The Manipulation Monitor primarily covers developments in antitrust and other competition law litigation relating to the financial services industry. In today’s blog post, however, we are taking a short break from covering the financial services industry to show that allegations of market manipulation in violation of antitrust law extends not just to the marketplace for notes, futures, options, government-backed bonds, commodities, or other financial products, but to the marketplace of ideas, i.e. social media and microblogging.
We will be discussing Parler LLC v. Amazon Web Services, Inc., 21-cv-0031, in the United States District Court for the Western District of Washington, in which social media platform Parler LLC (“Parler”) alleged that Amazon Web Services (“AWS”), an Amazon.com company, violated the Sherman Act by cutting off its web hosting services to Parler, so as to take Parler out of the microblogging market in favor of Parler’s competitor Twitter. Parler also moved for a preliminary injunction to stop AWS from terminating its web hosting service while its allegations are being litigated, so as to prevent irreparable harm to Parler.
Parler’s Complaint and the Court’s ruling on Parler’s request for a preliminary injunction are available here and here. Although Parler’s Complaint and request for a preliminary injunction concern claims for breach of contract and tortious interference, our discussion will primarily concern Parler’s anti-trust claim.
Parler, a self-described conservative social media platform, entered into a contract with AWS for cloud computing/web hosting services for Parler’s website and related apps. On January 8, 2021, AWS informed Parler that it would be suspending all services to Parler, as of January 10, 2021 at 11:59 p.m., purportedly because AWS determined that Parler did not have an “effective process” for complying with AWS’ terms of service against content that encourages violence, and that Parler accordingly created a public safety risk, in light of events at the Capitol Hill in Washington, D.C. on January 6, 2021.
Parler alleges that AWS’ termination of its contract is pretextual, and was done out of “political animus” and an apparent design “ . . . to reduce competition in the microblogging services market to the benefit of Twitter.” Parler noted that as recently as December 2020, AWS and Twitter announced a multi-year deal to provide expanded cloud services to Twitter, and also cited several news stories reporting that many users were abandoning Twitter for alternative social media platforms such as Parler, particularly after Twitter banned President Trump on January 9, and speculation that President Trump might start a Parler account, so as to show that Parler had become a “looming threat” to Twitter.
In regards to the issue of content moderation, Parler’s Complaint also noted that there were also threats of violence trending on Twitter, and yet AWS had apparently ignored violations of AWS’ terms of service on Twitter. Parler’s Complaint contends that the inconsistent treatment by AWS between Parler and Twitter indicates a “desire to harm Parler . . . “ and that AWS’ removal of Parler as a “surging market player” is a severe restraint on commerce in the microblogging services market, constituting a violation of the Sherman Act.
Simultaneous with the filing of its Complaint, Parler made a motion for a Temporary Restraining Order, seeking to stop AWS from cutting off its services to Parler. That motion was later converted to one for a preliminary injunction.
The Court’s Ruling on Parler’s Request for a Preliminary Injunction
In determining whether Parler’s request for a preliminary injunction would be granted, the Court had to determine whether Parler, as the moving party, has demonstrated that it is likely to succeed on the merits of its claims and likely to suffer irreputable harm from AWS’ actions, or, alternatively, that the balance of equities tips in its favor and that an injunction would serve the public interest.
As to Parler’s Sherman Act claim, the Court ruled that Parler failed to show a likelihood of success, since it submitted no evidence that Twitter and Parler acted together in restraint of trade, but rather only showed at most that Twitter received preferential treatment over Parler. The Court also noted that AWS has explicitly denied the existence of any such agreement with Twitter, and that Twitter’s feed for tweets is not subject to AWS’s terms of service, since AWS has not started hosting Twitter’s feed yet, in apparent contradiction to Parler’s claim that the disparate treatment between Twitter and Parler’s evinced pretext by AWS.
The Court went on to decide that Parler also failed to show a likelihood of success for its other claims, and also failed to establish irreputable injury. The Court also found that Parler did not establish that that the balance of equities tips in its favor and that an injunction would serve the public interest.
Thus, Parler’s request for a preliminary injunction was denied.
Parler’s Forthcoming Amended Compliant
Since the Court’s denial of Parler’s request for a preliminary injunction, Parler and AWS have since agreed that Parler will be allowed to file an Amended Complaint no later than February 16, 2021. We will keep you updated if Parler’s Amended Complaint will still include antitrust claims.
This post was written by John F. Whelan.
We welcome your feedback. If you have questions or comments about this post, please e-mail John M. Lundin, the Manipulation Monitor’s editor, at firstname.lastname@example.org or John F. Whelan at email@example.com or call John Lundin or John Whelan at (212) 344-5400.
Click here to subscribe to this or another of Schlam Stone & Dolan’s blogs.