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Amazon v. Parler: A Non-Antitrust Dispute

· January 19, 2021

*Updated to reflect current information

As antitrust continues to gain momentum in relation to the tech sector, lawyers seem to increasingly think that the antitrust laws can be used to solve commercial disputes that pertain to other areas of law, such as contract law. 

As you may have heard, Amazon Web Services (AWS), a cloud service provider owned by Amazon, decided to suspend controversial social media company Parler following the deadly riots that happened in the Capitol.  Parler is a social media company that competes with Twitter and Facebook, and that has recently gained popularity among conservatives.  AWS decided to suspend Parler’s use of its service after the company repeatedly refused to moderate or remove content that explicitly called for violence, in violation of AWS’s Terms of Service.  As a result of this and Parler’s decisions both before and after the incident, the site is not currently available on the Internet.¹  

Against this contractual dispute, Parler filed an antitrust lawsuit against Amazon.  In an act of wild speculation, Parler alleges Amazon colluded with Twitter (a company not named as a party) to suspend Parlerfrom AWS for political reasons, and asks the federal judge in Seattle to issue a temporary restraining order restoring Parler’s service. Amazon’s response to the lawsuit can be found here.  

The hearing relating to this temporary restraining order was held yesterday, where Judge Barbara J. Rothstein had the opportunity to clarify some of the contractual aspects of the AWS-Parler relationship. Typically, to bring a solid cartel case before a judge, there is one element that is of essence, which is that alleged cartelists need to be competitors.  In this case, and thanks to some of the questions raised by Judge Rothstein, Amazon was able to clarify what was evident for everyone but for Parler: that AWS does not compete with Twitter or Parler.  Put simply, without competitors there cannot be an anticompetitive collusive agreement. 

Amazon also clarified that Twitter’s live-feed isn’t hosted on AWS.  This means that Parler’s allegations that AWS had discriminated against Parler in the provision of the same type of service don’t make any sense either.  In any event, even if Twitter and Parler had been receiving the same service from AWS, it is worth remembering that AWS is not subject to a duty to service as common carriers typically are.  This means that if AWS and Twitter had decided to enter into an exclusive agreement which would require AWS to terminate service to Parler, that wouldn’t have violated the antitrust norms either so long as markets are not foreclosed. 

Frivolous lawsuits generate headlines, not policy changes. Critics will wage a battle in the court of opinion when they know their allegations are unpersuasive in a court of law; it is clear Parler’s claims are attempting to do just that.  In fact, before the case had even been reviewed by Judge Rothstein, Parler had already registered its domain with Epik, another web-hosting service, proving there are ample options in the marketplace.

In sum, the Amazon v. Parler dispute is another example of the use of the antitrust norms to try to complicate litigation that can be resolved through contract law.  So, unfortunately, it is safe to anticipate that in the future we will confront more situations where antitrust is used to generate litigation over violations of the Sherman Act even where there is no basis for such claims.


¹Parler is now back online

Competition

Some, if not all of society’s most useful innovations are the byproduct of competition. In fact, although it may sound counterintuitive, innovation often flourishes when an incumbent is threatened by a new entrant because the threat of losing users to the competition drives product improvement. The Internet and the products and companies it has enabled are no exception; companies need to constantly stay on their toes, as the next startup is ready to knock them down with a better product.