Big Tech on trial: What's at stake in the FTC's lawsuit against Amazon?
“The 360” shows you diverse perspectives on the day’s top stories and debates.
What’s happening
The Federal Trade Commission and 17 states filed a lawsuit against Amazon on Tuesday, accusing the online retail giant of using illegal tactics that have led to higher prices, harmed companies that sell their goods on its marketplace and made it impossible for any real competitor to challenge its dominance.
“Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them,” FTC chair Lina Khan wrote in a statement detailing a long list of practices Amazon uses that she argues violate federal antitrust laws.
The core of the lawsuit centers around accusations that Amazon punishes third-party sellers in a variety of ways — including making it harder to find their products in search results — unless they pay expensive fees and contract with Amazon’s shipping and logistics services. According to the FTC, these fees can consume as much as 50% of the revenue for the hundreds of thousands of businesses that rely on Amazon’s platform to reach customers, ultimately leading to higher prices for consumers.
Amazon strongly denies that it engages in illegal anticompetitive practices. “We fundamentally disagree with the FTC’s allegations — which are in many cases wrong or misleading — and with their overreaching and misguided approach to antitrust, which would harm consumers, hurt independent businesses, and upend long-standing and well-considered doctrines,” David Zapolsky, the company’s senior vice president of global public policy and general counsel, wrote in a statement.
Since taking over the FTC two years ago, Khan has spearheaded an effort to ramp up antitrust scrutiny of the business practices of Big Tech companies, leaning on century-old laws that were once used to break up monopolies in industries like oil and railroads. In addition to Amazon, the Biden administration has also taken action against Microsoft, Google and Facebook’s parent company Meta — though some of those attempts have already failed in court. Big Tech companies have also faced similar suits at the state level.
Why there’s debate
Many of Amazon’s critics have applauded the FTC for taking decisive action to curb Amazon’s anti-competitive strategies, which they say have allowed the company to grow into a behemoth that faces no real threat of competition regardless of how it treats its customers and independent partners. Others hope the suit will serve as a turning point for the modern economy, which they believe has been effectively surrendered to a handful of untrustworthy technology companies by regulators who were too timid to curb their abuses.
But opponents of the suit, mostly conservatives and other free-market advocates, accuse Khan of essentially attacking Amazon for being successful. They argue that Amazon and other Big Tech companies have become the dominant players in their industries because they’re simply more effective at providing what consumers need than anyone else. They make the case that forcing Amazon to change its practices — or in the most dramatic potential outcome, break itself up into smaller pieces — would only lead to higher prices and worse service for its customers.
What’s next
Unless the case is dismissed by a judge or settled before trial, it will likely take several years before a final ruling on the FTC’s lawsuit against Amazon is reached and even longer for its impact on the tech industry as a whole to become clear.
Perspectives
Antitrust laws were designed to prevent companies like Amazon from becoming so big
“Amazon is surely the king of our time. Our antitrust laws were fashioned specifically to guard against this overwhelming corporate power — both its accumulation and its abuse.” — Cory Doctorow, New York Times
Consumers will be much worse off it the FTC is allowed to weaken Amazon
“If the FTC gets its way, this case will inevitably lead to higher prices and slower deliveries for Amazon customers, as well as lost opportunities for smaller merchants to use all of the distribution services provided by Amazon.” — Ted Bolema, Fortune
The suit is a signal that the era of Big Tech’s unchallenged supremacy is coming to an end
“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.” — Editorial, Daily News
Amazon’s dominance allows it to take advantage of its customers and businesses that rely on its reach
“Consumers know how hard it is to determine whether Amazon’s prices are the lowest available. … Sellers who have marketed their merchandise on Amazon are certainly aware of the cost — a share of as much as 50% taken by the company. They know the consequences of flouting its rules or trying to discount its products from Amazon’s price.” — Michael Hiltzik, Los Angeles Times
The government shouldn’t punish success
“The FTC is attacking a corporation (Amazon) for having had the temerity to create an all new market, a market that the giants of retail could have easily taken for themselves if they’d taken what Amazon was doing seriously. They didn’t.” — John Tammy, Forbes
Khan’s desperate attempt to bring down Amazon is destined to fail
“Unfortunately, the case is reminiscent of Captain Ahab’s doomed pursuit of Moby Dick — it is guided more by desire and ideology than a reasonable assessment of the costs and benefits. The result will be a wasteful battle all but guaranteed to founder in court.” — Geoffrey A. Manne and Dirk Auer, New York Post
True competition can’t exist when one company is allowed to command so much power
“Amazon will waste no time in trying to convince its millions of customers that Khan is determined to make everyone’s shopping cart more expensive. They shouldn’t buy it. Like other big tech companies, Amazon is denying others the kind of competitive landscape that made its own existence possible.” — Dave Lee, Bloomberg
The lawsuit is more evidence that Democrats are antibusiness
“The Biden administration sees the word ‘competition’ as an Orwellian euphemism for compelling profitable enterprises to sacrifice their competitive advantages not for the benefit of consumers who might enjoy lower prices but to curtail corporate power.” — Noah Rothman, National Review
Photo Illustration: Yahoo News; photos: Getty Images (3), Claudio Divizia/Shutterstock.
