A Vendetta Against “Big”
Lina Khan, chairwoman of the Federal Trade Commission (FTC), and Amazon go way back. Khan made a name for herself authoring an article in law school arguing that even though Amazon had low prices and helped consumers, the government should still bring antitrust action.
Today, she is bringing antitrust action against Amazon but cites completely different reasons than that of her law school paper. This complete 180 on the part of Khan is a perfect example of the current FTC’s approach to antitrust—one not concerned with consumer welfare or promoting competition, but ideologically motivated to attack large American businesses.
Khan’s law school article argued that Amazon was artificially lowering prices. She accused Amazon of stifling competition by making things cheaper than the market price and forcing smaller businesses to lower their prices to compete with Amazon. Traditionally, antitrust claims must prove that the company being sued is hurting customers; this is known as the consumer welfare standard. Although the low prices were good for Amazon customers, Khan advocated for ignoring this fact and recommended that the government bring action.
The FTC’s current suit against Amazon goes an entirely different direction. Instead of arguing that Amazon’s low prices allow it to outcompete other retailers, the suit argues that Amazon has smothered competition and then used its privileged position to raise prices.
A group of booksellers have made the arbitrary approach of the FTC even more evident. The American Booksellers Association (ABA) asked to join the antitrust suit against Amazon. The ABA argues that Amazon’s size is hurting small booksellers because they are unable to compete with Amazon’s low prices. A younger Khan might have agreed. Unfortunately, the ABA’s claim hurts the premise of her current claim that Amazon is inflating prices. The FTC opposed ABA’s request, claiming it would create a new lawsuit.
Khan’s Amazon switch-up epitomizes the current FTC ideology on antitrust. Rather than viewing antitrust through the average American, the Commission’s simplistic “big is bad” approach has resulted in an unprecedented number of antitrust suits. Google, Apple, and Meta are all facing suits from the FTC right now. These lawsuits will not help Americans. Large companies, popular because consumers enjoy their products, will be hindered from continuing to improve to meet the demands of the market. Consequently, people will have fewer options and will have to pay more for their products.
The consumer welfare standard ensures that antitrust suits are for the purpose of helping Americans, not furthering a political agenda. Empowering consumers by allowing companies to compete for their business and prioritizing the consumer welfare standard is a more reliable defense against monopolies than expanding the powers of the Federal Trade Commission. The barrage of antitrust actions from the FTC disincentivizes companies, large and small, from striving to engage in the healthy competition that has made the United States a leader in so many industries.