While federal and state regulators have spent years nibbling around the edges of unrestrained tech industry power, a lawsuit filed by the Federal Trade Commission and 17 states, targeting e-commerce giant Amazon’s fundamental business practices, puts us in a different ballgame.
The effort will broadly be described as one to break up Amazon (excitedly, by supporters; derogatorily, by opponents) but that’s not its clear objective. Though much hay has been made of FTC Chair Lina Khan’s career-shaping interest in antitrust issues involving Amazon — with her star first rising as a result of a novel legal argument laid out in a 2017 Yale Law Journal article, using the company as her focus — a regulator’s targeting of one of the largest companies on the planet is nothing strange or untowards.
With its status as the de facto default online marketplaces for almost every kind of consumer good, its branching out to businesses including web servers, facial recognition, retail grocery, medicine and many more, Amazon is exactly the sort of company that should be drawing official scrutiny. It and its tech giant brethren have over the last several years proved that they’re not the benevolent colossi they once were thought of as.
Khan’s article, by the way, set out an interesting alternate standard for evaluating antitrust in the contemporary era, with consumer prices not the exclusive measure by which to evaluate a company’s monopolistic weight; agree or disagree, it’s a discussion worth broaching in an economy that’s very different to what it was a 100 years ago. While the lawsuit takes the more traditional approach of focusing on Amazon’s alleged inflation of prices across the board, it does recognize that there are aspects of its business practices that don’t slot easily into existing understandings of antitrust.
For example, Amazon will surely insist that many retailers have membership programs like Prime and it’s not unusual for it to try to get third-party sellers to conform to its commercial strategy via, for example, all-but mandated usage of its own logistics and shipping. Yet Amazon isn’t just a big warehouse; it can downgrade sellers in a way that pushes them out of customers’ sight, for either some adjudged transgression or simply not paying to be put at the top.
Among the most egregious claims the FTC makes is that the platform can pocket about half of a seller’s revenue in various fees and charges, and that it punishes sellers for providing lower prices elsewhere. If the FTC can establish all that, it’s pretty good evidence that, contrary to its claims, Amazon’s practices keep the prices of some goods artificially high across the market, not only on its own site but at others as well.
Does this all rise to the level of violating antitrust law? That’s for the courts to ultimately decide; it’s certainly possible that, concerning practices aside, the company might successfully argue it’s broken no laws and does ultimately make the market more responsive to consumers rather than the opposite.
Nonetheless, this effort is a big salvo in what will hopefully be a continuing battle by regulators to rein in some of the companies that have come to dominate every aspect of our lives.
