Politico reports that the US Federal Trade Commission (FTC) “is planning to take action soon on at least three of its half-dozen investigations of Amazon — moves that could lead to a blitz of litigation to rein in the iconic tech-industry giant.
“The FTC has been investigating the internet titan on multiple fronts dating at least back to 2019, looking into its abuse of power within its online marketplace, as well as potential consumer-privacy violations connected to its Ring cameras and Alexa digital assistant.
“The agency is also reviewing Amazon’s purchase of robot vacuum maker iRobot.”
The story points out that “any suit against Amazon would be a high-profile move by the agency under chair Lina Khan, a Big Tech skeptic who rose to prominence with a 2017 academic paper specifically identifying Amazon as a modern monopolist needing to be reined in.”
One potential move by the FTC is “a wide-ranging antitrust case targeting Amazon’s retail operations, multiple people with knowledge of the probe said. Though the details of a complaint are not known, it could include the bundling of services through its Prime subscription business and its use of competitor data to out-muscle rival retailers on its platform, according to some of those people. The FTC has been investigating nearly every aspect of the company’s business since 2019, and a lawsuit has long been expected. The Wall Street Journal previously reported that an antitrust case could be filed against Amazon in the coming months.
“The FTC is pursuing a so-called ‘dark pattern’ probe into the difficulty customers have unsubscribing from Prime and other services. Dark patterns are deceptive tactics used by websites to trick users into doing things like subscribing to a more expensive service than they intended.
“It is also conducting a deceptive advertising probe into the ‘Amazon Choice’ label the company gives certain products on its marketplace. The FTC is investigating how that label is used to promote products that appear in search results, including whether it is pay-to-play. Amazon maintains it is not.”
KC’s View:
Maybe Amazon is laying off more people because it needs to be able to allocate all that money to lawyers’ fees. Because my guess is that the FTC is going to move forward with challenges to Amazon on a number of fronts.
The Politico story notes that “top enforcement officials in the Biden administration have aggressively gone after corporate mergers and tech firms in the past year. The FTC last year sued to block Microsoft’s $69 billion purchase of Activision, and the Justice Department has two separate lawsuits against Google over its search and advertising businesses in addition to preparing an antitrust case against Apple … the FTC is under immense pressure to bring a successful antitrust case against Amazon — particularly after letting two of the company’s largest deals through without opposition in the past year, according to agency insiders and observers.”
The FTC’s unwillingness or inability to go after Amazon’s acquisitions of One Medical and MGM may indeed fuel its desire to challenge the company on broader monopolistic grounds.
I find the potential challenge to the iRobot deal particularly interesting, since, as Politico writes, “FTC staff do not believe that Amazon, the leading online retailer in the U.S., should be allowed to buy the largest maker of a popular product sold on its platform.” I’m neither a lawyer nor a regulator, but I’m not sure that falls into the traditional definition of “monopoly.” (Lawyers in the MNB community will correct me if I’m wrong on this.)
I’m also not persuaded by the idea that somehow Amazon is unique when it uses sales data to build and then flex its own marketing muscles. I think that’s what every retailer does, using data to do everything from determining which segments deserve a strong private label to figuring out how and where to place products in a store. A move against Amazon on these grounds would reflect an old world view of what retailers do, a belief that retailers only serve as a repository for other brands, as opposed to being brands themselves.
Regardless, I think Amazon is going to be facing nine miles of bad road when it comes to the regulatory landscape. And those miles likely are just around the corner. As Politico points out, “For the FTC, time is not on their side. With just 19 months until the election and a potential change in administration, it’s in the agency’s interest to move on these cases as quickly as possible, lest priorities change in a new regime.”
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