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As chair of the Federal Trade Commission, Lina Khan sued Amazon, echoing her law school thesis on the tech company’s monopoly power.
Alex Horowitz Ghazi/NPR
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Alex Horowitz Ghazi/NPR
As chair of the Federal Trade Commission, Lina Khan sued Amazon, echoing her law school thesis on the tech company’s monopoly power.
Alex Horowitz Ghazi/NPR
In 2017, while still in law school, Lina Khan wrote a law review article titledAmazon’s Antitrust Paradox” has quickly gone viral in policy circles. In it, she argues that U.S. antitrust enforcement has fallen behind the times. For decades, regulators have focused solely on consumer welfare, taking companies to court only when they believe consumers are being harmed by factors such as rising prices. But in the age of digital platforms such as Amazon and Facebook, Khan argues in the article that it is time for a more proactive antitrust approach.
Just four years later, President Biden appointed Lina Khan to chair the Federal Trade Commission, one of the main U.S. government agencies responsible for enforcing antitrust laws, allowing her to put some of her ideas into practice.
Now, two years into the job, Khan has made some big moves against big tech companies like Meta and Microsoft. But the FTC has also faced some big losses in court. On today’s show, we talk with FTC Chair Lina Khan about turning bold theory into bureaucratic practice, the FTC’s new lawsuit against Amazon, and what it all means for business as usual.
Interview Highlights
On the FTC’s defeat in the Meta/Within Unlimited case, and some of the FTC’s smaller victories in court decisions:
So the FTC’s lawsuit, which was designed to prevent Meta from acquiring Within, was essentially what’s called “potential competition.” So the allegations in that case included pointing out that Meta itself had actually been planning to enter this market, and it ended up making the acquisition in a way that short-circuited, whereas if Meta had consciously entered, we would have seen this organic competition. (…) It’s true that we didn’t win, and we’re disappointed about that, but the court’s decision also made a series of very important decisions about how the doctrine of potential competition applies to digital markets. So one of Facebook’s arguments in that case was that the doctrine was so old that it didn’t even apply to these markets, and the court firmly rejected that argument. (The judge) said, “No, this doctrine of potential competition still applies, even in markets like digital markets, even in virtual reality,” and he pointed out a series of important ways that the doctrine applies to this market and gave us a series of victories that we can build on in any future cases.
On the FTC’s case against Amazon and what Khan considers Amazon’s anti-competitive behavior:
In today’s digital economy, if you want to be in e-commerce, you generally have to sell on Amazon, and the lawsuit lays out a series of tactics that Amazon deploys against merchants that we believe are anticompetitive. It basically lays out the policy that, “If you sell on Amazon, you can’t sell anywhere else for a lower price, so you can’t list your product on any other site for a lower price than you list it on Amazon.” And one of the reasons that ended up being problematic is that Amazon also kept raising the fees it charged these merchants. So these merchants were facing higher costs on Amazon, but couldn’t raise their prices on Amazon to reflect those higher costs. Instead, they either raised their prices on other sites or stopped selling elsewhere altogether, because Amazon gets really heavy-handed when it finds someone listing their product for a lower price elsewhere. So, ultimately, Amazon’s tactics actually led to higher prices, not just on Amazon, but across the economy.
How her strategy and thinking about Amazon’s anticompetitive tactics have changed from her law school days to her current role as FTC chair:
Conducting independent research and writing academic papers is very different from being a law enforcement officer, who has subpoena power and can investigate what actually happened, and ultimately (if you file a complaint) your task is to make sure that violations of law are alleged and to be prepared to win in court. Having said that, I would also point out that when you have a monopoly strategy, you may be in different life cycles at any given moment, and the strategies that a company deployed to achieve monopoly power are different from the strategies it deployed after it became a monopoly, which are really focused on protecting the monopoly and exploiting monopoly power. So the lawsuit that we filed is really a reflection of Amazon in 2023, which we believe is now in extraction mode, where it is able to extract profits from customers, both on the consumer side and on the seller side, after consolidating monopoly power, blocking competitors through (these) illegal means. That’s the focus of this case.
How she views her tenure as FTC chairwoman, despite her court setbacks:
One of the things that I care about most as an enforcer is deterrence. You really want to make sure that companies don’t engage in illegal conduct in the first place. One set of comments that’s really hopeful for us is hearing from prominent dealmakers, prominent bankers, who will say, “You know, a few years ago, when I was involved in discussions about whether to do a merger, we didn’t really talk about antitrust until the very end, if at all. Now it’s a completely different story. We talk about antitrust on day one.” And there are a lot of deals that don’t even happen because people recognize that they’re legally dubious from an antitrust perspective. So as an enforcer, that deterrence is a big hallmark of success, right? We want to make sure that we’re conserving resources and making sure that companies don’t engage in illegal mergers in the first place, and there are a range of indicators that that’s happening.
Today’s show is hosted by Alexi Horowitz-Ghazi and Jeff Guo. It’s produced by Dave Blanchard, assisted by Sam Yellowhorse Kesler, and edited by Jess Jiang. Sierra Juarez fact-checked, and James Willetts designed. Alex Goldmark is the executive producer of Planet Money.
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