The Federal Trade Commission (FTC) has sued Amazon for “illegally maintaining monopoly power.” Amazon’s alleged illegal behavior includes its burying of discounted independent sellers in their search results, conditioning “Prime” eligibility for products on using Amazon’s “costly” fulfillment program, pricing requirements for merchants, and others. We are currently examining the validity of these claims in the complaint presented by the FTC, but basing this lawsuit on history leaves us skeptical that their reasoning will be fair. Under Chair Lina Khan, the FTC has repeatedly demonstrated a total disregard for the consumer welfare standard, which has been the court’s precedent since the failures of the structuralist approach in the 1960s.
Amazon has been a beloved consumer brand for decades, revolutionizing online retail through lower prices and ease of use. The efficiency at which Amazon operates is a direct result of its ability to integrate supply chains and utilize economies of scale. Amazon Prime has been the culmination of these integration efficiencies, and consumers have responded positively to this development, with 97 percent of Amazon Prime users indicating satisfaction with the service.
Chair Khan made a name for herself by publishing a rebuke of the consumer welfare standard and outlining a legal case for dismembering Amazon in the Yale Law Journal, titled “Amazon’s Antitrust Paradox.” This lawsuit represents the pinnacle of Chair Khan’s career ambitions, and much is riding on its success. After a string of failures, the outcome of this case could determine the legacy that Chair Khan’s FTC leaves.