|
Welcome to You’re Probably Getting Screwed, a weekly newsletter and video series from J.D. Scholten and Justin Stofferahn about the Second Gilded Age and the ways economic concentration is putting politics and profits over working people.
 |
Welcome to You’re Probably Getting Screwed, a weekly newsletter and video series from J.D. Scholten and Justin Stofferahn about the Second Gilded Age and the ways economic concentration is putting politics and profits over working people.
With the Trump Administration dismantling the Consumer Financial Protection Bureau (CFPB), illegally firing members of the Federal Trade Commission (FTC), and proposing cuts to the Antitrust Division at the Department of Justice (DOJ), states have become an even more important line of defense against the excesses of concentrated corporate power. Big Tech has taken notice and early this morning got a big boost from big government.
The US House Energy and Commerce Committee voted early this morning on its portion of the massive budget reconciliation bill they are working to pass. Tucked into the bill is a provision that would preempt any current state or local regulation of artificial intelligence and add a 10 year moratorium on any new state regulations. OpenAI along with familiar tech giants like Meta, IBM, and Google have all advocated for federal preemption of AI regulation as reported by The Lever, along with Big Tech-funded advocacy groups like the Chamber of Progress.
 |
While it is possible the provision could still eventually be seen as a violation of parliamentary rules, the Republicans on a major committee have now given the idea its blessing. Although it should be noted that policymakers on both sides of the aisle are caving to Big Tech. So much for leaving it to the states, that must only apply when slashing healthcare programs.
States have been passing a variety of laws related to AI including preventing the use of deepfakes in elections, discriminatory uses of AI in hiring, and the creation of “digital replicas” of people without their permission. Colorado became the first state to pass a comprehensive regulatory framework for AI. Unfortunately Colorado Governor Jared Polis is now asking for implementation to be delayed and has voiced support for federal preemption.
The preemption provision would also thwart efforts states and cities are taking to address the use of AI to enable price fixing, most prominently in the rental market. RealPage, which we talked about last week, uses an algorithm to enable price fixing among landlords. States and cities are passing provisions to prohibit the practice.
 |
So-called algorithmic price fixing is not limited to rental housing with third party businesses like RealPage operating in various other industries. Public and private lawsuits have been brought in the meat, sugar, frozen potato and pharmaceutical industries alleging analytics companies have been used to coordinate pricing decisions. Despite this existing litigation, price fixing laws were written long before the advent of AI and the clear prohibitions states and cities are passing are a much needed next step.
Big Tech firms claim this preemption is necessary to spur innovation in AI, based on the faulty assumption that competition policy and government investment play no role in driving innovation. Economist Mariana Mazzucato has detailed how government often takes the biggest innovation risks. Furthermore, monopolies do not drive innovation, they stifle it. The breakups of Standard Oil and AT&T are classic examples of antitrust law helping drive innovation. Writer Cory Doctorow has covered well the phenomenon of what he calls “Enshittification” or the deterioration of once innovative services, such as Google Search, once Big Tech monopolies have amassed market dominance and no longer have to innovate to survive.
This preemption fight also demonstrates the importance of state governments in curbing the power of corporate monopolies. The lobby blitz on AI is reminiscent of Big Tech’s scramble several years ago to quash state efforts to break up Google and Apple’s duopoly over mobile applications. In Arizona a Republican legislator said Big Tech hired “every lobbyist in town” in order to kill app store legislation. Corporate monopolies understand that states can play a powerful role in addressing the harms of corporate monopolies, which shows up in significant spending on state-level lobbying by Big Tech, which of course is only one portion of our highly monopolized economy represented by armies of hired guns.
 |
States are the original trustbusters. It was the states that passed the Granger Laws to rein in the power of the rail and grain monopolies of the 1870s and it was states that passed the first antitrust laws in the 1880s to break up powerful corporations. Now states are banning noncompetes, going after junk fees, increasing penalties for antitrust violations, fighting price fixing, blocking major mergers, and trying to get in front of the AI explosion. But to continue to do so, they need Congress to get off their backs. So call your member today and let them know that if DC won’t do anything to keep Big Tech and other monopolies from screwing you, your state and local government should be allowed to.
YOU’RE PROBABLY (ALSO) GETTING SCREWED BY:
Tax Dodging Corporations
The Institute on Taxation and Economic Policy has found that several massive corporations were able to collectively keep $1.4 billion in sketchy tax breaks because they ran out the clock on IRS audits.
 |
Rich Tax Cheats
Speaking of the IRS, More Perfect Union has a new video out exploring how the massive cuts to the IRS proposed by Elon Musk and DOGE would further tilt the tax code towards billionaires at the expense of the rest of us.
Noncompetes
With the future of the FTC’s rule banning noncompete clauses in jeopardy, states can play an important role by banning noncompetes themselves. Four states have blanket bans on these unnecessary restrictions on workers, but the latest state to approve such a ban, Minnesota, might roll it back. A labor bill passed by the Minnesota House last week includes a rollback and former FTC Chair Lina Khan is urging legislators and Governor Walz to reject these efforts, which have been pushed by groups like the Minnesota Chamber of Commerce.
 |
Big Meat
You might think there is a vast and competitive ecosystem of brands competing for your dollar, when in reality just a few meatpackers own them all.
 |
PBMs
During a Senate hearing on pharmacy benefit managers (PBM) New Jersey Senator Cory Booker said PBMs are inflicting “corporate violence” on Americans. His full comments are worth a watch.
SOME GOOD NEWS
New Toolkit For Fighting Inflation
Hal Singer has a new piece in The Sling outlining the beginnings of a new toolkit for policymakers looking to address the profiteering that has been a key piece of recent inflationary challenges. Singer’s piece argues that while antitrust plays an important role in addressing inflation, policymakers need to think broader about how to address profiteering.
One of Singer’s proposals that stands out is requiring an agency, such as FTC or DOJ, to launch an investigation anytime an industry experiences above-average inflation. There is historical precedence for this sort of approach. Under FDR, the act of launching an antitrust investigation into an industry reduced prices by 18-33% and helped lift the country out of recession.
BEFORE YOU GO
Before you go, I need two things from you: 1) if you like something, please share it on social media or the next time you have coffee with a friend. 2) Ideas, if you have any ideas for future newsletter content please comment below. Thank you.
Break Em Up,
Justin Stofferahn
| ||||||||||
