The current push to disassemble the Amazon conglomerate, including its various entities like Amazon, Amazon Prime, and Amazon Web Services (AWS), spearheaded by Federal Trade Commission (FTC) chair Lina Khan, has sparked concerns regarding its potential negative impact on consumers. While Khan’s objective is to break up Amazon, there are worries that this action could jeopardize the efficiency, cost-effectiveness, and benefits that consumers currently enjoy.
Amazon functions as a cohesive unit, with its different components, such as online retail, physical stores, subscription services, advertising, cloud computing, logistics, and third-party seller services, working together to provide consumers with a wide range of offerings and significant cost savings. The interconnected nature of these entities leads to lower operating costs and consequently, substantial price reductions for customers.
The fact that Amazon has garnered a high level of public approval, as evidenced by a 72% approval rating in a 2021 Harvard-Harris poll, showcases its positive impact on consumers. However, under Khan’s leadership, the FTC seems determined to prioritize breaking up Amazon over preserving the benefits it offers to consumers.
Khan’s definition of a monopoly differs from the conventional understanding and legal interpretations. Her antitrust framework, often criticized as “hipster antitrust,” focuses on unconventional factors like lower prices, consumer preferences, and competition. She has expressed concerns about Amazon’s influence on avocado prices at Whole Foods, indicating the FTC’s apparent intention to reshape consumer preferences through antitrust measures.
For most Americans, Amazon has become deeply integrated into their lives, with ubiquitous Amazon vans and Prime packages becoming a common sight in neighborhoods. The convenience and affordability provided by Amazon’s services have led to widespread adoption, with approximately 200 million global consumers.
The mission of the FTC has evolved into a battle against “the curse of bigness,” echoing sentiments from the past, including those of Supreme Court Justice Louis Brandeis in 1934. While Amazon undoubtedly falls into the category of large corporations, it has also contributed to job creation, competitive pricing, and technological advancement.
Khan’s FTC argues that Amazon’s practices, such as pressuring merchants to utilize its distribution services and reducing prices for better positioning on the platform, are anti-competitive. However, these practices do not inherently harm consumers and instead align with Amazon’s commitment to prioritizing consumers.
While there are valid concerns regarding issues like fake reviews and privacy related to Amazon’s products like Ring, the FTC’s focus on breaking up the company seems disproportionate. It indicates a shift from addressing specific problematic practices to dismantling a trusted brand that many consumers appreciate.
American consumers deserve a marketplace that fosters robust competition and provides choices that enhance their lives. Khan’s approach risks sacrificing the benefits that Amazon provides in favor of addressing a perceived “curse of bigness.” Instead of disregarding consumer preferences, the FTC should prioritize addressing actual harms while enabling consumers to continue benefiting from a diverse and efficient marketplace.