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POLITICO: FTC Readies Landmark Case Against Amazon

09. 26. 2023

"Amazon is both the seller and the marketplace, and it’s because of this dynamic that it’s impossible for smaller tech companies to compete."

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This article originally appeared in Politico.

The Federal Trade Commission is expected to file a lawsuit against tech giant Amazon as soon as today. The high-profile case would be one of the most significant moves from the agency to crack down on the alleged monopoly power of large tech companies.

“This is a historic lawsuit that holds huge promise for smaller tech companies, who are really the ones that have the most to lose and the most to gain from this FTC lawsuit,” said Becky Chao, antimonopoly director at the Economic Security Project.

— What to expect: The agency has been preparing a complaint against the tech giant for months. Although the details of the lawsuit won’t be known until the final complaint is filed, it’s likely to go after a wide range of Amazon business practices, including company rules that the agency argues block lower prices on competitors’ platforms.

A case against Amazon would be one of the most aggressive moves from the Biden administration as it aims to rein in the power of some of the largest tech companies. And if the FTC is successful in its endeavor, it could require Amazon to restructure how its $1.3 trillion empire operates — such as changes to Amazon Prime and the requirements it puts on merchants.

“It’s a really big deal. And I expect that the lawsuit is going to focus on the core of Amazon’s monopolization strategy, that it’s not going to be narrowly focused on one or two behaviors, but it’s really going to be about the architecture of how it maintains its monopoly power,” said Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance.

And it seems Amazon is treading lightly with the anticipated suit on the horizon: Last week, the company scrapped plans to impose an additional 2 percent fee on merchants who don’t use its shipping services.

Amazon did not respond to a request for comment.

— A long time comin’: Antitrust advocates say a case against Amazon is long overdue, and argue that the company abuses its market position and stifles competition by doing things like requiring third-party sellers to offer the lowest price on Amazon.

“The problem that exists today is Amazon is both the seller and the marketplace, and it’s because of this dynamic that it’s impossible for smaller tech companies to compete,” Chao said. “They’re beholden to the giant to decide if they can sink or swim.”

And given Amazon’s broad empire of products and services, the FTC suit is likely to impact industries beyond tech — regardless of whether the agency wins.

“Amazon is this Goliath online, but its tentacles reach out into the material economy in very profound ways,” Mitchell said. “There’s never been a company like this in U.S. history.”

But Amazon and some Republican lawmakers have criticized the FTC for targeting tech companies, and argue that such lawsuits will hurt the tech industry in the long run. (The agency has filed three consumer protection lawsuits against Amazon since Chair Lina Khan took over in 2021, stemming from investigations that began prior to her tenure. The Amazon antitrust probe began in the Trump administration.)

“The [FTC] is supposed to protect consumers from fraud, real monopolies and scams,” Carl Szabo, vice president and general counsel at tech trade group NetChoice (to which Amazon belongs) said in a statement to MT. “Instead, [President Joe] Biden is ignoring the massive inflation and struggles Americans see daily, and his FTC wants to rip apart American companies that are providing affordable goods and services to consumers during this time.”

But the FTC and DOJ challenged other tech giants — including Facebook and Google, some of which the agency lost or are still battling it out in the courts — in the years before the Biden administration, too. This means that antitrust efforts have been ramping up, and are likely to continue.

The anticipated Amazon case signals an increased “generalized concern among antitrust enforcers, and reflects the bipartisan view on the Hill that these tech platforms in some cases may have gotten just too powerful and we don’t have meaningful, viable options,” argues Bill Baer, a visiting fellow at the Brookings Institution and former antitrust chief at the Justice Department in the Obama administration.