David Dayen: Amazon & Google Antitrust Cases Highlight “Newfound Vigor” in D.C. to Fight Monopolies
Written by GRB on 29/09/2023
This is a rush transcript. Copy may not be in its final form.
AMY GOODMAN: This is Democracy Now! I’m Amy Goodman.
On Tuesday, the Federal Trade Commission and 17 states filed a sweeping antitrust lawsuit against Amazon. The lawsuit accuses the company of using, quote, “punitive and coercive tactics to unlawfully maintain its monopolies,” unquote, allowing it to charge higher prices, harming customers and weakening competition. The lawsuit was spearheaded by FTC Chair Lina Khan, who made headlines as a law student in 2017 after she wrote a widely read scholarly article arguing for the breakup of Amazon.
For more, we’re joined by David Dayen, executive editor of The American Prospect. He wrote about this in his recent piece, “Amazon’s $185 Billion Pay-to-Play System.” His latest book is titled Monopolized: Life in the Age of Corporate Power.
David, why don’t we start off — and thanks for coming back today — by talking — you talking about the significance of this lawsuit, which comes just two weeks after the opening of a landmark antitrust trial against Google?
DAVID DAYEN: Yes. Suddenly there is all this activity in the antitrust space after a period of dormancy for about 40 years. Specifically, the Google trial is the first in 25 years, first monopolization trial. It’s not a trial to fight a merger. It’s just saying that this company is using anticompetitive behavior in ways that violates the law. This is the same thing in the Amazon case. It’s a monopolization case. And yes, as you say, it alleges that third-party sellers that use Amazon’s network are coerced into using all sorts of services that Amazon provides, for which they take this huge cut.
According to the report that I discussed last week, about 45% of all third-party sales go to Amazon in fees. Those fees are for logistics, something called Fulfillment by Amazon, which is their shipping and warehousing networks, and also for advertising, which are — basically, if you use Amazon Search these days, pretty much the entire first page is ads. They may not be the cheapest thing or the most useful product or the most quality product, but it’s things that the third-party sellers have to pay for to get into the consciousness of people who are searching for products. So, there are a variety of ways in which third-party sellers are induced to use these services, to pay Amazon.
And also there’s a sort of an anti-discounting measure, whereby if you are selling on Amazon, you can’t sell your products for a lower price on other websites. And because Amazon controls 70, 80% of all online commerce, you have to be at Amazon because the eyeballs are there. But, basically, through an algorithm, Amazon crawls the web, sees if you’re selling the same product for less elsewhere, and, if you are, downvotes you in the search so that you can’t essentially be seen by Amazon’s customers, and thereby you can’t sell anything there. So this arrangement raises prices across the internet and forces these sellers to sell for more money.
AMY GOODMAN: David, I wanted to play FTC Chair — that’s the Federal Trade Commission chair — Lina Khan in her own words, speaking on CBS in June about the Biden administration’s antitrust efforts.
LINA KHAN: When you have open markets, you want them to be contestable, which means that the existing giants have to be susceptible to competition. There are a whole set of antitrust lawsuits underway right now that allege that these companies have engaged in anticompetitive tactics that have unfairly blocked competition.
AMY GOODMAN: So, David Dayen, if you can talk about Lina Khan herself? A lot of corporate Democrats want Biden to take her out. She’s the FTC chair.
DAVID DAYEN: Yeah. She, as you mentioned, wrote this very celebrated law review article about Amazon itself. Of course, the company has said that she is now biased, because she believes in enforcing the law as it’s written, and they’re trying to throw her out of the case, much as they’ve tried to throw Jonathan Kanter, the head of the Antitrust Division, out of the Google case because of remarks he’s made in the past. Fortunately, judges have ruled that there is no need for recusal here.
Khan represents an aggressive set of antitrust enforcers that the Biden administration has put in and really reversed this troubling trend of the last 40 years, to the extent that even Republicans, some Republicans, are moving in that direction. I’ll mention that the Google case was actually filed during the tail end of the Trump administration. And this case against Amazon has been in the works at the FTC for four years. So it did — the investigation, at least, started under Trump’s antitrust — Federal Trade Commission, I should say. But clearly, both Lina Khan, Jonathan Kanter, Tim Wu, who was the former Biden administration antitrust chair, they have all been instrumental in this newfound vigor in antitrust.
AMY GOODMAN: And, of course, Jeff Bezos, we’re just showing images right now of the CEO of Amazon, Jeff Bezos.
DAVID DAYEN: Former CEO, but yes.
AMY GOODMAN: Yes.