Welcome to The Corner. In this issue, we discuss President Biden's address to Congress and his hints at transforming U.S. industrial policy and detail the Federal Trade Commission's newly released report on right to repair.

In His Address to Congress, Biden Hints at Transforming U.S. Industrial Policy

Last week President Joe Biden delivered his first speech to a joint session of Congress in an attempt to build support for an economic agenda designed not only to restart the economy after the COVID-19 pandemic but also to address decades of slow growth. A main part of Biden’s agenda is the American Jobs Plan, a $2.3 trillion-dollar public investment program that promises a major shift in how the U.S. manages industrial policy. “Throughout our history,” Biden said “public investment in infrastructure has literally transformed America — our attitudes as well as our opportunities.”

But as welcome as these plans may be, there’s no indication the Biden administration has recognized that for industrial policy to work, there must be both a robust competition policy and smart corporate governance policies designed to limit the power of financiers over industrial activity. As Cornell University Law professor Saule Omarova put it in an interview, “We can’t push money into the economy and let private equity and Wall Street take control of it rather than democratically elected institutions.”

The United States has, in fact, always had some sort of industrial policy. For most of our history, that policy was dominated by the people, acting through government to achieve certain political, social, economic, and national security goals. During the neoliberal revolution of the 1980s and 1990s, industrial policy in America was transformed. The Reagan and Clinton administrations shifted fundamental decision-making power over America’s industrial activity from the state to the private corporation and investment fund.

Chief among the specific decisions that shifted power to private actors were the radical relaxation of antimonopoly law and trade policy, the shift of control over the corporation from professional management to absentee shareholders, and the radical strengthening of patent and other intellectual property law. These changes resulted in mass corporate consolidation, the offshoring of critical industries to monopolists, a sharp decline in innovation, and a dramatic shift of wealth from the middle class to the rich.

Biden last week described this new industrial policy as “investments only the government can make,” and cited the effectiveness of programs like the Defense Advanced Research Projects Agency (DARPA) and the National Institutes of Health (NIH).

These institutions were built to implement industrial policy rather than allow monopolists and private interests, in the pursuit of short -term economic gain, dictate and determine the path forward for our nation’s most critical industries. Biden alluded to how DARPA helped lead to the discovery of the internet and global positioning systems. Other examples include the NIH leading the development of major vaccines and drugs.

One of the biggest challenges and tasks for the administration is coming up with an institutional solution to facilitate more of these advances, such as creating a public entity that would act as a National Investment Authority (NIA). This idea, advocated by scholars such as Omarova, could control the process and make sure Americans benefit. An NIA would allocate public and private capital to areas of the economy dealing with national priorities, such as tackling climate change or enhancing national security.

“If there are gains, they should not go to private equity or Wall Street but instead to the rest of us,” says Omarova.

FTC Releases Report on Right to Repair – It’s an Excellent Start

The FTC released its long-awaited report to Congress on Right to Repair on Thursday. The report is a critical step to ensure that people be provided the means and ability to repair their goods. The report appeared to clearly draw on the research, testimony, and advocacy on Right to Repair by the Open Markets Institute and allies including U.S. PIRG, iFixit, and the Repair Association.

The report details how restricted repair practices can harm consumers (particularly those in poor communities and communities of color) by raising repair costs and by decreasing product lifespan. The FTC also strongly noted the damaging effects such practices can have on the environment. The commission wrote that “extending the life of consumer products unquestionably delays these products’ entry into the waste stream and reduces the amount of energy used to generate replacement products.”

Importantly, the FTC details how the agency can use its rule-making authority under the Magnuson-Moss Warranty Act and Section 5 of the FTC Act to prohibit unfair and restrictive repair practices. The commission also spent several pages explaining how antitrust law is a tool at its disposal to create a more open repair environment for consumers. This section especially appears to draw from Open Markets’ submissions.

But the commission fell short of a full analysis of the intersection between monopolization and restrictions on repair. The commission did not, for instance, detail how restricted repair practices can be a direct indication and expression of monopoly power.

For more, be sure to check out some of our previous publications:

Daniel A. Hanley, The First Thing a Biden FTC Should Tackle: We Need the Right to Repair Our Products, Slate (November 18, 2020).
Daniel A. Hanley, Claire Kelloway, & Sandeep Vaheesan, Fixing America: Breaking Manufacturers’ Aftermarket Monopoly and Restoring Consumers’ Right to Repair, Open Markets Institute (April 2020).
Daniel A. Hanley & Claire Kelloway, Coronavirus Reveals Consequences of Restricted Repair, The American Prospect (May 12, 2020).
Claire Kelloway & Daniel A. Hanley, How Enforcing Antitrust Rules Can Help Our E-waste Crisis, The Hill (May 14, 2020).
Sandeep Vaheesan, Unleash the Existing Anti-Monopoly Arsenal, The American Prospect (September 24, 2019).
Claire Kelloway, At FTC Workshop, Advocates and Business Owners Say Manufacturers Monopolize Repair, Food & Power (August 1, 2019).

🔊 ANTI-MONOPOLY RISING:

This week the Biden administration announced support for a WTO proposal that would waive intellectual property rights for companies producing COVID-19 vaccines. Many countries, including India, South Africa, and more than 100 others, have called for waivers that would allow them to manufacture their own vaccines. (NPR)
Apple last week updated its operating system in ways that make it harder for mobile applications to collect data from iPhone users. The corporation now requires applications to ask the roughly 1 billion users of the iPhone to assent to being tracked. The move is expected to greatly reduce the amount of data available to Google, Facebook, and other corporations to create personalized ads and information feeds designed to manipulate the behavior of individuals. The move has been widely criticized, however, both for entrenching Apple’s own power over users and for making it harder for upstarts to compete with established corporations such as Facebook and Google. In one reaction, the German Advertising Federation filed an antitrust complaint in Germany accusing Apple of abusing market power and violating antitrust law. (Financial Times and MarketWatch)
Last week the European Commission filed antitrust charges against Apple after preliminary findings that the company’s App Store policies violated EU competition rules. The commission’s investigation was set off by streaming service Spotify’s complaints over Apple’s powerful gatekeeper status in the digital economy. Since then, numerous other companies have voiced similar concerns. Under scrutiny is Apple’s mandatory 30 percent commission fee on sales made on its App Store by other companies. (The Verge)
Last week U.S. lawmakers introduced eight antitrust bills that aim to lower drug prices, such as by increasing generic competition and by preventing anticompetitive actions by pharmaceutical companies. One bill aims to prevent the practice of product hopping, or the practice of changing medications to create new patents. Another bill would ban pay-for-delay schemes, which involve drug corporations paying producers of generics to temporarily stay out of the market. (Reuters)

📝 WHAT WE'VE BEEN UP TO:

Barry Lynn last week spoke at the OECD’s half-day international conference, “A Systemic Recovery,” on how to structure international systems to ensure their stability and resilience. Other participants included the economists Paul Krugman and Ken Rogoff, former Bank of England head Mark Carney, IMF chief economist Gita Gopinath, former head of the UK Liberal Democratic party Jo Swinson, Adm. William McRaven and Lt. Gen. Thomas Bostick. Lynn said, “We don’t have to develop any new technologies or devise any new economics” to address the dangerous instability of today’s international systems. “The only guide we need is the common sense we learned in kindergarten: Don’t put all our eggs in one basket.”
The Open Markets Institute’s Center for Journalism & Liberty’s recent conference — “After Google & Facebook: The Future of Journalism & Democracy” — was mentioned in The Seattle Times, Columbia Journalism Review, and Dee News Line. “Press advocates from government, academia and the industry also huddled (online) at a conference hosted by the liberal Open Markets Institute in Washington, D.C., on ways to sustain journalism and support democracy. It’s great to see this momentum. But as Minnesota Attorney General Keith Ellison said during the Open Markets event, this needs to go beyond 'the academy’ and elite circles — it ‘needs to be talked about at kitchen tables.’”
Sally Hubbard appeared on Retail Dive’s “The Backroom” podcast to discuss what shifts in competition policy and enforcement could mean for the retail industry writ large. “In recent years, the tech giants have come under scrutiny from the federal agencies tasked with reining in harmful monopolies and ensuring competitive markets. To make sense of how the world of antitrust and market structures affect retailers across the industry, we talked with Sally Hubbard, a former assistant attorney general with New York's antitrust unit and current director of enforcement strategy at the Open Markets Institute.”
Reporting on the nomination of former Open Markets legal director Lina Khan to the FTC continued. Open Markets Institute was mentioned in Ars Technica: "After law school, Khan worked as the legal director of Lynn's new organization, the Open Markets Institute. So if we can expect anyone to push the Federal Trade Commission to enforce antitrust laws more aggressively against big technology companies, it would be Khan. The choice of Khan could also signal that the Biden administration more broadly will take a confrontational posture toward Big Tech.”
Sally Hubbard was quoted in CBC, World ABC News, YYC Times, Technology InfoSec, Digitpatrox, Today News Post and B Positive Now commenting on the Epic and Apple case. "The reason why we haven't seen action from private parties is it's really hard to have the resources to sue a monopolist," she said. "And there's incredible fear of retaliation when you actually go against a company that controls your ability to get to market."
Sandeep Vaheesan responded to Lina Khan’s nomination to the FTC and the Biden administration’s opportunity to strengthen antitrust in Yahoo! News and Central News Agency Global Central Magazine. "My dream is that we can start to formulate fair competition regulations and explain what behavior should be prohibited... Each monopoly case does not need to take three to five years to go through, as long as the rules are clearly written to explain which behaviors are illegal, such as prohibiting employers from requiring employees to sign competition clauses.”
Johnny Ryan was quoted in The Irish Times, Irish Legal, The Irish Examiner, The Journal, Silicon Republic, RTE News, Inside Privacy, and Eminetra calling out Ireland’s data regulator for failing to rein in Big Tech. “’In the three years since the GDPR was applied, the DPC asserted its lead role in 196 cases, but delivered decisions in only four,’ he will say [at an Oireachtas committee hearing].”
Sally Hubbard’s book, “Monopolies Suck,” and Barry Lynn’s book “Liberty From All Masters” were included in a list of books in The New Republic: “In the last two years, a slew of books have described the dangers of monopoly power and called for change.”
Claire Kelloway spoke on The Working Landscapes Lab “Too Big to Farm” podcast about how agricultural monopolies have resulted in overproduction, degraded ecosystems, created public health crises, all-time-high farm debt and narrowed opportunities for new farmers.

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📈 VITAL STAT:

64.5%

Amazon's market share in the cloud-computing industry.

📚 WHAT WE'RE READING:

“Workplace Monitors: A Model for Worker Safety, Rights, and Representation” (Great Democracy Initiative, Dr. Lindsay Owens): Owens discusses how to build a fairer and more worker-focused monitoring program to ensure that a firm is compliant with state and federal employment laws and ensure workers are properly educated about their employment rights.

BARRY LYNN’S

NEW BOOK

Liberty From All Masters

The New American Autocracy vs. The Will of the People

St. Martin’s Press has published Open Markets Executive Director Barry Lynn’s new book, Liberty f rom All Masters.

Liberty is Lynn’s first book since 2010’s Cornered. In his new work, Lynn warns of the threat to liberty and democracy posed by Google, Amazon, and Facebook, because of their ability to manipulate the flows of information and business in America. Barry then details how Americans over the course of two centuries built a “System of Liberty,” and shows how we Americans can put this system to work again today. Lynn also offers a hopeful vision for how we can use anti-monopoly law to rebuild our society and our democracy from the ground up.

Liberty from All Masters has already made waves for its empowering call to restore democracy by resurrecting forgotten tools and institutions. “Very few thinkers in recent years have done more to shift debate in Washington than Barry Lynn. In Liberty from All Masters, he proves himself as a lyrical theorist and a bold interpreter of history. This book is an elegant summoning of a forgotten tradition that can help the nation usher in a new freedom,” says Franklin Foer, author of World Without Mind and national correspondent for The Atlantic.

You can order your copy of Lynn’s book here.

SALLY HUBBARD’S

NEW BOOK

MONOPOLIES SUCK

7 Ways Big Corporations Rule Your Life and How to Take Back Control

Simon & Schuster published Monopolies Suck by Sally Hubbard on Oct. 27. The book is the first by Hubbard, who is Open Markets’ director of enforcement strategy. Hubbard examines how modern monopolies rob Americans of a healthy food supply, the ability to care for the sick, and a habitable planet, because monopolies use business practices that deplete rather than generate. Monopolists also threaten fair elections, our free press, our privacy, and, ultimately, the American Dream, Hubbard shows. In Monopolies Suck, Hubbard reminds readers that antitrust enforcers already have the tools to dismantle corporate power and that decisive action must be taken before monopolies undermine our economy and democracy for generations to come. In Monopolies Suck, Sally provides an important new view of America’s monopoly crisis and of the political and economic harms of concentrated private power. Order your copy here.

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