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Here’s what Lina Khan might do about Amazon now that she’s chair of the FTC

The new head of the Federal Trade Commission thinks Amazon is too powerful. Here’s what might happen next.

Here’s what Lina Khan might do about Amazon now that she’s chair of the FTC
[Illustration: Mallory Heyer]

For most of the past half-century, antitrust enforcement tended to be narrowly focused—on your pocketbook. Companies could get as big and powerful as they wanted and still escape the hammer of regulators, as long as they didn’t raise prices for consumers. Amazon, however, has consistently delivered lower prices for consumers, and yet it still raises concerns among antitrust experts.

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You see the paradox? Legal scholar Lina Khan did. In a 2017 Yale Law Journal article that went viral, she made a clear-eyed argument for why the current price-obsessed framework of antitrust law can’t adequately address the harms of today’s tech giants. She took Amazon to task on two fronts: “predatory pricing” (selling items at a loss to undercut competitors) and voraciously expanding into new areas of business (such as logistics or Amazon Web Services), through which rivals come to rely on Amazon-owned infrastructure. “Companies may exploit their market power in a host of competition-distorting ways that do not directly lead to short-term price and output effects,” Khan wrote in the article, called, appropriately, “Amazon’s Antitrust Paradox.”

Four years later, Khan (who declined to comment for this article) has been appointed by President Joe Biden as the new chair of the Federal Trade Commission (FTC), the agency in charge of enforcing U.S. antitrust laws. What now? Amazon continues to maintain that it hasn’t run afoul of any existing laws—and has suggested that Khan needs to recuse herself from Amazon-related matters because of her work prior to becoming FTC chair—but antitrust experts expect that some kind of enforcement action against Amazon is nonetheless likely. What that will look like is unclear. The FTC could choose a narrow approach, as the attorney general of Washington, D.C., did with a lawsuit accusing Amazon of imposing overly restrictive contracts on third-party sellers (which has since been expanded to include wholesalers). Such a strategy might lack the dramatic reimagining of antitrust philosophy outlined in Khan’s research, but it might also stand a better chance in court. Alternatively, the FTC could go big, aiming to “essentially break up Amazon along business lines,” according to Stacy Mitchell, codirector of the Institute for Local Self-Reliance and a noted Amazon critic.

Or the laws themselves could be altered. Predatory pricing is notoriously difficult to prove in court, and Khan has made a case as to why the legal standard needs to change. (She mentions, for instance, the infamous story of how Amazon lowered the price of diapers to squeeze the owner of Diapers.com, which it acquired and eventually shut down.) Some experts say any action by the FTC could nudge Congress toward passing meaningful reforms. Last year, a House subcommittee on which Khan served as counsel recommended that Congress consider legislation aimed at “structural separation and line of business restrictions” (i.e., breaking a company up) as a way to rein in Big Tech. Since Khan was appointed, the FTC has already presented data on Big Tech acquisitions that suggests it will be tougher on such deals.

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“It’s totally conceivable that the FTC could bring a case that it knows it very well may lose, [but that will] light a fire under legislators to pass some of the legislation that’s been proposed,” says Benjamin Sirota, a former prosecutor with the Department of Justice’s antitrust division. “Ultimately, that’s probably the most feasible way to regulate a company like Amazon.”

Read more about how Amazon is upending business, from A to Z

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About the author

Christopher Zara is a senior staff news editor for Fast Company and obsessed with media, technology, business, culture, and theater. Before coming to FastCo News, he was a deputy editor at International Business Times, a theater critic for Newsweek, and managing editor of Show Business magazine

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