Trump Just Hijacked a Necessary Conversation About Amazon
(Bloomberg Opinion) -- Imagine you’re Lina Khan.
In January 2017, you wrote an influential article for the Yale Law Journal titled “Amazon’s Antitrust Paradox,” in which you argued that the current framework in antitrust “is unequipped to capture the architecture of market power in the modern economy.”
You wrote: “We cannot cognize the potential harms to competition posed by Amazon’s dominance if we measure competition primarily through price and output” — which is precisely how market power is now measured. You concluded your article with a series of ways antitrust should be rethought to curb the dominance of Amazon.com Inc. and other “platform companies” like Alphabet Inc.’s Google and Facebook Inc.
“Amazon’s Antitrust Paradox” could not have been better timed. Google was facing antitrust challenges in Europe. Facebook would soon be embroiled in the Russian election scandal. Amazon was preparing to jump into the grocery business, the pharmacy business, and who knows what else. Its dominance was scaring more than just internet companies. People were talking about whether the major platform companies needed to be regulated or maybe even broken up.
Two weeks ago, it was reported that you will be temporarily joining the office of Rohit Chopra, one of the two Democratic commissioners on the Federal Trade Commission, who wants to explore your ideas within the government.
And then, on Monday morning, President Donald Trump sent out two tweets that would seem to strongly suggest that he agrees with you. He wants to see tougher antitrust action taken against Amazon too! Except that his motives and yours aren’t exactly the same:
Trump’s motivation is not to realign antitrust policy to deal with the giant tech companies. No, his motive is to punish a company run by the same man who owns the Washington Post, Jeff Bezos. He’s simply lashing out at one of his perceived enemies.
Which means that in pursuing your big ideas about how the government can better grapple with the tech companies, you’re playing into the hands of a mendacious man who has no qualms about using the instruments of government to try to harm people he doesn’t like. That’s not a fun place to be.
I was reminded recently that Trump isn’t the first president to try to leverage the Justice Department’s antitrust department for his own purpose. Nixon did it, too. In the early 1970s, ITT, an aggressive conglomerate run by Harold Geneen, was facing three antitrust suits brought by the Justice Department. During the negotiations between the company and the government, ITT pledged $400,000 for the 1972 Republican Convention. Ultimately, the company had to divest several divisions, but it got to keep its crown jewel, The Hartford insurance company.
Although Nixon and his top aides denied it, it was widely believed that the $400,000 was payment for a settlement the company could live with. Years later, a Nixon tape was released that seemed to confirm the allegation. “Kleindienst has the ITT thing settled,” Nixon was recorded as saying. (Richard Kleindienst was deputy attorney general — i.e. the Rod Rosenstein of his day.) He continued:
He cut a deal with ITT. We give them Hartford, which they badly need, and they give us Grinnell and one other merger which they don't need and which they’re kind of sorry they got into, apparently.
As it turns out, the ITT scandal led to something good: the Tunney Act, which mandates a court review of Justice Department antitrust decisions.
Alas, it’s hard to see a good outcome this time around. “The president’s comments undermine public confidence in the Department of Justice’s efforts to enforce the antitrust laws in a fair and nonpartisan manner,” said Jeff Blattner, a high-ranking antitrust official during Bill Clinton’s administration. What Trump is doing is undermining one of the core tenets of the Justice Department: that it is making decisions based purely on the merits and not for political or personal reasons. Americans have learned over the years to expect that from the federal agencies. With Trump as president — and, in the case of antitrust, with Makan Delrahim as its chief — I’m not so sure they can anymore.
I’ve written previously about the two big mergers Delrahim has rendered judgement on so far. In AT&T Inc.-Time Warner Inc., he fought a merger that would have breezed through under any of the last five presidents. In the second, the Walt Disney Co.-21st Century Fox Inc., he approved a “horizontal merger” that would likely have faced significant challenge from previous Justice Departments. (Disney did agree to spin off Fox’s 22 regional sports channels.) Trump is on record as opposing the former deal and approving the latter.
And now Amazon. Maybe the government won’t take any steps against the company, and we can breathe a little easier. But if it does, how can you trust that the reasons are legitimate, and based on the rule of law? You can’t.
Khan wouldn’t talk about Amazon for this column, but I did speak to some of her colleagues at the Open Market Institute, where she is the director of legal policy. Phil Longman, the institute’s policy director, told me that he feared the legitimate rationale for taking antitrust action against Amazon might well be lost if it became a Trump piñata. “If Trump is going to declare war on Amazon, progressives will rally around it,” he said — even though progressives are the natural allies of tougher antitrust enforcement. “It’s really dangerous that people will come to the defense of anything that Trump is against,” he added.
The rule of law is such a bedrock principle in the U.S. Until Trump came along, it was part of the air we breathed and the water we drank — we barely ever had to think about it. Trying to involve himself in antitrust decisions is one of a hundred ways this president is eroding our faith in the rule of law. Not knowing if we can count on it is disorienting. It makes it difficult to even have a discussion about Amazon’s dominance because of the fear that any such discussion will be hijacked and corrupted by the president.
“The key question is, if the government does go after Amazon do these tweets matter?” said Barry Lynn, the director of the Open Markets Institute. The answer: “Yes.”
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. He is co-author of “Indentured: The Inside Story of the Rebellion Against the NCAA.”
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