Antitrust Politics on Stratechery: the Cadence edit

Newsletter Challenge, v. 4

Quick note: I recently wrapped up a writing coach arrangement with Ari Lewis, host of the Mastering the Attention Economy podcast. We enjoyed working together (see Ari’s ROI here), and he proposed I take on a newsletter editing challenge.

The challenge: Twenty edits by 22 September. In paired blocks below, you’ll find the original and my edit.

My primary goal: add clarity, concision, and cadence.
For details on my process, click here, a Google doc. Leave suggestions as you see fit. Thanks!

“Antitrust Politics,” August 4

  • https://stratechery.com/, by Ben Thompson
  • Ben tallies 163.8K followers on Twitter
  • Subscribers hail from 85 countries, and the NYT considers this newsletter to be “one of the most interesting sources of analysis on any subject.”

The key tasks:

  • move the lead up
  • simplify the language, and
  • make it easy to distinguish between Ben’s copy (grey, quote format), the big block quotes (grey, quote format, italics), and my edit (black, regular font).

Key metrics on this 2000-word section of Antitrust Politics:

  • improved the readability from grade 16 to 11 (hemingwayapp.com),
  • cut median sentence length from 28 to 18, and
  • still maintained variety of sentence lengths (standard deviations: 20 and 13).

Antitrust Politics

August 4, 2020

The only thing more predictable than members of Congress using hearings to make statements instead of ask questions, and when they do ask questions, usually of the “gotcha” variety, refusing to allow witnesses to answer (even as those witnesses seek to run out the clock), is people watching said hearings and griping about how worthless the whole exercise is.

There was, needless to say, all of the above last Wednesday, when the House Subcommittee on Antitrust, Commercial, and Administrative Law held a hearing featuring Tim Cook, CEO of Apple, Jeff Bezos, CEO of Amazon, Sundar Pichai, CEO of Google, and Mark Zuckerberg, CEO of Facebook. Statements were made, gotcha questions were asked, answers were interrupted, clocks were run out, and there was a whole lot of griping about what a waste of time it all was.

To be sure, it does seem like there must be a better way to hold these hearings, particularly if the goal is to learn something new, but the reality is that genuine inquiry is much more likely to happen without the glare of the media spotlight that inevitably accompanies such a high profile hearing; what that glare will highlight is the politics of the topic in question: what do various politicians and parties actually care about, what do they think that their constituents care about, and how should those affected by said hearings respond.

The only thing more predictable than members of Congress using hearings to issue statements rather questions — and, they actually ask a question (largely of the “gotcha” variety), they prevent the witness from answering the question — is the subsequent griping of the American public about the utter worthlessness of such hearings.

Last Wednesday, just such a one-ring circus was hosted by the House Subcommittee on Antitrust, Commercial, and Administrative Law, and featured a who’s who of American CEOs. The line-up included Tim Cook (Apple), Jeff Bezos (Amazon), Sundar Pichai (Google), and Mark Zuckerberg (Facebook). These gentlemen were not, alas, forced to stick their heads into the mouth of a lion. Instead, once the political ringleaders clarified their partisan priorities, the CEOs simply clarified the philosophical strains of big tech and big commerce.

If the goal of such a hearing is to educate and, as needed, to develop a corrective course of action, the glare of the media spotlight significantly reduces the chances of that happening to close to zero. In fact, that glare eclipses most everything outside of these three questions: 

  • What do various politicians (and parties) actually care about? 
  • What do they think their constituents care about?; and
  • How should the various parties affected by a given hearing respond?

~~~~~~~~~~~~

In that regard last Wednesday’s hearing was a success: partisan priorities were made clear on the politician side, tech’s collective position and impact on society came into view, even as each of the companies at the hearing revealed different strengths and vulnerabilities. This article will examine all of these points, but first a caveat: this post, even more than most on Stratechery, is meant as an analysis of the politics of this hearing in particular, not a statement of values; unless I say so explicitly, I am not necessarily endorsing or condemning any particular line of argument, simply pointing it out.

This article examines each of these points, but first, a caveat: this post — even more than the usual Stratechery post — offers an analysis of the politics of this hearing in particular, rather than a sweeping statement of the implications of such a hearing. Unless noted explicitly, I regard the lines of argument offered up by the key players here in a nonpartisan way. 

~~~~~~~~~~

The Political Effects of Monopoly

Lina Khan, who rose to prominence with her 2017 law review article Amazon’s Antitrust Paradox, and who served as counsel for the antitrust subcommittee over the course of the investigation that culminated in Wednesday’s hearings, summarized the New Brandeis Movement of antitrust in 2018:

Lina Khan rose to prominence via her 30,000-word article in 2017 on Amazon’s antitrust paradox, which appeared in the Yale Law Journal. She also served as counsel for the antitrust subcommittee during the investigation that culminated in Wednesday’s hearings. This investigation grew out of the New Brandeis Movement, which Khan helped initiate in 2018:

As the name suggests, this new movement traces its intellectual roots to Justice Louis Brandeis, who served on the Supreme Court between 1916 and 1939. Brandeis was a strong proponent of America’s Madisonian traditions—which aim at a democratic distribution of power and opportunity in the political economy. Early in the twentieth century, Brandeis successfully updated America’s antimonopoly regime, along Madisonian lines, for the industrial era, and his philosophy held sway well into the 1970s. As the ‘New Brandeis School’ gains prominence — even prompting two floor speeches by Senator Orrin Hatch (a Republican from Utah) — it’s worth understanding what this vision of antimonopoly does and does not represent.

Lina Khan, “The New Brandeis Movement: America’s Antimonopoly Debate” (2018)
Journal of European Competition Law & Practice

While the article is worth reading in full, it is no accident that Khan started with “democracy”:

Brandeis and many of his contemporaries feared that concentration of economic power aids the concentration of political power, and that such private power can itself undermine and overwhelm public government. Dominant corporations wield outsized influence over political processes and outcomes, be it through lobbying, financing elections, staffing government, funding research, or establishing systemic importance that they can leverage. They use these strategies to win favorable policies, further entrenching their dominance.

Brandeis also believed that the structure of our markets and of our economy can determine how much real liberty individuals experiences in their daily lives. Most people’s day-to-day experience of power comes not from interacting with public officials, but through relationships in their economic lives — negotiating pay with an employer, for example, or wrangling the terms of business with a trading partner. Brandeis feared that autocratic structures in the commercial sphere — such as when one or a few private corporations call all the shots — can preclude the experience of liberty, threatening democracy in our civic sphere.

Ibid.

Chairman David Cicilline, in the conclusion to his opening statement, made a clear gesture to the New Brandeis Movement:

“Because concentrated economic power also leads to concentrated political power, this investigation also goes to the heart of whether we as a people govern ourselves, or whether we let ourselves be governed by private monopolies. American democracy has always been at war against monopoly power. Throughout our history, we’ve recognized that concentrated markets and concentrated political control are incompatible with democratic ideals. When the American people confronted monopolies in the past, be it the railroads or the oil tycoons or AT&T and Microsoft, we took action to ensure no private corporation controls our economy or our democracy.

What was notable to me is that in the hearing Cicilline and the other Democrats never really focused on this point; the rest of Cicilline’s opening statement, and much of the Democratic questioning, focused on what they perceived as illegal activities that caused economic harm, without necessarily tying that to political harm. Again, that’s not to say they were ignoring the linkage, but it wasn’t a priority.

What made this stand out was that Republicans were focused almost entirely on the politics of monopoly, specifically their contention that large platforms, particularly Google and Facebook (and Twitter), were censoring conservative viewpoints and working to elect Democratic candidates to office, particularly the presidency, and that this was a problem because of their dominance. Leave aside, if you can, your opinion about the veracity of these complaints (and remember my note at the beginning about focusing on analysis): while the Republicans were certainly not endorsing the “New Brandeis School” — Ranking Member James Sensenbrenner in particular took care to highlight support for the consumer welfare standard, also known as the “Chicago School” — their concern with the size of tech companies had nothing to do with economic effects and everything to do with political effects. It was a striking contrast.

That original nod, though, was never taken up by the democrats. The remainder of Cicilline’s opening statement, as well as the majority of questions by the democrats, focused on allegations of illegal activities and their economic harm. The democrats, in fact, expressed little — if any — concern about political harm. If those connections were clear to them, they scarcely made that clear to us. 

This omission stood out like a sore Brett Kavanaugh, since the Republicans focused almost entirely on the question of political harm. They contended that Google, Facebook, and Twitter censored conservative viewpoints. They argued that this trio of bad hombres helped elect Democratic candidates in 2018, and seem determined to make Trump a one-term president. (Let’s leave aside any consideration of the veracity of these complaints.)

To be clear (and I’m really trying to be nonpartisan here): the Republicans did not endorse the “New Brandeis School.” Ranking member James Sensenbrenner took particular care to highlight his support for the consumer welfare standard — a key tenet of the “Chicago School.” Republican concern with the size and scope of tech companies focused nearly exclusively on claims of political harm. It offered a striking contrast.

~~~~~~~

Begging the Question: [A Language Nerd Interlude – my addition]

One of the more humorous lines of questioning, at least for language nerds, came courtesy of Republican Representative Matt Gaetz:

“I want to talk about Search because that’s an area where I know Google has real market dominance. On December 11th, you testified to the Judiciary Committee, and in response to a question from my colleague Zoe Lofgren about Search, you said, “We don’t manually intervene on any particular search result.” But leaked memos obtained by The Daily Caller show that that isn’t true. In fact, those memos were altered December 3rd, just a week before your testimony. And they describe a deceptive news blacklist and a process for developing that blacklist approved by Ben Gomes, who leads Search with your company. And also something called a fringe ranking, which seems to beg the question, who gets to decide what’s fringe?

“And in your answer, you said to Ms. Lofgren that there is no manual intervention of search. That was your testimony, but … And now I’m going to cite specifically from this memo from The Daily Caller. It says that the … I’m sorry, that The Daily Caller obtained from your company. It says, “The beginning of the workflow starts when a website is placed on a watch list.” It continues, “This watch list is maintained and stored by Ares with access restricted to policy and enforcement specialists.” Sort of does beg the question who these enforcement specialists are?

First off, note that this is an example of Republicans linking dominance to concerns about censorship. The point about language, though, is that Gaetz is using the phrase “begs the question” incorrectly; I know this, because I used to make the same mistake, until a reader graciously corrected me a couple of years ago. What Gaetz meant to say was “raises the question”; “begs the question”, on the other hand, to use Wikipedia’s definition, is:

First off, note that Gaetz connects dominance to the question of censorship. My point about language, though, is that Gaetz uses the phrase “begs the question” incorrectly. It’s a common mistake. I was guilty of it for ages. Gaetz means to say “raises the question.” “Begs the question,” on the other hand, refers to:

An informal fallacy that occurs when an argument’s premises assume the truth of the conclusion, instead of supporting it. It is a type of circular reasoning: an argument that requires that the desired conclusion be true. This often occurs in an indirect way such that the fallacy’s presence is hidden, or at least not easily apparent.

~~~~~~~~~

For an example of this logical fallacy at work, look no further than this antitrust hearing, and Cicilline’s concluding statement:

Today, we had the opportunity to hear from the decision makers at four of the most powerful companies in the world. This hearing has made one fact clear to me. These companies, as exist today, have monopoly power. Some need to be broken up, all need to be properly regulated and held accountable.

If I may nitpick, this is obviously not true — Cicilline had decided well before this hearing that these companies have monopoly power. The problem is that a huge number of questions in the hearing took it as a given that these companies were monopolies, and proceeded to find rather common business practices as being major crimes. In other words, they begged the question.

Okay: I may be nitpicking, but it’s a significant nit. Cicilline decided well before this hearing that these companies exercise monopoly power. As a result, dozens of questions reflected the fact that committee members assumed that these companies were monopolies, and proceeded to identify common business practices as major crimes. In other words, they begged the question.

The Line — Nay, the Doodle of the Argument [added]

~~~~~~~~~

One of the most striking examples of this fallacy — where it is assumed that a company is a monopoly, and therefore its actions are illegal, and because its actions are illegal it is a monopoly — was this exchange between Representative Jamie Raskin and Bezos:

Here’s the crooked line of argument: officials prefigured that one or more of these companies maintains a monopoly, and concluded therefore that select actions violated the law. Then, because such actions violated the law, the company at hand must be a monopoly. See, for example, this tidbit from the exchange between Maryland representative Jamie Raskin (D) and Bezos:

“Start with the HBO Max-on-Fire TV question. One of the first things you learn about conducting effective negotiations is that you want to negotiate about more things, not fewer. The reasoning is straightforward: if you are only negotiating about a single variable — in this example, Raskin believes that Amazon and HBO should only negotiate on price — the outcome is zero sum: every cent that Amazon wins is a cent that HBO loses. However, if you are able to introduce more variables, then you might find out that one company cares a lot about price, while the other company cares a lot about promotion (just to make up an example); in that case one company can get a better price and give up a lot of promotional opportunities, while the other can get a worse price and gain a lot of promotional opportunities, and thanks to their differing priorities, both feel like winners. That’s good negotiating!

It also appears to be, at least according to Raskin, illegal, because Amazon is “us[ing its] gatekeeper status role in the streaming device market to promote [its] position as a competitor in the video streaming market with respect to content.” That’s the problem though: there was zero evidence provided that Amazon has a monopolistic position in either streaming devices or video streaming; it was simply taken as fact, which made basic negotiating practices suspect, and evidence that Amazon was a monopoly. Begging the question.

Raskin’s question about Amazon’s acquisition of Ring was an even better example of the fallacy at work; while I don’t really understand why multivariate negotiations would be illegal even if you are a monopoly, there are clear antitrust issues raised by a monopolist acquiring a company for market share. Crucially, though, acquiring a company for market share if you are not a monopolist is not a crime.

It also appears, from Raskin’s viewpoint, to be illegal, because Amazon is “us[ing its] gatekeeper status role in the streaming device market to promote [its] position as a competitor in the video streaming market with respect to content.” So here’s the problem: committee members presented zero evidence that Amazon maintains a monopoly in either streaming devices or video streaming. It was simply taken as fact, which made basic negotiating practices suspect, and offered further evidence that Amazon is a monopoly. Thereby, begging the question.

Raskin’s question about Amazon’s acquisition of Ring exemplified this fallacy. Now, I don’t really understand why multivariate negotiations would be illegal if you were a monopoly. Still, it’s clear antitrust issues are at stake when a monopolist acquires a company for market share. But, if you are not a monopolist, acquiring a company for market share is not a crime.

~~~~~~~~~~~

It follows, then, that if Amazon had a monopoly in the home automation market, and acquired Ring for market share reasons, that could very well be an antitrust violation, but if they weren’t a monopoly, it would not be. What is critical to note is that you have to establish that Amazon has a monopoly first; only then can you decide if the acquisition was anticompetitive. Raskin, though, begs the question: the fact that Amazon acquired Ring for market share reasons is taken as evidence that Amazon has a monopoly, which then makes the acquisition illegal.

The same problem applied to Raskin’s final two complaints: Alexa defaulting to Amazon Prime Music, and recommending Amazon Basics. Those may be a problem if you first establish that Amazon has a monopoly in the relevant product areas, but it is not itself evidence that Amazon is a monopoly.

Let’s suppose, then, that Amazon had a monopoly in the home automation market. If they acquired Ring for reasons of market share, then they might be guilty of an antitrust violation. Once again, you first have to establish that Amazon has a monopoly: only then can you decide whether the acquisition was anti-competitive. Raskin, though, begs the question: she takes the fact that Amazon acquired Ring for the purpose of market share as evidence that Amazon has a monopoly, and therefore regards the acquisition as illegal.

In her final two complaints, Raskin begs the question again (and again): she takes issue with Alexa defaulting to Amazon Prime Music and “her” recommendation of Amazon Basics. So, if you establish that Amazon has a monopoly in the relevant product areas, then there may be illegality. The fact that Rep. Raskin suspects this action may be illegal does not confirm that Amazon is a monopoly.

~~~~~~~

I’m focusing on this specific exchange, but the truth is that a combination of vilifying common business practices and begging the question was a consistent theme. Things like market research or copying competitor features or improving products were held up as obvious crimes and evidence of monopoly, when they were often not crimes at all, or only crimes if a monopoly in the relevant market had first been established. That is not to say that the committee’s investigation didn’t produce evidence of illegal anticompetitive actions, but rather that said evidence, such that there was, too often begged the question.

The hearings featured a combination of the vilification of common business practices and reprises of begging the question.  Market research, copying competitor features, and product improvements were each introduced as obvious crimes and evidence of a monopoly. In fact, these actions may be criminal, but if the company in question maintains a monopoly. Did the committee’s investigation produce evidence of illegal anti-competitive actions? Possibly. Too often, though, its participants simply begged the question.

# # #

And that’s a wrap. If you like what you see, drop me a line over here.

Thanks!

Happy writing!

Published by Randal Doane

Living the good life in NE Ohio. I dig science and the written word. Let's build something amazing together.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: