Break up Amazon? Seattle Congresswoman Pramila Jayapal takes on tech giants

In general, politicians don’t quarrel with their state’s largest private employers, but Pramila Jayapal, the Seattle congresswoman, is doing just that, promoting laws that would dissolve Amazon.

Jayapal’s Ending Platform Monopolies Act is part of a broader, bipartisan effort in Congress to curb the power of the Big Four tech giants: Amazon, Facebook, Apple and Google.

Following a 16-month antitrust investigation that concluded last fall, House lawmakers this month unveiled five antitrust laws aimed at testing the power of companies by limiting their ability to devour or cling to competitors weaknesses.

Jayapal’s proposal would allow the federal government to sue the Big Four tech companies for selling businesses that are considered a “conflict of interest.” That would mean that Amazon could no longer operate its marketplace for third-party providers and at the same time compete against them with its own products. Similar divestments would be required by the other top tech firms, and all could face massive daily fines for failure to comply.

Jayapal, vice chairman of the House’s Antitrust Subcommittee said the big tech companies couldn’t be trusted to oversee themselves and that even tightened federal regulations might not be enough, making forced separations a necessity.

“Look, this is not about Amazon. This is about the monopoly power of the Big Four technology companies, ”said Jayapal in an interview. “There is an irresistible urge for companies operating on multiple platforms with conflicts of interest and competing businesses to use power in a way that stifles competition.”

She also cited the dominance of the advertising platforms Google and Facebook, which devoured most of the online advertising revenue and accelerated the demise of newspapers and other local news outlets.

Amazon overtook Boeing last year to become Washington’s largest private employer when the online retailer broke sales records and went on a hiring hunt when the coronavirus pandemic closed many retail stores. The company ended 2020 with more than 80,000 employees in the state, a 25% increase over the previous year.

Despite its huge role in the local economy and providing many high-paying tech jobs, Amazon was long gone from being viewed as just a hometown employer. The company has received heavy criticism and even hostility from some Seattle executives and activists for its treatment of workers and its impact on housing affordability.

The focus on today’s ubiquitous big tech giants is somewhat reminiscent of past antitrust disputes in the US. In the late 1990s, the US attempted to bust Microsoft over its stranglehold on the PC market – a battle that ended in a 2002 settlement that curbed some of its practices.

The Big Four have caused setbacks across the political spectrum, if not always for the same reasons. All five House bills unveiled last week had both Democratic and Republican co-sponsors – resulting in some unusual alliances.

Jayapal, a Democrat first elected in 2016, chairs the Congressional Progressive Caucus. Their bill is backed by Texas Republican Lance Gooden, a Conservative who was elected in 2018 and pledged to combat “growing demands for socialism in America.” Gooden represents a conservative borough in the Dallas area where 61% of voters supported Donald Trump last year, compared to just 12% in Jayapal’s Seattle borough.

In a recent Fox News interview, Gooden said companies like Amazon and Facebook “have no respect” for a free marketplace. “You want to control the mind. You want to control the language. You want to control product placement. They are actually marketing their ability to control search engine results and drive traffic online, ”he said.

Amazon executives have defended its practices amid the antitrust push, arguing that efforts to break it or otherwise regulate its massively popular platforms would ultimately harm consumers and small businesses.

When asked if Jayapal is sponsoring a bill to liquidate the Seattle-headquartered company, Jack Evans, an Amazon spokesman, said in an email: “We have not commented on the legislation and will comment on the role of Rep. Jayapal reject.”

However, in a blog post last fall in response to the House of Representatives antitrust report, Amazon criticized its “marginalized ideas”, saying that “misguided intervention in the free market would kill independent retailers and punish consumers by ousting small businesses from popular online stores Prices and reduces consumer choice and convenience. “

While millions of third-party sellers benefit from selling on Amazon’s Marketplace platform, some see it as a deal with the devil, saying the company is expressing them – and driving up prices for competitors – by practically every aspect of the E-commerce controls transactions.

Bernie Thompson, the founder of Redmond-based Plugable Technologies, which sells laptop docking stations and other electronics, said he relies on the Amazon platform for more than 85% of his company’s sales.

Thompson said Amazon has developed a “brilliant model” inviting competitors to access its platform and unparalleled customer base. “But they also have advantages at all levels. Having a fair and equal playing field has never been one of Amazon’s values ​​or priorities, ”he said.

He welcomes Congress’s increased scrutiny of Amazon’s practices. While there are risks to state regulation, he said, there are also “enormous risks for a market in which the largest companies are above competitive pressure”.

Last month, District of Columbia Attorney General Karl Racine filed an antitrust lawsuit against Amazon alleging the company’s practices cause “artificially high” prices on e-commerce sales.

Amazon has also been accused of tapping its huge pool of sales data to target and undercut third-party sellers, in some cases by essentially copying their popular products and selling them at a lower price.

The company has long denied that it is misusing third-party data in this way. An Amazon attorney said at a congressional hearing in 2019 that “we don’t use individual seller data” to compete with other companies on its platform.

But the Wall Street Journal reported last year that Amazon employees used such data to bring their own products to market and profit, citing interviews with more than 20 former employees.

Jayapal questioned Amazon CEO Jeff Bezos at a congressional hearing on the report last year. Bezos said the company has a policy against such data usage and is reviewing whether employees have systematically violated it.

Jason Boyce says he personally witnessed Amazon’s tactics. He had run a successful third-party seller business from 2003 and became a major seller of sporting goods.

“I used to be Amazon’s biggest supporter, cheerleader, fan,” said Boyce, now describing his view as “love hate. Most of all hate. “

Amazon undercut its store, which was based in Sammamish for several years, Boyce said by focusing on its successful products and offering identical or near-identical versions at a discount. Eventually he sold his company and founded Avenue7Media, which advises other retailers on how to navigate through Amazon’s system and protect themselves.

Boyce said Amazon continues to interfere with third-party vendors with tactics such as making it harder to find deals from disadvantaged retailers and click “Buy” – a major disadvantage when impatient shoppers are comparing online products.

“It’s incredibly insidious,” he said.

Boyce, whose testimony was quoted in the House of Representatives antitrust investigation, said government intervention was overdue: “Either a separation or very thick guard rails” to protect competition.

Amazon has defended itself against this criticism, stating that its groundbreaking decision to welcome third-party sellers to its platform in 1999 continued to benefit consumers and third-party sellers as well as the company.

In its blog post last year, the company argued that the separation of third-party vendors from appearing alongside Amazon’s products “would be revived via the failed two-shop model that Amazon tried two decades ago; the model that both small sellers and customers rejected. “

The U.S. Chamber of Commerce has also criticized the number of House proposals, including Jayapal’s, to highlight the Big Four companies.

“Laws targeting specific companies rather than focusing on business practices are simply bad policy and fundamentally unfair and could be declared unconstitutional,” said Neil Bradley, executive vice president and chief policy officer of the chamber, in a recent statement.

Mark McCarthy, a senior fellow at the Brookings Institution who has followed the big tech debate, said the antitrust approaches outlined in the legislation proposed by Jayapal and others have advantages and disadvantages. Forced separation of Amazon and its third-party marketplace could have some negative effects, he said.

“This has consequences that may not be so good for consumers and retailers,” he said, saying that buyers would have a harder time finding products and sellers could lose customers.

McCarthy pointed to another antitrust law tabled by Rep. David Cicilline, DR.I. that would not divide tech companies but instead prohibit “discriminatory behavior” by “dominant platforms” and make Amazon illegal, non-public data held by third parties were obtained to use -Products from party sellers.

Doing nothing, McCarthy said, was not an option.

“It’s the kind of conversation we need to have about how best to deal with the tremendous power these companies have. I’m glad it’s out there. “