FTC Chair Lina Khan on Antitrust in the age of Amazon | Planet Money

Intro

In this episode of Planet Money, FTC Chair Lina Khan discusses the challenges of antitrust in the age of Amazon. She argues for a change in antitrust policy, focusing on the asymmetry of power, consumer harm, and the need to break up dominant companies. Khan’s appointment as chair of the FTC gives her the opportunity to put her ideas into practice and enforce antitrust laws more aggressively.

Main Takeaways

The Evolution of Antitrust

• Antitrust laws were created in response to concentrated power in the late 19th century.
• In the 1970s, a new paradigm focused on consumer welfare became mainstream.
• This shift created blind spots in enforcing laws against monopolies in digital markets.

Lina Khan’s Arguments for Change

• Lina Khan’s paper, “Amazon’s Antitrust Paradox,” called for a shift back to the spirit of original antitrust laws.
• Narrow definitions of consumer welfare cannot capture new antitrust threats posed by digital platforms.
• Khan argues for potentially breaking up Amazon to promote competition.

Lina Khan’s Role as FTC Chair

• Khan was appointed as the chair of the Federal Trade Commission by President Biden.
• She aims to enforce antitrust law more aggressively and expand it beyond the consumer welfare standard.
• Khan revised and updated the merger guidelines to address platform markets and labor markets.

FTC’s Actions Against Anti-Competitive Behavior

• The FTC filed a case against Facebook, alleging anti-competitive acquisitions of Instagram and WhatsApp.
• The FTC focuses on stopping anti-competitive acquisitions early on to prevent solidification of monopoly power.
• The court’s decision in the Meta-Within acquisition case clarified the potential competition doctrine in digital markets.

FTC’s Case Against Amazon

• The FTC alleges that Amazon deployed anti-competitive tactics against third-party merchants.
• Amazon’s tactics result in higher prices and make it difficult for new businesses to compete.
• The possibility of breaking up Amazon is still on the table, but the case may take years to battle out in court.

Summary

The Evolution of Antitrust

Antitrust laws were originally created to address the concentrated power of massive companies in the late 19th century. However, in the 1970s, a new way of thinking about antitrust focused on consumer welfare became mainstream. This shift in paradigm created blind spots in enforcing laws against monopolies, especially in digital markets where narrow definitions of consumer welfare fail to capture new antitrust threats posed by social media platforms and online marketplaces.

Lina Khan’s Arguments for Change

Lina Khan, through her paper “Amazon’s Antitrust Paradox,” challenges the prevailing antitrust paradigm and argues for a shift back to the spirit of the original antitrust laws. She highlights the need to address the asymmetry of power between dominant companies and smaller businesses, as well as the negative impact of narrow consumer welfare definitions. Khan suggests that breaking up Amazon could promote competition and prevent the company from further abusing its power.

Lina Khan’s Role as FTC Chair

As the chair of the Federal Trade Commission, Lina Khan has the opportunity to put her ideas into practice. She aims to enforce antitrust law more aggressively and expand it beyond the consumer welfare standard. Khan has revised and updated the merger guidelines to address the unique challenges of platform markets and labor markets. Her role is crucial in investigating companies, reviewing proposed mergers, and ensuring compliance with antitrust laws.

FTC’s Actions Against Anti-Competitive Behavior

The FTC has taken action against anti-competitive behavior, such as filing a case against Facebook for its acquisitions of Instagram and WhatsApp. The focus is on preventing anti-competitive acquisitions early on to avoid the solidification of monopoly power. The court’s decision in the Meta-Within acquisition case has provided important insights into the potential competition doctrine in digital markets, rejecting arguments that it doesn’t apply to such markets.

FTC’s Case Against Amazon

The FTC alleges that Amazon has engaged in anti-competitive tactics against third-party merchants, resulting in higher prices and making it difficult for new businesses to compete. The possibility of breaking up Amazon is still on the table, but the case may face lengthy legal battles. The FTC’s case against Amazon rests on conventional antitrust arguments about consumer welfare and the negative impact of Amazon’s tactics on competition.

Conclusion

Lina Khan’s appointment as the chair of the Federal Trade Commission signifies a shift in antitrust policy towards addressing the power imbalances and anti-competitive practices of dominant companies in the digital age. With a focus on enforcing antitrust laws more aggressively and expanding their scope, Khan aims to promote competition and protect consumer welfare. The FTC’s actions against Facebook and Amazon demonstrate the commitment to challenging anti-competitive behavior and ensuring a fair marketplace.