Today, Diana Moss, Vice President and Director of Competition Policy at the Progressive Policy Institute (PPI), released the following statement in response to the Federal Trade Commission’s case filed on September 26, 2023, against Amazon.
“The FTC’s case filed against Amazon adds to the growing body of monopolization cases that have been filed against the large digital ecosystems in recent years. Digital monopolization cases will face the same challenges in past monopolization cases, in any sector — from steel, to copiers, to chips. In the case of the FTC’s complaint filed against Amazon, the government will need to convince a judge that Amazon possesses significant market power in the specific markets alleged in the Commission’s complaint. Then, the FTC must show that Amazon’s strategies targeting sellers on Amazon’s e-commerce platform stifled competition, with demonstrable harm to consumers.
“The court will need to resolve fundamental and tough questions in the Amazon case. These could be a heavier lift for the government in markets involving online commerce than in past cases, such as AT&T and Microsoft. For example, the FTC’s complaint alleges harm in two major markets: a consumer-facing online superstore market, and a seller-facing online marketplace services market.
“The online ‘superstore’ concept is a novel idea, reminiscent of the market defined in the 1997 Staples-Office Depot merger. However, the FTC will need to establish at trial that consumers actually shop that way, versus purchasing some products on Amazon and others at other online retail outlets. Given the intricacies of online consumer psychology and behavior, this could present difficult questions at trial.
“The FTC’s complaint also makes it clear that the seller-facing online marketplace services is the mirror image of the consumer-facing online superstore market. This approach could risk the perception that the FTC is defining, as markets, only those in which Amazon has a significant market share. This ‘market share in search of a market’ approach is not typically how markets are defined in antitrust cases. And it could well be at loggerheads with evidence of consumers and sellers switching to online alternatives that are not included in the FTC’s online superstore or marketplace services markets.
“The second task for the FTC will be to show that Amazon used strategies such as anti-discounting policies and tying Amazon Prime eligibility to Fulfillment by Amazon to restrict competition, with adverse effects on prices, quality, and innovation. Such practices have been the subject of a number of successful monopolization cases. But they are likely to pose complex issues in the online commerce environment. For example, in past monopolization cases, competitors that were forced out by exclusionary tactics (e.g., Netscape in the Microsoft case) rapidly lost market share.
“Therefore, all eyes will be on what rival online superstore and marketplace services providers will say about whether, and how, Amazon’s practices squeeze them out of the market. Moreover, the court is sure to consider countervailing arguments that Amazon’s policies create benefits for consumers and innovation in the online commerce markets.
“The implications of a federal case against Amazon, together with the complement of other digital antitrust cases, cannot be understated. Without innovation in legal and economic analysis, antitrust cannot keep up with promoting competition in markets with novel technologies and business models. However, case selection and the quality of theories and evidence play a vital part in carving a pathway to stronger enforcement.
“The bottom line is that both wins and losses add to the body of caselaw that will be cited by antitrust courts for years to come. The hope is to win more cases on strong theories and evidence, in order to create a clear roadmap for the courts to invigorate enforcement. Weak antitrust cases frustrate the goal of vigorous antitrust enforcement and work against promoting competition for the benefit of consumers and workers.”
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C., with offices in Brussels, Berlin and the United Kingdom. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org
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Media Contact: Amelia Fox, afox@ppionline.org