In the Biden administration, Lina Khan, the chair of the Federal Trade Commission (FTC), is leading the charge to break up Amazon. However, worries are arising regarding the potential negative effects on consumers. Khan’s efforts to dismantle the Amazon conglomerate, which includes entities like Amazon, Amazon Prime, and Amazon Web Services (AWS), are raising concerns that this action could undermine the efficiency, affordability, and advantages currently enjoyed by consumers.
Amazon encompasses various components such as online retail, physical stores, subscription services, advertising, cloud computing, logistics, and third-party seller services. Together, these components provide consumers with a seamless and cost-saving experience. The interconnected nature of these entities leads to lower operational costs, resulting in significant price reductions for customers.
The substantial popularity of Amazon, evident in a 72% favorability rating according to a 2021 Harvard-Harris poll, showcases its positive impact on consumers. However, under Khan’s leadership, the FTC seems more inclined to prioritize breaking up Amazon rather than preserving the benefits it offers to consumers.
Khan’s definition of a monopoly differs from traditional interpretations and legal definitions. Her antitrust framework, often criticized as “hipster antitrust,” concentrates on unconventional factors such as lower prices, consumer preferences, and competition. She has expressed concerns about Amazon’s influence on avocado prices at Whole Foods, suggesting that the FTC aims to shape consumer preferences through antitrust measures.
For most Americans, Amazon has become deeply ingrained in their lives, with Amazon vans and Prime packages being a common sight in neighborhoods. The convenience and affordability provided by Amazon’s services have led to widespread adoption, with approximately 200 million consumers worldwide.
The evolving mission of the FTC centers around tackling the “curse of bigness,” echoing sentiments from the past, including those of Supreme Court Justice Louis Brandeis in 1934. While Amazon is undeniably a large corporation, it has also contributed to job creation, competitive pricing, and technological advancements.
Khan’s FTC argues that Amazon’s practices, such as compelling merchants to use its distribution services and lowering prices for better positioning on the platform, are anticompetitive. However, these practices do not inherently harm consumers and align with Amazon’s focus on consumer-centric operations.
While there are valid concerns regarding issues like fake reviews and privacy associated with Amazon products like Ring, the FTC’s emphasis on dismantling the company seems disproportionate. This approach veers away from addressing specific problematic practices and instead moves towards dismantling a trusted brand that many consumers appreciate.
American consumers deserve vigorous competition and choices that improve their lives. Khan’s approach runs the risk of sacrificing the benefits that Amazon provides in an attempt to address a perceived “curse of bigness.” Instead of disregarding consumer preferences, the FTC should prioritize addressing actual harms while allowing consumers to continue benefiting from a diverse and efficient marketplace.