Federal Trade Commission Chair Lina Khan has it out for Amazon, and it is a fight she’s been preparing for since grad school. Six years ago, in 2017, Khan amassed attention with the publication of her academic article criticizing Amazon’s eCommerce dominance. Khan was 29 years old, just a year older than Amazon is today.
Thanks in part to the notoriety Khan achieved from that publication, the Biden Administration appointed her to the FTC, and she has been eager to put Amazon in the hot seat ever since.
Khan’s article, “Amazon’s Antitrust Paradox” featured in The Yale Law Journal, notes how Amazon’s “sheer scale and breadth…may pose hazards” to our economic system and “the potential social costs of Amazon’s dominance” is worrisome. However, just one page prior to these assertions, Khan notes how customers “universally seem to love the company” and that “close to half of all online buyers go directly to Amazon first to search for products.”
Khan’s article, and the attention it received, signals a scary level of evasion within our culture. There is a strong desire to bash big business and vilify the success of billionaires, yet much of their wealth was derived through the power of our own pocketbooks. Our Starbucks coffee, use of smartphone capabilities, and online shopping sprees weren’t brought on by force — they were choices. And to a large extent, we are better off because of them.
This is not to say that marketers haven’t improved their ability to appeal to our interests, incentivize our purchase decisions, and persuade us with readily available buy-it-now buttons. But being coaxed is not the same as being coerced.
Over 200 million people across the globe have opted to use Prime, and even government agencies (too many in the US to name) have readily signed on for Amazon Web Services (AWS). The launch of AWS in 2006 has been a huge benefit to organizations of all shapes and sizes, and the sheer scope of offerings that Amazon has developed over time for helping small businesses is truly remarkable.
Currently, more than 60 percent of sales in Amazon’s stores are derived from small and medium-sized businesses, and Amazon has gone to great lengths to incentivize various forms of entrepreneurship.
Amazon offers educational assistance to those looking to leverage its platform through programs like Seller University and Small Business Academy, and it enables sellers to differentiate and appeal to consumers according to what region they are in or communities they represent.
The value derived from using Amazon’s logistics and promotional strategies is undeniable given that it has resulted in the creation of entire agencies whose sole purpose is to help other firms maximize their use of Amazon.
Indeed, despite the FTC’s aversion to Bezos’s business, Amazon is an American brand to be proud of. Over the years, it has earned many awards and accolades for its customer-centric approach and Amazon is often referenced in business courses to reiterate best practices for business growth.
People love the Amazon brand – so much so that it was ranked higher than the US military in the Harvard CAPs Harris Poll and achieved top positions in both the Morning Consult list and the Axios Harris Poll for its favorable status and reputation. And yet, little appreciation is granted by Khan or her FTC colleagues for how Amazon improves efficiencies for small and medium-sized businesses or caters to customers who may have limited means.
If Amazon can be sued by the FTC for the success it has achieved in catering to customers and enabling the sales of third-party sellers, what chance does a small business have for crafting its own strategies and having autonomy over its own operations and distribution networks? Industrial liberty is being hampered by government power more than it is via corporate power, and all members of the business community should be concerned about this fact.
A society can’t progress when an economic system is subject to bureaucratic bullying or when the dynamics of market mechanisms are distorted by political pressures.
Antitrust laws, as being applied by Lina Khan, are truly anti-progress.
Made available by the American Institute for Economic Research.
