Three Cities Sue Axon; Claim It Has A Monopoly On Body Cams, Electronic Weapons

Legal Issues

from the bit-thuggish,-but-probably-not-a-monopoly dept

As much as I dislike and distrust Axon (formerly Taser and the leading proponent of the “excited delirium” theory of cop exoneration), I just don’t think there’s much going on here. Sometimes there are actual monopolies. And sometimes, one business is just better at business than its competitors.

But that’s what a few cities are claiming in a new lawsuit, first reported by Cyrus Farivar for Forbes:

Baltimore, Maryland; Augusta, Maine; and Howell, New Jersey have sued Axon, alleging that the company has committed antitrust violations, abused its market power, and forced cities to pay exorbitant fees for a basic, but crucial piece of law enforcement tech.

Filed in federal court in New Jersey, the suit claims that the Arizona-based company formerly known as Taser International bought VieVu, one of its key competitors, to secure four major contracts that had eluded it: New York City, Oakland, Miami-Dade and Phoenix. Then, under its new Axon brand, it aggressively raised prices for clients that had few other options. Within a year, Axon’s body cam prices had risen 50 percent. By 2022, those prices had nearly tripled, reaching $490 per camera.

The lawsuit [PDF] stresses a lot of these points and says a lot of things about profit margins being inordinately high. But if that’s what the market bears, that’s what Axon can charge (is there a pun intended here? maybe?). And while it’s somewhat concerning that Axon managed to acquire VieVu (which it referred to internally as its “#2 competitor”), that alone is not enough to create a monopoly.

Also highlighted in the lawsuit are a bunch of things lots of businesses do, like tie up customers with lengthy contracts, force customers to only use refills made by the same company (Taser refills are pretty much proprietary ink cartridges), and vertically integrate as much as possible to make moving away from tied-in products extremely difficult. This is something Axon does with its body cameras and its front end for recording access, Evidence.com. Cameras without storage and access aren’t all that useful. And only Axon cameras work with Axon’s software.

Again, this is the sort of thing seen literally everywhere. While it does make customers unhappy, it works out pretty well for the companies using these tactics. That’s why so many companies do it. And that’s why some unhappy customers sue, much like these cities have.

It’s not all that remarkable that Axon increased its camera prices once it acquired VieVu. Then again, Axon has also given away cameras for free to increase market share and tie law enforcement agencies into far more lucrative data retention/access contracts.

But what’s probably most fatal to this lawsuit is the argument it makes in support of its monopoly theory:

Motorola, Panasonic, and Utility largely make up the rest of the BWC Systems market. As demonstrated by the dramatic price increases that Axon implemented after acquiring VieVu, none of these other competitors pose the same competitive constraint on Axon as did VieVu, and none were able to constrain the exercise of Axon’s monopoly power. These other competitors’ BWC Systems rarely provided significant competition to Axon in RFP processes conducted by police departments. A chart included in a December 2019 Axon investor presentation shows the meager market share these competitors had compared to Axon, with the closest competitor, Motorola, controlling only 7 of 69 U.S. Major City Chief Agencies compared to Axon’s 47.

It’s that first sentence. If you’re able to list a handful of other competitors in the market, you can’t credibly make a claim the market has been monopolized. Sure, Axon may have the largest share of the market, but it’s no more a monopoly than Google’s outsized share of the search engine market. Some companies manage to dominate markets because they’re making better products, have better marketing, or do both well enough that their name becomes synonymous for competitors‘ products — like Taser for any stun gun-esque weapon and Google becoming the go-to shorthand for performing a web search on any service.

The lawsuit also claims Axon “aggressively” defends its patents, to the point it has sued “potential competitors” in the “less lethal weapon” market out of existence. Again, while nobody likes a bully, this is sort of thing lots of patent holders do, even when they control far less market share than Axon does. Again, just because Axon is dominant doesn’t mean it’s a monopoly or that any of these claims — ones that could apply to plenty of other companies in plenty of other fields — add up to the conclusion this lawsuit wants a judge to reach.

I, for one, welcome this lawsuit, if for no other reason than it might expose some previously unknown facts about Axon, its management, its sales tactics, and its communications with law enforcement agencies. In other words, I’m here for the discovery. Axon may be a “gorilla” (as one of its execs encouraged its marketers to be) but it’s hardly a monopoly.

Filed Under: antitrust, baltimore, body cameras, body cams, competition, howell, new jersey, tasers
Companies: axon