Are we about to lose Amazon?
The Federal Trade Commission (FTC) is one of those bureaucratic agencies you’ve probably heard of but don’t pay attention to, which makes it the perfect place for nefarious activities.
Lina Khan, an overt socialist who hates corporations and capitalism, was appointed to run it by Joe Biden in 2021 and things have been going downhill ever since. Now Khan has set her sights on Amazon, and a forthcoming antitrust lawsuit is anticipated any day now. It’s worth knowing that Khan has been gunning for Amazon all along, she first rose to prominence in progressive circles when she published “Amazon’s Antitrust Paradox” in 2017, targeting the company’s dominance and arguing for an expanded use of antitrust by the government.
While we don’t yet have the complaint, we have a pretty good idea of what to expect in it. Here is what you need to know.
Background
Americans love Amazon. The app has over 197 million monthly active users, there are over 12 million products sold on the platform, and a whopping 70% of Americans are Prime members. It’s more popular than Facebook, Twitter, and most government institutions, and it isn’t hard to see why. Amazon has drastically transformed our way of living, making it possible to get practically anything you want delivered to your door within days, sometimes even hours—and at prices that often beat its brick and mortar competitors. It doesn’t seem like consumers have much to complain about.
And that’s supposed to be the basis of antitrust actions. Known as the consumer welfare standard, this precedent dictates that the government should only go to the extreme extent of exerting antitrust against a private business when it is actually a monopoly, and when it has used that monopoly to harm consumers. It would be pretty impossible to argue either standard applies to Amazon.
But that’s the point, Khan wants to drastically overhaul our economy and she sees an expansion of the ways antitrust is used as the vehicle to do that. So far her strategy has not paid off, she’s 0-4 in her cases thus far. But Amazon is her white whale, if you will, and it’s expected she’ll throw everything she’s got at it.
Experts anticipate the claim will be made in federal court, rather than the FTC’s in-house tribunal, which will enable state Attorneys General to join her crusade. Thus far, California, New York, and Washington D.C. have all been similarly circling in the water around Amazon.
Likely Complaints and Claims
The FTC has already sued Amazon this year over the six clicks it takes for Amazon Prime subscribers to cancel their subscription. Clearly a deeply serious agency that definitely deserves our tax dollars (insert eyeroll).
But this second lawsuit will likely focus on many of Amazon’s core business practices and could lead to the breakup of the company, which many progressives have been advocating. But what justification do they have without a clear violation of the consumer welfare standard? They’re really reaching, but that doesn’t make this case any less radical or dangerous.
Khan and her clan claim Amazon has rules that block sellers from offering lower prices on competing websites. That would seem to be well within their rights for allowing sellers access to their platforms and millions of users, but Amazon says that isn’t even the case and says they allow sellers to set their own prices.
Secondarily, opponents have claimed Amazon forces merchants to use their internal logistics and advertising services, which include shipping and warehousing. According to the FTC, they do this by rewarding merchants with better placement on their website or punishing those who don’t sign up with less visibility. Again, that would seem well within their purview to do. No one has a right to use their company’s platform and in order to do so it’s pretty standard business practices for a company to set some stipulations that benefit it within an agreement. But again, Amazon denies this accusation. In fact, it recently announced the re-launch of a program that helps sellers who use other logistics providers receive priority listings on Amazon.com.
The third complaint may be the biggest doozy. The FTC says Amazon bundles services for a discount. The horror.
According to the FTC, this gives the company an unfair market advantage. But if that were the case, they’d also have to take issue with services like a Costco membership, Walmart+, or a Sam’s Club membership. Discounted bundle services certainly are no harm to consumers or nothing the government should be breaking up companies for offering.
And lastly, the FTC says Amazon “forces” merchants to buy ads in order to get better placement in customer search results, which they bizarrely try to claim is a “tax.” First and foremost, no one is forced to do business with Amazon, so to call this a tax is absurd. Secondarily, there’s nothing wrong with this practice whatsoever. Amazon must decide which of its 12 million products and their respective merchants are viewed first in results, allowing people to pay to be higher in the results is a completely fair and smart business practice.
Furthermore, tons of other companies use these same practices in their business models. So why is Amazon being attacked over them? Because there is simply a deeper agenda here.
The Harm
If successful, this lawsuit has the potential to completely ruin one of America’s most-beloved businesses and reduce the quality of life for all of us. It would be a grave injustice against a company that has simply found a way to make people’s lives better, greatly succeed at doing so, and is simply continuing to try to maximize its profits. That is the quintessential American Dream, but increasingly that dream is turning into a nightmare as the US government seeks to punish success and seize more control of the free market.
President Biden, Lina Khan, and all of the other capitalist haters working under them have made it clear that they do care what everyday Americans think or want when it comes to their products, and they don’t care about your preferences or even your ability to access affordable goods. They instead are unilaterally focused on power and control over private businesses.
And it’s important to remember that the results of this case won’t just apply to Amazon. They could set a sinister precedent that would strip many companies of the ability to set business practices in a way that offers Americans lower priced goods and services too. Retailers like Walmart+ may have to take away useful benefits from their programs and small businesses may not be able to sell on online marketplaces. Services like quick delivery options or easy returns could also disappear.
And for what?
But while the government has only made our lives harder at every turn, American businesses like Amazon have been holding the line. When the government shut down our economy and locked us in our homes, Amazon was out ensuring we could get the things we needed to stay home. When supply chains were shut down, Amazon ensured Americans living in rural areas still had access to goods. When inflation soared due to Biden and company’s economic policies, Amazon continued offering low prices and the ability to find the best deal.
It’s the American businesses that have stood in the gap for us over the past couple of years, now it’s time we stand up for them in return. If we like our Amazon, we’re going to have to fight to keep it.
Hannah is a consultant for Netchoice, a free-market trade organization that works on tech policy.
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