Today, Will Marshall, President of the Progressive Policy Institute (PPI), and Dr. Michael Mandel, Vice President and Chief Economist at PPI, released the following statements in response to the Federal Trade Commission’s antitrust lawsuit against Amazon, targeting Amazon Prime.
Marshall urges courts to demand that the FTC produce tangible evidence of actual harm to consumers and competitors before attempting to dismantle one of America’s most innovative and successful companies:
“Up until now, the case for breaking up America’s big tech firms has been extraordinarily flimsy, resting more on faddish academic theories and populist rancor than sound economic and legal reasoning. To date, what we have mostly heard is that big companies are bad because they are big. That way of thinking is no substitute for a rigorous, sector-by-sector analysis of the impact of economic concentration on consumer welfare, prices, innovation, and U.S. competitiveness.
“The explosive growth of e-commerce, catalyzed to a significant degree by Amazon, is an amazing American success story. This fusion of entrepreneurship and technological prowess couldn’t have happened anywhere else in the world. We hope that U.S. courts will demand solid empirical evidence of harm to consumers or competitors before forcing Amazon to stop offering low prices and Prime’s popular fast shipping service.
“Unable to show how U.S. consumers are harmed financially by the services they’re eagerly snapping up from tech companies, ideologues and populists have cooked up a new antitrust theory: the digital giants are using their market power to suffocate or absorb smaller competitors.
“Prices are a telltale sign. In highly concentrated markets, prices tend to rise as monopolists extract ‘rents’ from consumers who can’t find what they want elsewhere. Yet prices in the digital sector have stayed low, acting as a moderating force on inflation that’s otherwise plaguing U.S. households.
“Crucially, the United States is locked in a momentous competition with China for mastery of AI and other technologies that are crucial to American prosperity and national security. To prevail in this global contest for ‘innovation power,’ the U.S. will need some big competitors and the vibrant innovation ecosystem that has flourished around them,” said Will Marshall.
Dr. Mandel underscores the transformative role Amazon has played in driving down costs for consumers and creating good-paying jobs:
“Since being introduced in 2005, Amazon Prime has helped transform consumer shopping decisions. Rapid delivery and no need to figure out shipping charges meant that the act of buying online became frictionless. The result: E-commerce became a growth industry, benefiting families, propelling vast amounts of investment in America, and creating many more, and better paid jobs than were being lost in brick-and-mortar retail.
“Since then, the average number of hours that American households spend shopping for consumer goods has dropped by almost 25%, saving Americans more than 9 billion hours per year. Valued conservatively, those time savings are worth more than $300 billion.
“This type of consumer time savings is not possible without massive investments in fulfillment centers and computer networks. From 2017 to 2021, Amazon invested $127 billion in the United States, outstripping any other company.
“And these fulfillment centers have become a central hub of job growth in the great majority of states. Nationally, the warehousing industry (which includes most Amazon fulfillment centers) and the local delivery industry added more than 900,000 jobs between 2019 and 2022, with pay averaging $49,000 annually. Moreover, job gains in e-commerce substantially exceeded job losses in brick-and-mortar retail, both nationally and in most states,” said Dr. Michael Mandel.
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
