Welcome to The Corner. In this issue, we discuss President Trump’s “revocation” of President Biden’s Executive Order on Competition. And we describe how the fight to defend FTC’s 2024 ban on non-compete clauses has moved to the states.
Toward the Next American Democracy — As Trump Completes His Embrace of Monopoly Power
In politics, four years truly is a lifetime. When President Biden in July 2021 signed his Executive Order on “Promoting Competition” he launched both a revolution in antimonopoly enforcement and a new way of thinking about the political economy, one that focused on shaping private power for the public purpose. Last week, President Trump put an official end to all of that, with a new EO that “revoked” the old.
By the time the Trump autopen rolled over the parchment, few journalists thought the action worthy of mention. President Trump, after all, had already made his views clear by firing pro-enforcement officials at the Federal Trade Commission and the Department of Justice and attacking efforts by other democracies to regulate the U.S.-based tech corporations that dominate online communications and commerce.
For our team at Open Markets, none of this came as a surprise. Yes, the first Trump Administration took important actions to break the power of Google and Facebook. But early in this last presidential campaign we saw that Trump’s team had embraced a very different approach. Rather than protect citizens and businesses from manipulation and extortion by the world’s biggest corporations, they chose instead to put the power of those corporations to use for their own interests. And the oligarchs who control that power, rather than resist, opted to help Trump, in expectation of some favor or other.
In short, for more than a year, it’s been obvious Trump was pursuing a merger of private and state power similar to what we saw in Germany and the Soviet Union in the 1930s, and what we see in the People’s Republic of China today.
Right now the vast majority of American voters who believe in democracy are being presented with two main paths forward. First, revert to the laissez-faire approach of President Clinton and Larry Summers, in the hope that the newly freed “market” will provide little people with a few more houses. Or tax the billionaires and redistribute some of their wealth, in the form of public funding for apartments, supermarkets, and mass transit.
We have friends in both camps. We believe both have smart ideas. But neither offers a coherent answer to Trump and the oligarchs. Both programs are way too small for this moment.
The time has come to relearn how to imagine — and make — a truly better future. We can rebuild a broad glittering prosperity for everyone. We can reestablish and perfect American democracy and liberty for the next century. And we can do both soon.
The price of admission to this America of your dreams? A bit of homework and a little faith. Our first task is simply to complete what Biden started in July of 2021 — which in turn was what Senator Elizabeth Warren set in motion in June of 2016 — and relearn how to see and shape power within the political economy to protect democracy and build true liberty. Our second, to relearn that we truly hold the future in our own hands.
We at OMI can help. We and our allies spent the last 20 years preparing for today’s crisis, by studying how today’s oligarchs were concentrating their power and how they were using it. By relearning the history of how Americans first made themselves free from King and corporation, and how Americans kept themselves free for the next two centuries while also extending American liberty to ever more people.
You’ll be hearing more from us soon. President Trump’s revocation of the Biden EO is but the beginning of the second stage in the next American renewal.
Non-Compete Ban Fight Moves to States
Brian Callaci
The future of the Federal Trade Commission’s landmark 2024 decision to prohibit non-compete clauses in employment contracts is uncertain. Now under chair Andrew Ferguson, the FTC has until September 8 to decide whether it will stand up for the ban in court. But even if the FTC wavers on its commitment, a growing number of states — both Democratic and Republican — are taking actions to defend the right of workers to freely move from job to job.
Enacted in 2024, the FTC’s non-compete rule is a near-total ban on contracts that prevent workers from leaving their current employer to take another job or start their own businesses. The Open Markets Institute led the coalition that first petitioned the FTC to ban non-competes in 2019. Last August, however, a judge in Texas held that the FTC had neither the statutory power nor sufficient evidence to enact the ban and stopped the rule from taking effect nationwide.
The benefits of the FTC fighting to uphold the rule are clear and substantial. The agency estimated the rule would increase worker earnings by $400 billion to $488 billion over 10 years. The rule would also likely lead to more innovation and business startups: When Hawaii exempted workers in technology industries from non-compete clauses, it resulted in a 10.2 percent increase in the number of technology establishments and a diffusion of skilled technology workers across the labor market.
The rule is also important for legal and moral reasons. The rule, for instance, revives notions of coercion and exploitation that, while long integral to antitrust, had been abandoned in favor of narrow “consumer welfare” since the late 1970s. In addition to adverse effects on wages and output, the FTC banned non-competes, in part, simply because they are coercive and exploitative.
The Trump FTC has thus far shown little practical interest in defending the Agency’s rule. Ferguson has expressed a preference to using individual lawsuits rather than a blanket ban to rein in non-compete clauses. But most legal experts believe such an approach would be clumsy and slow, and would ultimately fail to protect the interests of most workers. In an economy in which 18 percent of workers are bound by non-compete clauses, judicating the ban on a case-by-case basis guarantees a game of litigation whack-a-mole.
The FTC’s internal debate on the issue has also been warped by President Trump’s illegal firing of two of the three Democratic commissioners who originally voted in favor of the non-compete ban, Rebecca Slaughter and Alvaro Bedoya. The third vote came from then FTC Chair Lina Khan.
The good news is that a growing number of states are taking action. In April, Virginia’s Republican Governor, Glenn Youngkin, signed into law legislation expanding the state’s non-compete ban. Previously only applying to workers making less than the state’s average weekly wage, the state’s non-compete ban applies to all workers entitled to overtime under the federal Fair Labor Standards Act. In Ohio, bipartisan legislation broadly banning non-competes has been introduced in the Senate. In New York, state senator Sean Ryan reintroduced his bill broadly banning non-competes. Last year, the Rhode Island General Assembly, citing the FTC’s findings, passed a comprehensive ban on non-competes, though Governor Daniel McKee vetoed the bill on grounds that it was overbroad.
Other states are restricting the use of non-competes in more targeted ways. This year, Wyoming passed a non-compete law that covered a substantial fraction of the workforce but excluded broad classes of highly paid and professional employees from the law and did not limit the use of training repayment agreement provisions (TRAPs) requiring workers to repay employers for training received should they leave.
Concerningly, a few states have considered laws that would actually allow employers to impose non-competes more freely on their workers. For instance, Florida has decided to roll back its existing laws against non-competes with draconian new legislation. The new law, shaped by lobbyists for billionaire Kenneth Griffin’s hedge fund Citadel Capital, extends the maximum time for a non-compete clause to stay in effect from two years to four years for workers earning over twice the mean wage in the county where the employer resides (this salary threshold currently ranges from $80,000 to $150,000).
By contrast, earlier this year, the Minnesota legislature rejected an attempt to water down a new state level law restricting non-competes.
Supreme Court Justice Louis Brandeis famously called state governments “laboratories of democracy.” Even as the Trump administration acts to restrict democracy in sector after sector of the political economy, recent actions in states all across America suggest that protecting workers and small businesses from coercive practices like non-competes is a policy that enjoys broad, bipartisan support.
CJL at Open Markets and Partners Call on DOJ to Break Google’s Ad Tech Monopoly
The Center for Journalism & Liberty at Open Markets Institute, alongside Public Knowledge and Rebuild Local News, submitted a letter calling on the U.S. Department of Justice Antitrust Division (DOJ) to strengthen its initial proposed remedies to break Google’s monopoly over the ad tech market, which intermediates ad sales mainly between news publishers and advertisers on the open web. The letter called on the DOJ to set a hard deadline for the divestiture of Google’s publisher ad server, called DoubleClick for Publishers, and for Google to restore lost revenue to news publishers.
“We urge the DOJ to consider disgorgement of Google’s ill-gotten profits … to provide relief and restitution to publishers harmed by Google’s monopoly regime through an independently administered fund,” CJL director Courtney Radsch said. The letter follows a district court ruling this past spring that Google violated Section 2 of the Sherman Act by illegally monopolizing the ad tech market, as well as Sections 1 and 2 of the same act by unlawfully tying its products to maintain its monopoly. Read the letter here.
📝 WHAT WE'VE BEEN UP TO:
- The Open Markets Institute filed an amicus brief in the Supreme Court, urging the Court to challenge alleged misrepresentations by the pharmaceutical corporation Merck to the Food and Drug Administration, which then allowed the company to extend its monopoly in the mumps vaccine market. In the case Chatom Primary Care v. Merck & Co., a group of physicians accuse Merck of misleading the FDA about the potency of its vaccine to block biosimilar competition. “Merck’s actions, if allowed to stand, would send a dangerous
message that companies can abuse the regulatory system to protect their monopolies at the expense of honest rivals, consumers, and public health,” said OMI legal director Sandeep Vaheesan, who coauthored the brief. Read the full brief here.
- Vaheesan also published an op-ed in The New Republic arguing that while recent wins in lawsuits against Big Tech are a step forward, the real battle lies in dismantling their invasive surveillance advertising model, which exploits our privacy and fuels societal harms. “This surveillance advertising, now intensified by artificial intelligence, violates our privacy, fuels discrimination, keeps us addicted to our devices, and wastes energy, water, and highly skilled labor,” he wrote.
Open Markets policy director Phil Longman appeared on Reconnect America, a podcast hosted by Bill Moyer and Solutionary Rail, a campaign to reform American railroads to serve the public good, in which Longman discussed his 2024 Washington Monthly piece entitled “Train Drain: How deregulation and private equity have gutted the U.S. freight rail system — and with it, the promise of America’s industrial renewal.”
Open Markets senior legal analyst Daniel Hanley published an article in The Sling calling for stricter antitrust penalties in the form of structural remedies, which usually entails forcing companies to sell off business units. “The remedies that judges will impose on Google and the other alleged monopolists in the government’s lawsuits will be a defining test of judicial integrity and democratic accountability to the rule of law,” Hanley wrote. “As the jurisprudence makes clear, anything less than structural relief results in the public “[winning] a lawsuit and [losing] a cause.”
The Center for Journalism & Liberty at Open Markets, joined by 15 leading press freedom groups, civil liberties organizations, and labor unions, urged the Federal Communications Commission (FCC) in a letter not to move forward with plans to loosen media ownership limits, currently set at an expansive 39% audience reach cap. Earlier this summer, the FCC asked for public comments on changing or eliminating a longstanding rule that limits the size and national reach of giant broadcasters — like Sinclair, Nexstar and Fox Corporation — which already own hundreds of local stations across the country. The letter was covered in Common Dreams and Nation of Change. Read the letter here.
In an article on the proposed Union Pacific-Norfolk Southern rail merger, Common Dreams quoted from a piece in Washington Monthly written by Open Markets transportation policy analyst Arnav Rao, in which he wrote, “If the United States is serious about reshoring manufacturing, it cannot afford to let its rail system become a duopoly. Allowing Union Pacific to absorb Norfolk Southern would leave just two national carriers, each with incalculable leverage over customers, workers, and regulators."
An academic paper on cloud computing released earlier this month heavily cites Open Markets Institute’s groundbreaking report, “Engineering the Cloud Commons,” published this past spring. The new paper by David Gray Widder and Nathan Kim describes how the three main players in cloud — Google, Microsoft, and Amazon — are elbowing out VCs to lead investments in thousands of startups to entrench market dominance.
Popular Resistance quoted OMI legal director Sandeep Vaheesan on how employer-imposed debt repayment agreements called TRAPs can depress wages for low-paid service workers and constrain worker mobility, particularly in periods of full employment.
The Open Markets Institute joined other watchdog groups like Public Citizen, NextGen Competition, and the Consumer Federation of America, among others, in urging the Federal Trade Commission to investigate Meta’s acquisition of Scale AI, warning the merger could give Meta control over critical data annotation services essential for training advanced AI models. The letter received coverage in MediaPost and WebProNews.
Jacobin published a review of the book Abundance that cited arguments made by OMI’s legal director Sandeep Vaheesan and chief economist Brian Callaci.
🔊 ANTI-MONOPOLY WINS:
- U.S. House representatives Greg Casar and Rashida Tlaib introduced the Stop AI Price Gouging and Wage Fixing Act, which seeks to ban companies from using artificial intelligence to manipulate or wages based on personal data. The bill would prohibit practices like an airline raising prices for an individual after seeing her search for a family obituary or a ride-share app paying a driver less after seeing that she visited a pawn shop. (House.gov)
- PepsiCo is the target of a private lawsuit that uses the recently revived Robinson-Patman Act to allege that the food and beverage giant charged some retailers different prices for its Pepsi drinks that were not available to others. Filed by a restaurant owner at the U.S. Southern District of New York, the lawsuit alleges that the corporation engaged in "anticompetitive and unfair and deceptive business practices" linked to sales of its Pepsi soft drinks. (Yahoo Finance)
- The House Judiciary Committee sent letters to major sports leagues questioning whether fragmented licensing rights and increasing costs of accessing live sports content calls the leagues’ historical exemptions from antitrust laws into question. It is unclear whether the committee will hold a hearing to follow up on its requests for information. (The Athletic)
- A class action antitrust lawsuit was filed against dozens of prestigious undergraduate institutions and two application processing platforms by former students over claims the schools’ use of the early admissions application process has systematically denied applicants the opportunity to receive adequate financial aid or compare financial aid packages across schools. (Inside Higher Ed)
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📈 VITAL STAT:
$34.5 billion
The amount AI startup Perplexity has offered Google for its Chrome browser in an unsolicited bid after a district court last year declared that Google held an illegal monopoly over search. The DOJ has asked the court to force Google to sell its popular browser. (Wall Street Journal)
📚 WHAT WE'RE READING:
The Democratic Marketplace: How a More Equal Economy Can Save Our Political Ideals — Lisa Herzog, a professor of political philosophy at the University of Groningen, makes a forceful case that the preservation of democratic political values requires a fundamental restructuring of how Western nations are governing their markets. Herzog argues that workers and their communities have been sidelined from economic decision-making in favor of a technocratic approach to corporate governance that has damaged people’s trust in institutions and sowed the seeds for a far-right resurgence across the world.
Order Legal Director Sandeep Vaheesan’s new book:
Sandeep Vaheesan, the legal director at the Open Markets Institute, published his first book Democracy in Power: A History of Electrification in the United States on December 3, 2024. Vaheesan examines the history—and presents a possible future—of the people of the United States wresting control of the power sector from Wall Street, including through institutions like the Tennessee Valley Authority and rural electric cooperatives.
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