2021年1月15日 星期五

On Tech: When tech antitrust failed

How did a case meant to lower prices instead possibly lead to higher prices?

When tech antitrust failed

Angie Wang

If you’ve wondered recently why prices for e-books seem high, let me tell you why a failure of antitrust law might be (partly) to blame.

A government antitrust lawsuit a decade ago that was intended to push down prices helped lead instead to higher ones.

The outcome suggests that the U.S. government’s lawsuits against Google and Facebook and a just-announced Connecticut antitrust investigation into Amazon’s e-book business may not have the desired effects, even if the governments win. It turns out that trying to change allegedly illegal corporate behavior can backfire.

Cast your mind back to 2012. The second “Twilight” movie was big. And the Justice Department sued Apple and five of America’s leading book publishers in the name of protecting consumers and our wallets.

Book publishers were freaked out about Amazon’s habit of pricing many popular Kindle books at $9.99 no matter what the book companies thought the price should be. Amazon was willing to lose money on e-books, but the publishers worried that this would devalue their products.

The government said that to strike back at Amazon, the book companies and Apple made a deal. Publishers could set their own e-book prices on Apple’s digital bookstore, and they essentially could block discounts by any bookseller, including Amazon.

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To the government this looked like a conspiracy to eliminate competition over prices — a big no-no under antitrust laws. Eventually the book publishers settled and Apple lost in court.

Later, Amazon, Apple and other e-book sellers agreed to let publishers enforce e-book prices. The arrangements were legally kosher because they were separately negotiated between each publisher and bookseller. (I can’t answer why Amazon agreed to this.)

The government won but the publishers got what they wanted with e-books. Bookstores can choose to take a loss to heavily discount a print book, but they typically can’t with digital editions. The $10 mass-market e-book is mostly gone.

How did an antitrust case meant to lower prices instead possibly lead to higher prices? Christopher L. Sagers, a law professor at Cleveland State University who wrote a book about the e-books litigation, told me that he believes it’s a failure of corporate antitrust laws.

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Professor Sagers and others believe that because a few major book publishers release most mass-market titles, they have the power to keep prices high. He laments that the antitrust laws have failed to stop industries from getting so concentrated. In other words, he thinks it’s bad for all of us that a book-publishing monopoly is trying to fight Amazon’s monopoly.

“American antitrust is basically a failure and this case was a microcosm,” he told me.

Somehow this newsletter keeps coming back to this debate. An influential view — particularly among left-leaning economists, politicians and scholars — is that U.S. antitrust laws or the way they’re applied are flawed. They believe that the government has failed to stop the increasing corporate concentration and mergers in industries like airlines, banking and technology, which has led to higher prices, worse products and income inequality.

In the long run for the book industry and for us, it could be healthy that the artificially low $10 mass-market digital novel is gone. And there are lots of low-priced Kindle works, though, from self-published authors and Amazon’s own book-publishing unit.

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Amazon was selling the e-book edition of Professor Sagers’s book about the price-fixing lawsuit for $28.45 on Friday — a price dictated by the book publisher. “I wish it were cheaper,” he said. “I wanted a lot of people to read it.”

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Is Amazon bigger than any brand?

Maybe you bought The Rug recently from Amazon. Or those TikTok leggings that women are showing off. I own the Amazon Coat, the fairly affordable outerwear star from a couple of winters ago.

It’s not unusual for products like these from relatively unknown brands to get popular fast. On social media, word of mouth, smart advertising or the recommendations of influential people can make any product go viral.

And when this happens, it makes me wonder whether the brands that matter most in the stuff we buy are Instagram, Amazon and TikTok — not the companies that actually make the products.

I don’t think anyone referred to it as the “Orolay Coat,” although that was the company that made the Amazon Coat. (I had to check my closet to make sure I got the brand name right.) People who bought The Rug might not know it’s from a company called Rugs USA. It’s just that nice rug they saw on Instagram and bought on Amazon.

And if I quizzed the women making TikTok videos of their favorite new leggings, could they tell you which company made them? Probably more than one company is making similar leggings with a honeycomb pattern? I don’t know, guys, this is not a fashion newsletter.

My point is that the social media sites where we find out about products and the websites where we buy them are far more influential in what we buy than the name that made the product.

Sure, some brands do still matter. You might be devoted to Nike running shoes no matter what. But I bet a lot of other people might search for Nike shoes on Amazon, not find what they’re looking for and buy a different sneaker brand instead.

Amazon already has your purchasing information, you trust the company and it can ship the shoes fast. Amazon might not have made the sneakers, but it’s the brand that matters most.

Before we go …

  • Welp, that was pointless: Remember all the fighting about whether the Trump administration would block TikTok in the United States? Yeah, that went nowhere and now Joe Biden has to figure out what to do about TikTok and other technology from Chinese companies, my colleague David McCabe writes.
  • Facebook’s double standard: The threat of violence from inflammatory posts and misinformation on social media is nothing new in many parts of the world. Adam Satariano says that after Facebook and Twitter suspended President Trump, activists are asking why the companies haven’t acted elsewhere.
  • People are buying houses sight unseen from TikTok? BuzzFeed News digs into house flipping on TikTok and the people making fun of tacky homes and absurd kitchen remodels in TikTok videos.

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The Daily: What Comes Next

It was a big news week. Here are three takeaways to offer some clarity amid the chaos.

Hey everyone, happy Friday.

Our week was packed with shows addressing the fallout from last week’s insurrection at the Capitol. Everything has felt extra crazy lately, and we hope you’re doing OK.

In The Daily’s planning meeting each morning, our team gathers to pitch stories, discuss the news and create a plan for the next day’s episode. When determining which story to pursue, editors often ask: What do you want to hear tomorrow? This week, there was a consistent answer: We were craving clarity amid multiple escalating crises.

Whether it was the skyrocketing rates of coronavirus infection or the second presidential impeachment, in each story line, our team wondered: What comes next? While we’ve spent most of this decade living in uncertainty, it’s been particularly chaotic lately. And because you might have finished this week with more questions than answers, we wanted to leave you with three takeaways from our shows to help you make sense of what’s ahead for some big stories.

Three takeaways from this week

The virus is getting smarter — and measures to combat it might get stricter

A new coronavirus variant, circulating rapidly in Britain, is up to 56 percent more contagious than the virus we faced in 2020. The new variant doesn’t appear to be common in the United States, most likely making up less than “0.5 percent of the viruses circulating,” the science writer Carl Zimmer said. Still, we can’t be sure of how fast it’s spreading, as the United States has no large-scale, nationwide system for checking coronavirus genomes for new mutations.

Officials in the incoming Biden administration told Carl they were “in favor of much more aggressive genome sequencing of viruses.” This data is essential for tracking the variant. But while we wait for widespread vaccination, Carl said, “we may have to look for more drastic measures to slow this thing down.”

Britain has entered one of its strictest lockdowns since the pandemic began, shutting most pubs, retail stores and schools. The question for the Biden administration is to what extent it will follow suit. “State and federal officials can take actions that individuals cannot,” Carl said. “For example, providing high-quality masks to everyone, providing at-home tests, and much more contact tracing to block the spread.”

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President Trump was impeached for a second time. So now what?

The last few days of the Trump presidency have been eventful, to say the least. Within a week of the storming of the Capitol building, President Trump has been impeached for a second time, a historic — and notably more bipartisan — move by the House.

But for the impeachment to bar Mr. Trump from seeking the presidency in 2024, he would next need to be convicted by the Senate. Mitch McConnell, the majority leader, has made clear that he will not bring members back for a speedy trial in the coming days, but has privately expressed openness to Democrats’ efforts to convict Mr. Trump after he has left office, in the interest of purging him from the Republican Party.

Now Democrats will have to decide, as Nicholas Fandos explains, how to avoid an all-consuming impeachment trial that “stomps all over” Joe Biden’s legislative agenda and his political message of bringing the country together in his first days in office. One Biden ally, Representative Jim Clyburn, has suggested waiting 100 days before commencing proceedings, while the president-elect himself has floated the idea of splitting the Senate workdays between his agenda and the trial.

Though there is no precedent for a president being tried after his term is over, other government officials who were impeached have been tried after they departed. Speaker Nancy Pelosi is expected to address reporters in the Capitol about when she planned to send the charge to the Senate later today. You can follow the live updates here.

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Tracking far-right extremism is becoming more time intensive

After the occupation of the Capitol by pro-Trump loyalists, social media companies like Facebook and Twitter moved to block conspiracy theorists, far-right groups and even President Trump from their platforms. So we wondered: Where will these groups go next?

Sheera Frenkel, a cybersecurity reporter, told us on Wednesday that the answer is private messaging platforms — where their movements are harder to track. “I am currently in close to 50 different groups on Telegram and Signal,” she said. “The only way to actively monitor these groups is to closely follow their conversations.”

But knowing about the formation of new groups, and identifying the shifting boundaries of existing ones, can be difficult. Under the Trump administration, “there have been few federal guidelines on how to define far-right movements, or money dedicated to organizations which provide best practices on how to stop the far right from radicalizing Americans,” she said. Moving forward, the Biden administration has choices about how best to combat this extremism, and how to “work with tech companies to identify fringe groups that they think should be monitored,” Sheera added.

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For when you need a break from the news

Erica Futterman, our deputy director of audience and operations, captured this sunset in Central Park. We hope you’re all getting outside as much as you can these days, too.Erica Futterman

We know all of these headlines can feel overwhelming. Our team often shares with one another ways we are trying to create moments of brightness and levity amid a heavy and hectic news cycle. So, this week, we wanted to share some of those recommendations with you from one of the zaniest and loveliest producers on our team, Hans Buetow.

Hans always has a good listening recommendation to offer. He often plays elevator music in that dead, silent, awkward time while 50 people are waiting to start a virtual team meeting, and it’s this sense of fun he brings to his work on the Modern Love Podcast and Still Processing.

So we asked Hans what he’s been listening to. Hopefully his recommendations will help usher you into the new year and beat the bleakness of the ninth (hundredth?) month of the pandemic:

  • Dimension 20: This is my escapist binge. It features a group of people playing the most delightful game of “Dungeons and Dragons.” It’s edited and produced, serialized (so start at the beginning), and has drama, swashbuckling, tenderness, humor and fun voices. It’s a great way to sink into the story side of games like D&D. The 90-minute episodes are, frankly, too short for my taste.
  • Off Menu: In this podcast, two British comedians Ed Gamble and James Acaster ask comedians and public figures about their dream meal. Not their final meal, or their favorite meal … but their dream meal. Guests are asked to build a fantasy menu featuring a drink, bread, starter, main course, side dish and dessert. The best part? It’s a game that you can play with the people in your life. Can’t think of what to talk about on your next Zoom call with the in-laws? Play a round of Off Menu with them. It’s guaranteed to get people smiling, sharing, remembering meals they have had and dreaming about ones they’ve always wanted to eat. I’ve done it several times with family and it is always memorable, bonding and fun. I suggest starting with the episode featuring the television presenter Claudia Winkleman.

This newsletter is produced and edited by Lauren Jackson, Desiree Ibekwe, Mahima Chablani and Laura Kim. Special thanks to Erica Futterman, Hans Buetow, Carl Zimmer and Sheera Frenkel.

That’s it for The Daily newsletter. See you next week.

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