The moment Amazon feared when FTC Chair Lina Khan was appointed may soon arrive: Bloomberg reports that the agency is putting the final touches on its most substantial antitrust case against the tech giant, and could file suit in the next few weeks.
According to documents viewed by Bloomberg and sources familiar, the upcoming suit will allege that Amazon systematically disadvantages merchants who don’t use certain “optional” services like “Fulfilled by Amazon.” If the FTC can show that Amazon is maliciously manipulating a market it has something like monopoly power in, it could make the case that the company needs to be broken up or restructured.
To do so is not easy, however: Amazon grew fat under the doctrine that essentially, if consumers aren’t directly affected, even something that looks, walks and talks like a monopoly isn’t one. Khan famously challenged this doctrine in an extensive law review article that marked her as a rising star and potentially the biggest threat to a similarly ascendant tech industry.
But this would be the biggest test yet of her assertion that monopoly can emerge in other forms, of which Amazon is a prime example. If she could establish as precedent that using network effects and unlimited cash to undercut and replace competitors is a new and dangerous form of market control, it would be a tectonic shift in regulation.
The FTC has already taken up Amazon for three separate and unrelated issues over the last month. Amazon settled allegations that its Ring brand doorbells allowed spying on customers and that it had “flouted” child data privacy laws with Alexa; a third case was brought last week accusing the online retailer of deceptive practices relating to its subscription services.
The goal is reportedly to file before certain logistical issues at the FTC appear in August, so putting the case in order and getting it out the door have been its focus over the last few months. The case supposedly has been in the works for several years.
Amazon has previously suggested that Khan’s frequent criticism of them means she “no longer can consider the company’s antitrust defenses with an open mind.” That objection has been met with the consideration it deserves, although Khan may still have to tread carefully in order to avoid a situation where she is the deciding factor of a case.
I have contacted both Amazon and the FTC for comment and will update if I hear back from them.
