I think Amazon makes a tremendous product. I am an Amazon Prime subscriber and I use it weekly. It has saved me countless hours (from going to a store, navigating Target's terrible website, or simply in reducing shipping time) and, I'm sure, countless dollars. Products are cheaper on Amazon and they get to my door faster. Buying them is easier, and figuring out which products I want is simpler. Amazon makes it easy to read customer reviews and explore the specs of a product in a way other online retailers frequently don't.
At the same time, the details of the Amazon case seem more damning than Google’s. Just as a matter of numbers, the fact it might take roughly 50% of sellers’ revenue in fees is alarming. But some of their practices are, too. A few commentators I read referenced this Wall Street Journal story about "Project Nessie," an algorithm Amazon used to test how much it could raise prices for competitors to match them. If other places didn't increase their prices along with Amazon, it would bring its price back down, thus ensuring it didn't lose any market share. The company also did this in reverse: Matching discounted prices from competitors and then remaining locked in the lower prices when a competitor's sale ended. Its sheer size allowed it to recoup money, improve margins, and defend itself against competition.
That is, in a lot of ways, the kind of thing our antitrust laws were designed to defend against. But if the FTC were to win this case, it would probably make Amazon's product worse, which impacts me in a negative way, which makes it harder for me to root for that outcome. It also makes it a little harder to justify philosophically, as antitrust law is supposed to protect me, the consumer.
The most compelling argument for Amazon that I've seen came from a few commentators across the political spectrum, who effectively made the case that the FTC is defining a market Amazon literally created and then arguing that Amazon is monopolizing that market. Put differently: The online retail world we live in only exists because of Amazon. And now Amazon is being punished for making that world a reality. Emotionally, I like that argument. Legally, I have no idea how it pans out.
Google is almost the reverse for me. Google's product has gotten worse and worse over the years. Top search results are dominated by advertisements. When searching for news stories (which is what I primarily use it for), there is overt bias toward left-leaning outlets. And anytime I use Google, all of its advertising partners bombard me with my searches everywhere I go for the rest of time. As a result, I find myself using alternative search engines — like DuckDuckGo, Brave, or Bing — more and more regularly.
At the same time, Google's practices seem less offensive to me. The advertising issues are more worrisome to me than the raw search monopoly, though the two are of course linked. But Google paying Apple or Mozilla to use its Google search feature doesn't really offend my monopoly sensibilities. They are paying a steep price, Mozilla and Apple could refuse if it were smart for their own businesses, and as a consumer it makes my life easier having something as crucial as a search engine baked into the default internet browsers of the devices I buy. And if it really bothered me, I could always switch my browser’s search engine or download another browser.
Again: My personal feelings about these products are difficult to separate from whether I view them as monopolies. A broader issue, and one that is sure to persist beyond these cases, is whether the FTC is justified in taking proactive steps to head off the threat of monopolies in the long run, even if no laws are being broken right now. It’s possible Amazon and Google are little more than tremendously helpful products now, but what if their market share and dominance grows even further? That's a question for the courts to decide, but also one for us to consider as consumers: Are we willing to sacrifice short-term convenience for our long-term benefit?
It's very unclear to me how either of these lawsuits will turn out, and I don't feel compelled to make an uninformed prediction. But I will say this: The impact is likely to be massive. When I wrote about Kevin McCarthy yesterday, I said his ouster probably wouldn’t impact you in a meaningful way even though it was a historic story the media was obsessing over. This story is getting far less attention, but its likelihood of impacting your day-to-day life (given how ubiquitous search engines and online retailers are) is much higher.
Your questions, answered.
Q: You covered Murdoch’s legacy well. How would you like your legacy to be described when you turn 90?
— Clive from Templeton, CA
Tangle: Interesting question! Of course, I would love it if Tangle took off and sparked a total re-imagining of the way political news works. My dream is that we maintain a small, well paid team and reach a massive audience. I have no aspirations for Tangle to become the next major newsroom, though it’d be wonderful if people waited for our coverage of big issues to help inform their own opinions. In my ideal world, Tangle is both widely respected and hugely successful, and I personally get to pursue all of my individual interests. (I love covering politics, but my truest passion is writing — and I have tons of other projects I want to pursue!)
Just hypothetically, though, let’s say Tangle doesn’t explode in popularity, and I’m not heralded as leading the vanguard in a journalistic revolution that restores trust in news (unlikely, I know). Even if Tangle enjoys only modest success, I want my legacy to be one that’s a part of these two broad trends in journalism that I’m betting on as “the future of news.”
1) Newsletters are the new newspapers. Part of the legacy of the internet is to decentralize, and what that means for journalism is a decentralization of both means of distribution as well as expertise. People don’t receive physical news anymore, and the legacy organizations that had made print their bread and butter have pivoted their businesses to rely significantly on electronic media. The next evolution of that is familiarity with the people behind the news as people, rather than just extensions of a brand. Reading the tea leaves, I think that means there’s a big market need for digestible news, delivered to your inbox, from people who you can trust.
2) People want to understand. I think we’ll be looking back at the past twenty years as the first reaction to the digital media paradigm, which showed that rage sells and emotional responses drive clicks. For all that time, I think we’ve essentially been binging junk food. And after twenty years of that, I think news readers are craving a healthy diet. That means that instead of seeing headlines that confirm your biases, you get opinions that challenge them. Instead of reading news that drives emotion, you get news that leads with facts, nuance and civility. And instead of being told that people who disagree with you are your enemies, you get analysis that treats issues with balance and empathy.
When I’m 90, I hope that I can look back and say that both of those big bets were right. That, even though news media will still have its issues, I — and Tangle — were part of a movement that fixed some of the biggest problems in journalism over the past two decades.
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How to fix debates.
We have a new YouTube video out where I discuss how we can fix presidential debates and the way I'd change them if I had the chance:
Under the radar.
The Biden administration plans to give millions of dollars in foreign aid to Panama in exchange for the Central American country deporting more migrants. The aim is to stop migrants before they arrive at the U.S.-Mexico border. Sen. Bob Menendez (D-NJ) had been holding the program up, but the plan is advancing now that he’s stepped down from the Senate Foreign Relations Committee after being indicted on bribery charges. Roughly $10 million is expected to be spent on a six-month pilot program to help Panama deport migrants who don't qualify for protections, with the funds used to target single adult males. Axios has the story.
- 50%. The approximate percentage of total revenue sellers end up paying to Amazon because of the platform's fees, according to the FTC complaint.
- 17. The number of state attorneys general who joined the lawsuit against Amazon.
- Two. The number of those attorneys general who are Republicans.
- 1.6 million. The number of packages Amazon ships each day.
- 9 billion. The estimated number of Google searches made each day.
- 90%. The estimated market share Google has in search.
- One year ago today we announced our day off for Yom Kippur.
- The most clicked link in yesterday's newsletter was the parents who were charged following a school shooting.
- Won't matter... until it does: 806 Tangle readers responded to our poll asking how much the removal of Kevin McCarthy from his position as Speaker of the House matters to you, with 31% saying it matters somewhat. 18% said it mostly doesn't matter, 21% said it matters a great deal, 14% said it matters a little, and 13% said it does not matter at all. 3% were unsure or had no opinion. "It doesn't matter until the government shutdown happens," one respondent said.
- Nothing to do with politics: It's that time of year again — Fat Bear Week.
- Take the poll. Do you think Google or Amazon are guilty of anti-competitive business practices? Let us know!
Have a nice day.
Sharon Travers was on her way to her wedding ceremony at Cults Parish Church in Aberdeen, Scotland, when her car broke down, leaving her stranded en route. However, just when it seemed the universe was conspiring against her, a good samaritan arrived to save her wedding day. Sharon’s friend and driver waved down the first passing car, which turned out to be driven by a man named Alan Knowles, a name that would soon be etched in Sharon’s memory. Without hesitation, Alan agreed to drive the distressed bride-to-be to the church. "I'm glad the bride managed to get to the church on time," Alan said. "I just really want to say thank you," Sharon responded. "I'm now laughing about it, but I certainly wasn't at the time. I'm so grateful. It was such a fantastic moment." Sunny Skyz has the story.
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