Ken Buck, a Republican representative who is a member of the conservative Freedom Caucus, continued the theme, grilling Bezos about evidence that Amazon had deliberately allowed counterfeits to proliferate on its site in order to extract protection money from suppliers. He cited the experience of PopSockets, a start-up in his home state of Colorado that makes popular phone accessories. The company’s founder told the subcommittee that Amazon declined to rid its website of fake versions of his products until he agreed to spend $2 million to advertise on the site.
The subcommittee also has evidence that Bezos had leveraged his exceptional backing from Wall Street to block upstart competitors from gaining a foothold; that Amazon lost $200 million in a single month selling diapers below cost in a bid to force the parent company of a popular rival, Diapers.com, to agree to be acquired; that Amazon sold Echo speakers below cost and bought up potential rivals such as Ring so that its Alexa voice assistant could dominate the “smart home” market. Lawmakers have also documented the consequences of these practices—the small businesses, the software developers, and the product inventors who live in fear of being crushed at Amazon’s whim.
Amazon, of course, is just one of the tech giants under the antitrust subcommittee’s scrutiny. The panel is building a case that these companies have created a form of private government—autocratic regimes that are tightening their control over our main arteries of commerce and information. As such, they threaten Americans’ liberties. “Our founders would not bow before a king,” Cicilline said at the hearing. “Nor should we bow before the emperors of the online economy.”
Congress has not conducted so detailed an investigation of monopoly power in the lifetimes of most Americans, so it’s hard to conceptualize where it might lead. But if the past is any guide, it could precipitate both new laws and antitrust prosecutions. In 1938, for example, Congress set up a commission to examine concentration across multiple industries. Its findings led the federal government to file a major antitrust case, change the patent laws, and, in 1950, pass sweeping legislation to restrict mergers. Congress conducted other investigations of monopoly in the 1950s and 1960s, and the results shaped antitrust enforcement. But then, beginning in the 1970s, monopoly was sidelined as a concern by both political parties.
The House’s antitrust subcommittee is resurrecting this tradition, and there are signs its work is already having an effect. State attorneys general in New York and California have reportedly opened antitrust investigations into Amazon.
But a multiyear court fight is not the only way to restructure Amazon and the other tech giants. The subcommittee may recommend a more straightforward approach. Congress could approach digital platforms the same way it did the railroads, another pivotal technology that governed market access. In the late 19th century, a handful of railroad barons used their control of the rails to monopolize other industries. They captured the market for coal, for example, by blocking rival producers from using the rail lines to get their coal to market. They also charged farmers exorbitant rates to ship their crops. Congress responded by setting up a commission to oversee rates and ensure that the railroad companies did not discriminate against some customers by imposing higher prices or different terms of access. Then, in 1906, Congress enacted a law barring the railroads from maintaining an ownership stake in firms that produced goods requiring rail transportation, thereby dissolving their ability to self-deal.