Amazon Antitrust – Last Word (At Least For A While)

Sept. 15, 2023

LAS VEGAS – The Aug. 7 article in the New York Times revealed an open secret; namely that the Federal Trade Commission (FTC) is pondering an antitrust lawsuit against Amazon. Jason Boyce, founder and CEO of Oregon-based Avenue7Media had a lot to say on the topic in a previous Prosper article, and Prosper is revisiting the topic yet again with Chris McCabe, founder and owner of ecommerceChris, Cambridge, Mass.

This latest article will be the last word on the topic, at least until the FTC files its lawsuit. The lead-up has been long, and McCabe is surprised that the suit has taken this long.

Prosper: How did you learn about the possibility of an antitrust suit against Amazon?
Chris McCabe: I believe I first heard about a potential lawsuit back in 2020 during the House Subcommittee’s investigations into antitrust in Big Tech, when I was asked to serve as a subject matter expert on the Amazon marketplace of third-party sellers. Their work may date back to 2019, so I would have heard about it soon thereafter during the search for appropriate experts on Amazon’s overall impact on ecommerce, and all third -party sellers.

Prosper: Was this something you were anticipating, or was it a bit of a surprise?
Chris McCabe: It’s definitely not a surprise. I think I’ve expected it to happen even in prior years. I have wondered when it was going to happen more or less since the conclusion of the House Subcommittee’s investigation and the publication of their report on antitrust a couple of years ago.

Once the current FTC chair Lina Khan took over, I considered it a guarantee unless Amazon made some major changes in marketplace management. Amazon instead appears ready for a “throwdown moment.”

Prosper: What entities are Amazon’s biggest competitors?
Chris McCabe: I’d consider Walmart to be the nearest main competitor, even though they only have single digit percentages of ecommerce marketplace sales. They are growing their presence, albeit slowly and in the face of Amazon’s continual dominance in US and global ecommerce. They’re a direct competitor, even if not necessarily a strong competitor at the current time.

Prosper: Do you think these competitors are rooting for the suit or perhaps unsure of what to think?
Chris McCabe: I’m not sure that any large company would root for a suit like this just in case the future sees them succeed beyond their wildest dreams, only to face the same investigations, calls for a break-up, and increasing involvement or scrutiny by regulatory agencies. At the same time, a wrist slap of Amazon, or a weakening of their market share, would not necessarily be greeted with tears or sullen faces by some of the “far behind” competition. It could grant them at least an initial opportunity to try to make up for some lost time, or catch up in a way, if that’s even possible at this point.

Prosper: What are the odds that the FTC actually files the suit?
Chris McCabe: I read the NY Times article, but from everything I’ve read and heard from all knowledgeable minds from the worlds of government, antitrust lawyers, and fellow experts in the Amazon space, the odds are extremely long that no suit will be filed. The NY Times’ mention of the “last rites” meeting between Amazon and the FTC more or less sealed the deal and pushed each side into their respective trenches for the long haul. It looks like we’ll be seeing it very soon, in fact.

Prosper: If an antitrust suit went through and succeeded in breaking up Amazon, would it be good, bad, or somewhere in between for independent e-commerce (Prosper attendees)?
Chris McCable: If it means that amazon will manage marketplace selling more accurately and fairly— where policy enforcement is consistently applied, abuse is actively investigated and prevented, and account suspensions are communicated effectively, I would feel like the lawsuit will have produced positive results. If the outcomes miss those benchmarks, or somehow result in more unfairly punitive measures, then it will harm sellers.

Prosper: If you could wave a magic wand and make the lawsuit possibility go away, would you do it?
Chris McCabe: So many things would have to happen to make this lawsuit disappear, but I’m mainly interested in what’s best for Amazon sellers and for consumers who seek out quality products at an affordable price on the Amazon marketplace. If the marketplace will function better for all stakeholders, Amazon included, based on reforms and improvements brought along by this lawsuit, then I am all for it. If a breakup makes life a lot worse for sellers and consumers, or results in Amazon moves that hurt marketplace sales, then I’d certainly wish the wand had waved.