Amazon’s Antitrust Suit Paradox
September 28, 2023
Privacy Plus+
Privacy, Technology and Perspective
Amazon’s Antitrust Suit Paradox. This week, the Federal Trade Commission (FTC) and 17 states brought a major antitrust lawsuit against Amazon.com, Inc. (Amazon), alleging that under both federal and state law Amazon is a monopolist whose conduct stifles competition by “block[ing] off competition, shopper traffic, and seller business.” Let’s consider the remedies that have been requested and the implications of this suit.
Background:
Over the years, we’ve considered the growth of the “Hipster Antitrust” movement stemming from a law review article, entitled “Amazon’s Antitrust Paradox,” written by now-FTC Chair Lina Khan when she was a law student. For background, you may read our previous post, “Privacy Meets Antitrust,” at this direct link: https://www.hoschmorris.com/privacy-plus-news/privacy-plus-may-11-2019 , or search the word “hipster” on our blog by clicking on the following link: https://www.hoschmorris.com/search?q=hipster.
With recent antitrust suits against Microsoft, Google, and now Amazon, the FTC seems intent on applying antitrust law to rein in Big Tech. But the FTC faces an uphill climb.
A recent Harvard Business Review (HBR) article summarizes the FTC’s current challenge well, stating:
“Antitrust authorities have a poor track record of successful lawsuits that proceed to trial, largely because federal law doesn’t cover the behavior regulators now allege is harmful to competition, including the control of consumer data to create competitive advantages, and self-preferencing their own products on their platform”
(Emphasis added).
The HBR article adds that the mere existence of more regulatory scrutiny may discourage additional deals. A link to the article is available at the following link:
https://hbr.org/2023/02/microsoft-google-and-a-new-era-of-antitrust
The Remedies:
Surprisingly, the 170+-page Complaint is non-specific about the remedies it seeks. It includes requests for injunctions, attorney’s fees, and “other remedies as the Court may deem appropriate under the facts and circumstances of the case,” but is unclear on whether the FTC seeks massive structural relief such as a break-up of Amazon.
A link to the Complaint follows:
https://www.ftc.gov/system/files/ftc_gov/pdf/1910129AmazoneCommerceComplaintPublic.pdf
You can read the FTC’s press release by clicking on the following link:
Our Thoughts:
1. We aren’t criticizing the seeming vagueness of the FTC’s request for remedies. One reason is that we (all of us -- citizens, the U.S. government (USG), and democracies everywhere) need the help of Amazon (and Google, Microsoft, Meta, and other Colossi) to meet today’s horrendous challenges posed by AI, disinformation, and other issues. As we’ve said before, we don’t believe any one nation or even group of nations can effectively control the internet by itself or themselves and manage these crises, and everyone in the Free World will need Amazon and the rest to participate in the deep, serious discussions that must take place. If it takes existential lawsuits such as these to overcome Colossi greed, ego, disassociation, fear of fiduciary-duty breach or whatever to get this discussion moving, then it seems to us that that wouldn’t be a bad thing.
2. A little history to illustrate: Compare today’s “Big Tech” monopoly suits with “Big Tech” monopoly suits of an earlier generation – specifically, U.S. v. IBM, and U.S. v. AT&T. Defying conventional wisdom that the USG couldn’t be defeated or at least exhausted, IBM fought like a tiger to defend its purported monopoly in general-purpose computers for 13 years – from 1969 to 1982 – presenting some 950 witnesses and 30 million documents. The USG finally dismissed its case, concluding it was without merit. AT&T, by contrast, agreed in 1982 – albeit after an 8- year fight – to get out of the local-market business and devolve that into seven regional Bell operating companies (Southern Bell, Southwestern Bell, and so on), called “RBOCs.”
Did IBM “win,” and AT&T “lose?” On the surface, maybe so. Paradoxically, however, the opposite seems truer. IBM soon lost its seeming monopoly in “general purpose computers,” or at least, never regained its dominance in that market. Whereas, with AT&T’s new focus on long-distance and seven newly independent RBOCs doing local service, shareholders, customers, and new entrants seemed to flourish with many new opportunities across the telecom markets.
The moral? Sometimes the fight is necessary to start a conversation – and the conversation needs to be taken just as seriously.
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Hosch & Morris, PLLC is a boutique law firm dedicated to data privacy and protection, cybersecurity, the Internet and technology. Open the Future℠.