In an interview with CNBC's "Squawk Box," FTC Chair Lina Khan defended the agency's choice to prosecute Amazon. She illustrated why the complaint referred to the internet giant as an "online superstore" to showcase its monopoly power. This move by the FTC represents a significant victory for Khan, whose reputation rose after she wrote the 2017 Yale Law Journal note "Amazon's Antitrust Paradox."
FTC Chair Lina Khan defended the antitrust lawsuit filed against Amazon on CNBC's "Squawk Box" Wednesday, denying that the agency's goal is to punish large companies for their success. Describing the legal action as "fundamentally about protecting free and fair competition," Khan said the complaint is built on her 2017 Yale Law Journal note which outlined a new approach to antitrust enforcement, one that accounts for the scale and network effects in digital markets. During the interview, Khan pointed to Amazon's use of monopoly power to create a 50% tax on sellers, and noted how its scale has allowed the company to leverage "tactics that deprive rivals of the ability to gain that similar critical mass of customers." Moreover, any eventual remedies should consider the aggregated harms caused by Amazon's scale. Khan also explained that the FTC's complaint defines the relevant market as the online superstore, one well-established in brick and mortar stores with the ability to offer a variety of products on demand and around the clock. Despite Amazon's claims that it competes with many online and offline retailers, research firm Insider Intelligence estimated last year that the company captures almost 40% of Americans' online spending. Moreover, the FTC accused Amazon of monopolizing the market of selling services to online merchants, noting the "network effects" between its superstore and marketplace services that make it difficult for rivals to gain traction.
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