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Activists of Sammilito Garments Sramik Federation (Combined Garments Workers Federation) march for fair wages and union rights for all Amazon supply chain workers in Dhaka, Bangladesh on November 27, 2020. (Photo: Mamunur Rashid/NurPhoto via Getty Images)

California's New Antitrust Suit Shows How the State Can Lead on Reining In Amazon

By launching a first-of-its-kind antitrust lawsuit against Amazon this September, California is proving once again that it can take lead from D.C. to advance progressive policy.

California has been a policy trendsetter for decades, leading the way nationally on issues ranging from environmental policy to online privacy. At a time when gridlock and aggressive industry lobbying threatens antitrust reform in Washington, California can and should lead the way on holding predatory monopolists like Amazon accountable.

As we collectively await the litigation process in this historic lawsuit, Sacramento leaders need to make modernizing state antitrust law a top legislative priority.

By launching a first-of-its-kind antitrust lawsuit against Amazon this September, California is proving once again that it can take lead from D.C. to advance progressive policy. The lawsuit, filed by California Attorney General Rob Bonta, centers on Amazon's anti-competitive behavior that destroys sellers' livelihoods and puts consumers at a disadvantage.

As Bonta has noted, Amazon reinforces its already-dominant position "to make increasingly untenable demands on its merchants," including via coercion: One strategy involves effectively forcing sellers into "agreements that severely penalize them if their products are offered for a lower price off-Amazon."

This unfair--and explicitly illegal--behavior fits squarely with Amazon's broader record of impropriety. After all, Amazon was only able to accumulate monopoly power by disregarding antitrust law laws and eschewing basic ethics at every turn. Discriminatory pricing at the expense of small sellers is just the tip of the iceberg for an empire built off the exploitation of workers--and, generally outside the public eye, Americans' taxpayer money.

In other words, strong antitrust enforcement to rein in Amazon's anti-competitive conduct should be understood as complementary to efforts to curb the company's other abuses, namely its abominable treatment of warehouse workers.

Last year, Governor Gavin Newsom made the welcome move of signing AB 701, an 'Amazon-inspired' workplace safety law to protect warehouse employees, into law. The fact of the matter is that by accumulating monopoly power, Amazon hasn't just tilted the scale in favor of its own products and services: It's empowered the company to abuse workers who often have few opportunities for alternative employment.

As Public Citizen explained, when "there's an overwhelmingly powerful boss in town, they can set the salary to whatever they want without fear of competition," a principle that also allows them to effectively force employees to endure dangerous working conditions.

It's worth noting that the clear link between holding Amazon accountable for antitrust abuses and improving conditions for its employees has not been lost on Amazon organizers. Amazon Labor Union (ALU) president Christian Smalls, for instance, has been vocally supportive of the American Innovation and Choice Online Act (AICO), arguably the most high-profile antitrust bill in Congress. In a recent article, Smalls noted that "competition equals more worker power, and more worker power equals a stronger democracy."

While many observers have become cynical about the prospect of Big Tech giants like Amazon ever being held accountable, don't mistake the lawsuit for a publicity stunt. The California Attorney General's case has serious legal merit, and if triumphant could change the way Amazon operates nationwide.

Though a comparable suit filed by the D.C. Attorney General's office was ultimately unsuccessful, legal analysts agree that California's lawsuit has a serious shot to win. To put it simply, despite the cases being similar in terms of accusations, legal scholars believe California's state-exclusive Cartwright Act means Bonta's case has a much better chance to succeed.

According to Prasad Krishnamurthy of the UC Berkeley School of Law, California law means that the courts are more likely to be "amenable to facts that suggest a business who put products on Amazon felt that they couldn't offer their products on rival platforms."

Nevertheless, despite the Cartwright Act's unique strengths, the 1907 law is just as deserving of a 21st-century facelift as federal antitrust rules. After all, in the age of the digital robber baron, neither Sacramento nor Washington can fully tackle the threats posed by tech monopolies until we update antitrust laws created before the invention of the computer.

Fortunately, both Bonta and progressive lawmakers in California understand this. On the day the California Attorney General's office announced the Amazon lawsuit, Bonta reiterated that he would continue to push to modernize antitrust state law. One lawmaker proposal would ensure that California antitrust law scrutinizes "behavior by digital companies that may not directly raise prices for consumers."

If enacted, this would mark a clean break from the right-wing "consumer welfare standard" approach, which for decades has given a green light to companies looking to build monopolies as long as merger activity doesn't directly lead to higher prices for consumers. Unfortunately, this shorthanded approach is the exact reason that companies like Amazon have been able to get away with swallowing up competitors whole. Ironically, in doing so, giants like Amazon have been able to reach "untouchable" market positions that enable them to hike prices.

As we collectively await the litigation process in this historic lawsuit, Sacramento leaders need to make modernizing state antitrust law a top legislative priority. Moreover, proposals like Assemblyman Ash Kalra's bill to clamp down on workplace surveillance technology, a tool notoriously used by Amazon, must also be advanced. As the world's fourth-largest economy, California should make it clear to corporate giants operating in the state that abusing workers, competitors, and merchants won't be tolerated.