Lina Khan Is Wrong About Amazon

Why exactly is Federal Trade Commission Chair Lina Khan antagonizing Inc., of all companies?

In a 172-page complaint announced last week, the FTC alleges that Amazon engages in “far-reaching schemes” to impede competitors. Actual evidence for these charges is scant — the document is heavily redacted — but one thing comes through clearly. In discarding its mandate to protect consumer welfare, the FTC has lost its way.

As a start, the complaint simply asserts that Amazon is an illegal monopoly. Bloomberg Intelligence estimates that the company’s platform captures less than 30% of US retail e-commerce sales. Its share of total retail is perhaps 5%. Multiple studies have found that Amazon is consistently the cheapest online retailer; on average, its prices were 14% lower than its competitors last year.

Only under a truly tortured definition of “market” could such numbers add up to unlawful dominance. And, sure enough, the FTC has two of them: the “online superstore market” and the “market for online marketplace services purchased by sellers.” Expediently, the first definition excludes brick-and-mortar stores, specialty retailers, brand-specific sites, online grocers and other “online stores with a more limited selection”; the second doesn’t count Shopify Inc., BigCommerce Inc. or other direct-to-consumer platforms. (No mention is made of thriving upstarts such as Temu and Shein.)

With Amazon’s market artificially narrowed, the complaint posits a few more specific objections. In each, the FTC is wielding fringe antitrust theories with little regard for consumers.

One allegation is that Amazon punishes sellers that offer products for lower prices on competing platforms. For instance, the suit says, Amazon blocks such sellers from its “buy box,” which highlights what the company considers the most valuable results to a user’s query. The FTC states (without evidence) that this practice leads sellers to raise their prices on other sites. Setting aside that such arrangements have never been found unlawful by a US court, Amazon is guiding buyers to sellers offering the same products for less — in other words, facilitating competition. Exactly what remedy would the government impose?