In proposing to buy WholeFoods for $14b, Amazon has surprisingly invited unwelcome serious antitrust investigation into, and public discussion about, Amazon’s core conflicted retail/MarketPlace business model and the many alleged predatory, discriminatory, and unfair standard Amazon business practices, that Amazon commits, not only in the grocery business segment, but in all other retail segments.
In stating “the parties expect to close the transaction in the second half of 2017,” that means Amazon expects no serious antitrust investigation of whether the transaction “substantially lessens competition,” and thus no “second request” from antitrust authorities requesting more information and questions to answer.
If a “second request” comes, which is likely, there is no way the companies can continue to “expect” the deal will be approved in 2017. That’s because such an investigative process effectively does not have any deadline for the reviewing authority, DOJ or the FTC, to either: approve, approved with conditions, or challenge the deal….
The combination of: the likely multiple alleged anticompetitive behaviors; the likely number of complaints and complainants; the online-offline complexity of investigating the complaints; the importance of this case as an online-offline antitrust merger precedent; the exceptional size, scope, reach, speed and non-transparency of Amazon’s online business; and the expected high-public profile of this transaction; all would auger for the reviewing authority to err on the side of caution and investigate the transaction fully.
Let me be clear here about what I am saying and not saying.
First, what’s obvious here is that the transaction will attract a lot of concern in private and publicly in multiple dimensions. That’s precisely because of the many serious implications this “Everything Store” proposed transaction will have for the future of competition in many markets, which in turn will delay Amazon’s transaction timetable.
…[M]ost of the antitrust concern will come with the exceptional market power that Amazon wields online, combined with the under-appreciated conflict in its business model where half of its retail revenues come directly from consumer-customers, and the other half of its retail revenues come from its MarketPlace offering where Amazon is the mall and gatekeeper for around 15 of its top 20 grocery competitor-customers, that have had to capitulate to Amazon’s market power and operate on Amazon Marketplace in order to reach all their offline customers online.
In layman’s terms, the problem Amazon’s retail intermediary model causes competitors is that it simultaneously is a direct retail competitor overall, at the same time it is the dominant online broker that has disintermediated its competitors from their customers when they are in the online world, and in that broker role, they are routinely criticized as not being an “honest broker” or as being a “non-neutral platform,” that routinely self-deals anti-competitively, because Amazon has market power to extract it with impunity, and no antitrust or regulatory accountability to speak of – to prevent it.
[T]his transaction review is the first genuine opportunity and powerful legal process for those alleging anti-competitive harm by Amazon to have antitrust authorities’ full ear in a confidential process where warranted.
While Spotify’s technocrats may be breathing a sigh of relief after the company’s most recent multimillion dollar settlement with songwriters, it is well to remember that the company is probably not anywhere close to out of the woods. As others have learned the hard way, once you replace the rights of songwriters and artists with your own lust for IPO riches, the lawsuits can go on for a very long time indeed. You would think that after nearly 20 years of massive infringement online, the obvious answer would suggest itself to the “get big fast” group: Don’t use music you don’t have rights to use.
Yes, that’s right. Just say no.
The typical reason given by interactive services about why their need to offer unlicensed music exceeds their desire to offer only licensed music is because of competitive pressure from YouTube. Why do they feel this competitive pressure? Because their investors tell them at every board meeting that they should feel it. But let’s be clear–I doubt that Tim Cook gets Eddie Cue in a headlock over the issue over at the Infinite Loop. If you agree, then that kind of narrows it down.
But entertain that idea for a moment, however ill founded. Why is YouTube able to sustain this competitive position that supposedly makes otherwise licensed services soil themselves with fear of being undercut and overrun by YouTube?
That’s right–the “DMCA license”, or YouTube’s absurd use of the “safe harbors” granted to them under the U.S. Copyright Act which YouTube likes to think makes them bullet proof. (Which is also what Cox Communications thought until they weren’t and is probably what Facebook thinks, too.)
So get that straight–some would say that The Golden Child (aka Spotify) is to be allowed to limp their way to the increasingly inexplicable goal of some kind of big financial reward (or “exit”) in an IPO of whatever stripe while we are all asked to look the other way and allow them the same shite arrangements that YouTube enforces through lobbying, litigation and unprecedented monopoly position (aka crony capitalism).
And you thought it was all about the “Value Gap”? Apparently not.
Remember the ex-Googler Renata Hesse who managed to get both herself and the Department of Justice sued by SONA over Hesse’s grotesque mishandling of 100% licensing? Like a good little bureaucrat, she leaves the songwriters to clean up her mess while she skips out to the big money. Don’t let the revolving door hit you.
And good job avoiding a confirmation hearing…that won’t happen again.
Sullivan & Cromwell LLP is hiring Renata Hesse, formerly head of the antitrust division at the Justice Department, as the law firm prepares for a continued wave of complex, cross-border mergers and other deals.
Ms. Hesse, 52 years old, will join Sullivan & Cromwell as a partner in Washington, D.C., the firm plans to announce Monday. The move is noteworthy not just because of Ms. Hesse’s stature in legal circles, but also because it is rare for Sullivan & Cromwell and other elite law firms to bring in partners from the outside. Until January, Ms. Hesse was acting assistant attorney general in charge of the antitrust division at the Justice Department, a position she has held twice.
[Editor Charlie sez: Because MIC Coalition members got legislation passed that violates international law, the U.S. lost a WTO arbitration so the U.S. taxpayer paid royalties to Irish songwriters that American songwriters don’t get paid. It would have been cheaper for the taxpayer to stop this crony capitalism and require the restaurants to pay songwriters like everyone else.]
The part of the U.S. Copyright Act that exempts some small restaurants and bars from paying public performance fees to collecting societies could be costing rightsholders more than $150 million a year, according to a study by the consultancy PMP Conseil.
The study was presented today (Nov. 8) by Keith Donald, chairman of the Irish Collecting Society IMRO, at a meeting of the International Council of Creators of Music. The research was funded by GESAC, the organization of European composers groups, in an effort to push the U.S. to change its copyright laws.
The issue stems from 1998, when Congress passed the Fairness in Music Licensing Act, which let more bars and restaurants play music on a stereo or television without getting public performance licenses from ASCAP or BMI. (The bill was attached to the Copyright Term Extension Act.) Although more sweeping exemptions in the original text of the bill were withdrawn, the final version allows restaurants and bars of less than 3,750 square feet to play music without a license, provided they meet certain conditions.
After the law took effect, the European Commission began a dispute proceeding against the U.S. at the World Trade Organization, on the grounds that the exemption violated the Berne Convention — which the U.S. is obligated to abide by under the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). The WTO ruled in favor of the Commission, and in 2003 and 2004, under the terms of a settlement, the U.S. paid into a European Union fund to benefit songwriters. But it hasn’t paid since then.
Obama like many political leaders has relied upon songwriters to shape his public persona and image. But Obama has also allowed his antitrust division to relentlessly persecute songwriters in ways that benefit Silicon Valley firms that are among his largest campaign donors.
Politicians, especially democratic politicians have always appealed to songwriters and performers for help campaigning and in shaping their images. But once the election is over we never see anything in return. Not even a “thank you.” But our long running abusive relationship with politicians seems to have hit a new low. It appears the Obama DOJ purposely waited until after all those celebrity/songwriter/performer campaign rallies were finished before they renewed their “100% licensing” legal crusade against songwriter non-profits BMI and ASCAP.
And I do mean “purposely waited.” Let me explain.
The US Copyright Office has been given a brutal Silicon Valley-style sacking, the first time the Copyright Register has been dismissed in 119 years.
Maria A Pallante was locked out of her computer on Friday, according to Billboard, on the instructions of her boss, a new Obama appointee, Carla Hayden, the Librarian of Congress.
“Officially, Pallante has been appointed as a senior adviser for digital strategy for the Library of Congress, although it’s clear she was asked to step down,” Billboard’s Robert Levine notes.
Critics see the move as in line with Silicon Valley asserting its influence over the US Government via its agencies in the dog days of the Obama Administration. Just last month, as Hayden started the post, the Google-funded group Public Knowledge attacked the Copyright Office for upholding the copyright laws.
“Pallante was the only one standing between Google and what is left of the copyright system,” wrote David Lowery on the Trichordist blog, which campaigns for better deals for songwriters and musicians.
Controversial decisions by the Department of Justice, the Federal Trade Commission, and the Federal Communications Commission have all resulted in proposals or decisions that advanced the business interests of Silicon Valley’s biggest companies.
For example, after an investigation of Google for anti-competitive practices, FTC staff concluded there was sufficient evidence to indict – but the Obama-appointed trade commissioners abandoned this for a voluntary deal instead.
[Editor Charlie sez: The title of this post could have been “Usual Suspects Are At It Again”]
In a letter submitted to the FCC late last week defending the Commission’s deeply flawed set-top box proposal, a group of professors make an incredible claim: Everyone is perfectly free to distribute copyrighted works online however they please. No license? No problem! According to these professors, many of whom teach copyright law, copyright owners have no distribution right in cyberspace. If you think this sounds wrong, you’re right! This claim sounds ridiculous because it is ridiculous, and it’s simply amazing—and troubling—that professors would mislead the FCC in this way.
The professors argue that a copyright owner’s “right to distribute encompasses the distribution of physical copies of a work, not electronic transmissions.” In support, they cite no case law whatsoever. There’s a good reason for this: None exists. The reality is that every single court that has ever considered this argument on the merits has rejected it. Time and again, this argument has been summarily dismissed by the courts. As the Nimmer on Copyright treatise puts it: “No court has held to the contrary on this issue[.]” Yet, the professors present this to the FCC as an accurate description of the law, with no equivocation whatsoever.
Read the post on Center for the Protection of Intellectual Property