Parler’s demise is not an antitrust problem

It has been a brutal few days for Parler, the now-infamous Twitter alternative favored by President Donald Trump’s most die-hard supporters. Both Google and Apple removed the app from their online stores, and the site went offline altogether after Amazon Web Services (AWS) suspended its webhosting account with little notice.

Parler responded to this deplatforming by filing an antitrust suit against Amazon, which is certain to fail and may not even survive a motion to dismiss. The crux of Parler’s antitrust case is that Amazon conspired with Twitter to eliminate its service. But the company’s filing contains not a single allegation of reduced competition relevant to antitrust law, let alone evidence to back up such claims.

Parler’s lawyers building their case on the assertion that Twitter and Amazon are acting as a cartel. That’s not possible, as Twitter and Amazon are not competitors in the antitrust sense. They operate in separate relevant markets. Any agreement between them would thus amount, at worst, to a vertical restraint of trade, rather than a cartel.

The distinction is important because cartels are inherently illegal. Vertical restraints are not. Antitrust liability is much harder to establish in vertical restraint cases, which rely on the so-called “rule of reason.” That’s another way to say that courts will consider such claims on their merits.

In general, firms are free to choose their trading partners and, barring exceptional circumstances, are allowed to enter into exclusive agreements. Twitter is free to convince Amazon to stop dealing with other firms, so long as this does not foreclose those rivals from the market and harm consumers in the process.

Parler offers no evidence of an anticompetitive agreement between Twitter and Amazon, nor of any ensuing consumer harm that would affect all or most social-media users, as opposed to the minority who happen to prefer Parler’s service. Parler’s argument that such harm exists is further weakened by the apparent ease with which the company found an alternative host.

Parler argues that Amazon is motivated by “a political animus” and that its behavior indicates “a desire to harm Parler.” But Amazon is perfectly free to do either of these things under existing antitrust law. Antitrust law is about preserving competition, not forcing firms to behave kindly, fairly or apolitically.

In the wake of Parler’s difficulties, some critics of Big Tech have claimed the real problem is “collusion” between various firms — namely, Amazon, Google, and Apple — who effectively imposed a group boycott on Parler. But here, too, the antitrust case falls flat. The fact that firms simultaneously cut ties with Parler is not, by itself, evidence of collusion. It is perfectly plausible that they all grew tired of Parler’s reputation after last week’s events at the Capitol. Parler’s own claim that other hosting services — ones that presumably do not have the stake in the microblogging market that Amazon is alleged to — also refused to host the site suggests that whatever factors caused these companies to withdraw access to Parler is not specific to firms that are Parler’s alleged competitors. As the Supreme Court put it, “proof of parallel business behavior does not conclusively establish agreement, nor does such behavior itself constitute a Sherman Act offense.”

In exceptional circumstances, courts have suggested that monopolists can be forced to deal with their downstream rivals, but only where a firm’s refusal to do so is part of a scheme to monopolize the market. That is clearly not the case here. Amazon does not compete head-to-head with Parler, so suspending Parler’s AWS account does not derail a competitor.

Parler’s complaint that it is being singled out for unfair treatment also misses the point. Amazon is not subject to common-carrier regulations that require platforms to treat their partners neutrally. Such rules historically have been used to regulate natural monopolies like telecommunications firms and power utilities. In contrast, the cloud-computing market is highly competitive, with participants that include Amazon, Google, Microsoft, Alibaba, IBM, Oracle, and a host of smaller players.

To put it simply, Parler’s exclusion from Amazon’s platform is not an antitrust issue.

None of this is necessary to say that Big Tech firms were right to suspend Parler, but antitrust is patently the wrong tool to address the policy issues that arise from the suspension. If there is a problem that requires a policy fix, changes to common-carrier regulation and contract law might be appropriate tools. For example, it would be possible to require app stores, web hosts, and other online services to serve certain firms irrespective of their behavior or to require certain notice periods or terms (like arbitration to settle disputes) if they want to suspend services.

This is not legal sophistry. Bodies of law are created to achieve specific objectives. Bending these rules to fit the idiosyncratic preferences of disgruntled citizens is inconsistent with democracy and the rule of law.

Dirk Auer joined ICLE as a Senior Fellow in October 2018. His work focuses on the law and economics of antitrust, with an emphasis on innovation policy, digital markets, and European competition law. Dirk is also a guest lecturer at the EDHEC business school in France, where he teaches a course on advanced competition law, and at UCLouvain in Belgium, where he teaches an introduction to American law course.