National Public Radio's "Planet Money" program featured an interview with Federal Trade Commission (FTC) chair Lina Khan in which she addressed a number of issues, including the regulator's case against Amazon.
• "In today's digital economy, if you want to be visible in e-commerce, you generally have to sell on Amazon, and the lawsuit lays out a set of tactics that Amazon has deployed against those merchants that we believe are anti-competitive. It has basically dictated policies that say, 'If you sell on Amazon, you can't sell anywhere else for a lower price, so you can't list your products on any other website for a price that's lower than what you're listing on Amazon.' And one reason that ends up being problematic is because Amazon has also been hiking the fees that it charges these merchants. So these merchants face higher costs on Amazon, but are not able to raise their price on Amazon to reflect those higher costs. And instead, they have to either raise their price on other websites, or they just stop selling anywhere else entirely because Amazon is so punitive when it does see that people have, you know, listed their products elsewhere for a lower price. And so at the end of the day, Amazon's tactics are actually resulting in higher prices, not just on Amazon, but across the rest of the economy."
• "When you have the monopoly playbook, there are different life cycles of where you can be at any given moment, and the tactics that a firm will take to achieve monopoly power will look different from the tactics that it deploys once it's become a monopoly and is really focused on protecting that monopoly and exploiting that monopoly power. And so the case that we brought really reflects Amazon in the year 2023, and what we believe is now extraction mode, where having cemented its monopoly power, having locked out rivals through [these] illegal tactics, it's able to extract from customers, both on the consumer side as well on the seller side. And so that's what the case is about."
- KC's View:
I understand these allegations, and appreciate how, if they are proven, could show that Amazon has engaged in monopolistic behavior.
If proven, of course, is an important part of the construct. I'll be interested to see the Amazon defense, which almost certainly will feature merchants who will make like Frank Pentangeli.
I'm still wondering how a degraded customer experience is a problem for regulators. And if the FTC will start applying the same rigor to other big retailers that operate in a similar fashion.