Sep 27, 2023 - Technology

Why the FTC's new Amazon lawsuit is no slam dunk

Animated illustration of Amazon's logo turning into a question mark.

Illustration: Shoshana Gordon/Axios

The Federal Trade Commission's new lawsuit against Amazon — like similar recent and historic antitrust litigation against other tech giants — faces a tough uphill climb because it takes a lot of certainty before the U.S. government will hogtie a U.S. corporation.

Why it matters: Much of the public, along with the media, shares a visceral sense that tech giants like Amazon, Google, Apple, Facebook and Microsoft are way too powerful and ought to be knocked down a few pegs — but, for better or worse, you don't win an antitrust lawsuit based on gut feelings.

Driving the news: The FTC's Amazon suit lays out detailed charges that the company's practices have raised prices for consumers, blocked competitors and stifled innovation.

  • It will now be up to a federal judge in Washington state to decide whether the case and evidence are strong enough to rule that Amazon should be liable for damages or "structural remedies," like limits on its conduct or even some kind of break-up.

Yes, but: As with the Justice Department's antitrust suit against Google, which is now being tried in a Washington, D.C. courtroom, there's a long list of complex hurdles that the government has to clear in order to win.

  • It has to prove that Amazon is a monopoly in specific markets. The FTC's lawsuit defines two markets in which Amazon has a "durable monopoly": the "online superstore market" and the "online marketplace services market."
  • Then it has to prove that Amazon used its monopoly powers to harm consumers and competitors. The FTC lays out detailed claims that, for instance, Amazon's "exclusionary anti-discounting conduct" artificially boosts prices and its rules for sellers to "coerce" them into using its fulfillment services.

These charges can sound persuasive in the pages of the FTC's 172-page lawsuit filing. But Amazon is about to unleash all the lawyerly energy that a trillion-dollar corporation can afford to buy.

  • Its lawyers are likely to question every assumption, definition and number in those 172 pages — which is why antitrust trials are notorious for their length and their lack of drama.

Between the lines: Microsoft famously lost its 1998 antitrust case (later mostly reversed on appeal) by losing the confidence of the presiding judge through what many saw as condescending executive testimony and counsel behavior. It's highly unlikely any tech firm will make that mistake again.

The big picture: However many people may feel that "Amazon is too big," antitrust law is specifically aimed at limiting monopoly power — and tech's current era of rule by a quintet of corporate giants means that there's still a ton of competition out there.

  • Amazon's retail power is undeniable, but its Amazon Web Services cloud business faces a strong challenger in Microsoft and, to a lesser extent, Google.
  • Amazon has a dominant position in the e-book market, but its efforts to break into the Apple- and Google-dominated phone business were a disaster.
  • Tech's big five are in one another's business all over the product landscape, as we've previously mapped out.

What's next: The artificial intelligence boom has set off a new melee among the tech giants.

  • Amazon is a big player in that game, but Microsoft and its OpenAI ally are coming on strong.
  • Google is a not-to-be-counted-out veteran, Meta is an open-source AI spoiler — and laggard Apple could just be waiting for the right moment to move in and clean up.

The bottom line: These companies all still fear each other far more than they fear the threat of antitrust litigation. That can look like arrogance — but it also looks like competition.

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