AMZN Stock – The hollow core of Parler’s antitrust case against Amazon
(Reuters) – There’s a lot going on in the complaint the conservative microblogging service Parler filed Monday against Amazon Web Services in federal court in Seattle.
As you surely know, Amazon disclosed on Jan. 10 that it was suspending its web-hosting services for Parler because, in Amazon’s view, Parler had failed to respond to a steady increase in violent content after the Jan. 6 riot on Capitol Hill. Parler alleged in its lawsuit the next day and in an accompanying motion for a temporary restraining order that Amazon, driven by “political animus” and a desire to boost Parler’s competitor Twitter, had sabotaged Parler at precisely the moment that Parler was poised for explosive growth. Parler counsel David Groesbeck accused Amazon of violating federal antitrust law in addition to breach of contract, arguing that Amazon’s actions illegally favored Twitter.
Amazon’s lawyers at Davis Wright Tremaine filed the company’s brief opposing the TRO Tuesday night. Citing scores of chilling posts by Parler users – including vivid threats of violence to politicians, social media executives, journalists, Amazon delivery drivers, even teachers – Amazon argued that it was Parler, not Amazon, that had breached their agreement. Amazon’s terms of service, the brief said, prohibit content that “violates the rights of others, or that may be harmful to others.” If its web services customers violate those terms, Amazon said, it has the right to suspend or terminate their accounts immediately. And, according to Amazon, it gave Parler plenty of opportunity to come up with protocols to comply with Amazon rules, as an Amazon executive recounted in a redacted declaration. (Amazon said it had redacted the name of the executive for fear its employee would be attacked.) Parler’s response – an inchoate plan to use volunteers to identify dangerous posts – was inadequate, Amazon said.
Amazon also pointed to Section 230 of the Communications Decency Act, the clause conservatives love to hate. Section 230, as you know, restricts liability for online service providers. In this case, Amazon said, it precludes Parler’s claims because Amazon acted in good faith. Under Section 230, Amazon said, it can’t be liable for acting in good faith to block violent and harassing content.
But for me, Amazon’s most interesting argument refuted Parler’s allegation that Amazon violated the Sherman Act by favoring Twitter, even though, according to Parler, Twitter’s content can be just as violent and abusive as posts on Parler. The pleading standard for federal antitrust claims, as Amazon’s Davis Wright lawyers said in their brief, is notoriously strict after the U.S. Supreme Court’s 2007 ruling in Bell Atlantic Corp. v. Twombly (550 U.S. 544). Antitrust plaintiffs must plausibly allege an anticompetitive conspiracy. But Parler didn’t even allege that Amazon and Twitter ever discussed Parler, let alone that they had an agreement to squelch the right-leaning site.
Amazon provided a declaration (also redacted) from an executive who negotiated the company’s recently announced agreement with Twitter. Amazon had previously been providing web hosting services for ancillary Twitter services, like data backup and Twitter’s new Fleets feature, but not for Twitter’s main feed. Under the new agreement, announced in December, Amazon will begin hosting Twitter’s main feed at an unspecified future date. But according to the executive, the negotiations with Twitter did not touch upon Parler.
“To my knowledge, (Amazon) and Twitter have never discussed, much less agreed upon, any policy, practice, or act directed at Parler,” the executive said. “To the contrary, we have an internal policy never to discuss matters involving one customer with another customer. Nobody in my organization would be authorized to discuss Parler with Twitter without my authorization (and) I have not authorized any AWS employee to discuss Parler with Twitter.”
There’s also a very good reason, according to Amazon, why Amazon would not have conspired with Twitter to thwart Parler: Amazon has no motive to pick between them. It’s in the business of providing web services to any customer, regardless of political views, that’s willing to comply with its terms, its executive said in the redacted declaration.
“AWS has no incentive to stop doing business with paying customers,” Davis Wright wrote in Amazon’s brief. It only suspended Parler’s account, the brief said, because Parler violated Amazon’s terms by failing to offer a systemic plan to take down violent and abusive posts.
Stanford law professor Mark Lemley told my Reuters colleague Tom Rowe that Parler’s antitrust theory just doesn’t seem plausible. “It would be one thing if there were evidence that Amazon, Twitter and Facebook conspired together to target Parler,” Lemley said. “But Amazon acting alone isn’t an antitrust problem … Amazon has a general right to refuse to deal with anyone for any reason, or indeed no reason at all.”
Parler’s reply brief, filed Wednesday afternoon, argued that circumstantial evidence backs its claim that Amazon acted in the interest of Twitter, a much bigger and wealthier client than Parler. Amazon only began threatening to shut down Parler web services when users began switching en masse from Twitter to Parler, the brief said. That timing, coupled with Amazon’s tolerance for violent posts by Twitter users, suggests a conspiracy to promote Twitter at Parler’s expense.
Parler also said Amazon and Twitter had “a clear interest in
eliminating an up-and-coming service like Parler,” although the brief did not directly respond to Amazon’s argument that it’s happy to take money from any customer that complies with its terms. Parler said Amazon engaged in anticompetitive conduct by erasing its site from the microblogging market.
U.S. District Judge Barbara Rothstein will preside over a hearing on Parler’s TRO motion tomorrow.
Parler and its users are convinced there’s a double standard. As the company complained in its filings, Twitter users also post violent threats: Just the day before Amazon suspended Parler, #HangMikePence was a trending topic on Twitter. (Amazon’s brief explained that it does not currently provide web hosting services to Twitter’s main feed, so it could not have threatened suspension. It also said that Twitter subsequently blocked the hashtag.)
But Amazon’s apparently unilateral decision to boot Parler does not constitute an antitrust conspiracy. Without additional evidence, Parler’s Sherman Act claim is not going to get the site reinstated through Amazon web services.