Parler’s Technical Difficulties Extend to Its Antitrust Claims
Parler’s lawsuit against Amazon Web Services highlights global antitrust scrutiny of Big Tech.
Parler was forced offline following its removal from Amazon Web Services.
By: katya dajani, Staff member
On January 10, 2021, Amazon Web Services (AWS) removed Parler—a social media platform frequented by right-wing groups and a self-described hub of “free speech”—from AWS’s cloud hosting service for violating its terms of service. In a letter to Parler, AWS cited as the basis for terminating the contract Parler’s failure to effectively moderate and remove “posts that clearly encourage[d] and incite[d] violence.” The move came shortly after both Apple and Google suspended Parler from their respective app stores for failing to comply with content moderation requirements.
On January 11, 2021, Parler filed suit against AWS in the United States District Court for the Western District of Washington (the “Court”). In its complaint, Parler characterized AWS’s decision to “effectively terminate” Parler’s account as a “death blow” to the platform because Parler was left with “no [other] way to get online.” Parler also alleged that AWS violated federal antitrust law, breached its contract with Parler, and intentionally interfered with Parler’s own contracts with millions of Parler users. The Court denied Parler’s motion for a temporary restraining order and set the matter for trial. Parler’s website has resumed operation after a brief outage.
Parler’s barebones antitrust claim against AWS will almost certainly fail. Its allegation that AWS “[conspired] to restrain trade” in violation of Section 1 of the Sherman Act reads like the legal equivalent of a Rorschach test, inviting the reader to deduce the substantive elements of the claim. If Parler indeed alleges that AWS participated in a concerted refusal to deal (also known as a group boycott) together with Parler’s social media rival Twitter, the claim fails to meet the basic pleading standard established in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (a Section 1 claim “requires a complaint with enough factual matter (taken as true) to suggest that an agreement was made”). To state a claim upon which relief may be granted, Parler needs to plausibly allege that AWS conspired with Twitter to boycott Parler, thus harming competition. Instead, Parler simply states that AWS entered into a multi-year agreement with Twitter and later suspended Parler’s account.
Parler also alludes to AWS’s market power in the global market for cloud services—an allegation that is irrelevant to a Sherman Act Section 1 claim. The complaint alleges that AWS is “the world’s leading cloud service provider[],” and its market share is “almost double [that of] the next largest competitor.” This portion of the complaint reads more like a Sherman Act Section 2 claim of monopolization or attempted monopolization of trade or commerce. Perhaps Parler was inspired by the European Commission’s recent antitrust probes into Big Tech or by the House Judiciary Committee’s 2020 majority staff report on competition in digital markets that have sought to resurrect unilateral refusal-to-deal theory—including the essential facilities doctrine—to modern antitrust jurisprudence.
If Parler is alleging a refusal-to-deal claim in violation of Section 2 of the Sherman Act, its prospects are similarly bleak. Generally, businesses are free to choose with whom they do business. However, in certain limited circumstances—e.g. when a monopolist chooses to forgo short-term benefits from cooperation or has a history of dealing with the rival in question—Section 2 of the Sherman Act requires that a company “deal” with another party. The essential facilities doctrine, which is a subset of the duty-to-deal theory, stands for the proposition that a monopoly that controls access to an “essential facility” must grant access to a competitor when it is impractical or impossible for that competitor to replicate the facility independently. The doctrine, never explicitly recognized by the Supreme Court, has traditionally been applied in cases involving access to tangible infrastructure deemed necessary to operate in certain markets (e.g. railroad bridges).
The essential facilities doctrine has experienced a resurgence through antitrust claims and investigations brought against Big Tech. Plaintiffs argue that, much in the same way that a railroad bridge might be considered essential to a competing railway company, digital platforms like Apple’s App Store might be considered essential to businesses seeking to market their applications to consumers. The doctrine’s resurgence has been particularly pronounced in the EU. Recently, the European Commission launched several investigations into multinational tech companies such as Google and Amazon in part under refusal-to-deal theories. Refusal-to-deal theory as applied to Big Tech has gained greater traction in the EU because the EU’s law on essential facilities is somewhat broader than that of the United States. In general, the European Commission is more sympathetic to abuse of dominance claims (when a firm has over the requisite market share in the relevant market and engages in behavior that amounts to abuse) than its U.S. counterparts.
While Parler’s complaint may be a weak attempt to capitalize on the global antitrust scrutiny on Big Tech, its claims are largely unsubstantiated. Its Sherman Act Section 1 claim almost certainly falls short of Twombly’s pleading standard. Likewise, even if Parler brought a fully developed unilateral refusal-to-deal claim, it would likely fail under current U.S. antitrust law.
Katya Dajani is a second-year student at Columbia Law School and a Staff member of the Columbia Journal of Transnational Law. She graduated from Brown University in 2017 with a B.A. in International Relations. Before attending law school, Katya worked as an Associate Analyst at NERA Economic Consulting.