US Markets
Wednesday, September 27th, 2023 4:22 pm EDT
Key Points
- The FTC is suing Amazon for antitrust violations, alleging that the company has used its monopoly power to stifle competition and harm consumers.
- The FTC alleges that Amazon has imposed an effective 50% tax on sellers and exploited its scale and network externalities to stifle competition.
- Amazon has countered the FTC’s allegations, insisting that it competes with a wide range of retailers and that it only captures a small share of the overall retail market.
The Federal Trade Commission (FTC) Chair, Lina Khan, defended the agency’s antitrust lawsuit against Amazon, emphasizing its aim to safeguard fair competition. In an interview, Khan explained that the lawsuit addresses Amazon’s alleged monopoly power, which enabled the company to impose an effective 50% tax on sellers. Khan’s expertise in this area stems from her 2017 article “Amazon’s Antitrust Paradox,” highlighting the need to adapt antitrust enforcement to digital markets’ scale and network effects.
Khan argued that Amazon exploits its scale and network externalities to stifle competition by preventing rivals from gaining similar customer bases. She emphasized the necessity of remedies that account for the harm caused by Amazon’s dominance, even though the FTC has not yet detailed these remedies as it focuses on establishing liability.
Regarding the market definition, the FTC considers Amazon an “online superstore,” akin to the concept in the brick-and-mortar world. This designation distinguishes Amazon from online and physical retail competitors by highlighting its unmatched variety, accessibility, and 24/7 availability of products. Amazon has countered this by insisting it competes with a wide range of retailers, citing its 4% share of U.S. retail sales. Nonetheless, it dominates the U.S. e-commerce market, capturing nearly 40% of online spending, as per Insider Intelligence.
The FTC’s complaint also accuses Amazon of monopolizing the market for selling services to online merchants, utilizing network effects to reinforce its dominance. The more sellers join, the more valuable data Amazon can provide, attracting more merchants and shoppers. This lawsuit signals a significant milestone for Khan’s FTC and reflects a growing focus on reining in the power of tech giants to preserve fair competition in the digital age.
To read the full original article on CNBC, please click here: https://www.cnbc.com/2023/09/27/amazon-lawsuit-protects-free-and-fair-competition-ftcs-lina-khan.html
