The Federal Trade Commission recently obtained a $2.5 billion settlement with Amazon, with the FTC alleging that Amazon used deceptive tactics to enroll millions of customers in Prime without clear consent and made it unnecessarily difficult to cancel. The company ultimately agreed to a historic penalty and broad changes to its practices.
The resolution appears to be just the first step in the Trump administration’s efforts to rein in what it perceives to be Amazon’s anticompetitive tactics: An antitrust case filed by the FTC and 17 state attorneys general alleges that Amazon has engaged in monopolistic practices to maintain its dominance over online commerce. The case alleges that Amazon uses a series of coercive tactics to entrench its dominance. For instance, it reduces visibility in search results for sellers who offer lower prices elsewhere and forces sellers to use the company’s own fulfillment services to have full access to Amazon’s Prime customers. Also, Amazon’s private-label products often receive preferential search placement over third-party alternatives.
The charges put forth in the settlement as well as the antitrust case manifest how the company’s enormous reach has allowed it to create--and control--markets and consumer experiences to serve its own bottom line, and the current structure presents an inherent conflict of interest.
The federal government has interceded before when companies have used a monopoly established in one market to exert dominance in related markets. When regulators broke up Standard Oil in 1911, the order focused on its use of vertical integration to control every step of the oil supply chain and shut out competitors. Similarly, in 1984, the government forced AT&T to divest its regional Bell operating companies after using its dominance in local phone service to stifle competition in long-distance and equipment markets.
The second Trump administration has taken numerous steps to rein in Big Tech. In September, the Department of Justice secured concessions from Google in an antitrust case over its digital advertising practices, forcing the company to divest key assets and restructure parts of its ad business. That the settlement resulted in a structural change of how Google operates signals that regulators are increasingly willing to pursue structural remedies, not just fines. Attorney General Pam Bondi has pledged that the Administration would work hard to hold companies accountable for monopolistic practices--a perspective that previous Republican administrations did not prioritize.
Amazon's bundling practices represent precisely the digital monopolization that demands structural intervention.
The aim of antitrust law should not be to punish success but to protect consumers and ensure that American businesses have a fair shot to grow and prosper for the benefit of consumers. Separating Amazon’s retail business from its logistics arm and cloud business may be a necessary step to ensure that new businesses do not find themselves squeezed out of the market before having a chance to establish themselves.
While the Trump administration has secured a key victory over Amazon to curb some of its abusive practices, additional steps may be needed to ensure that consumers and small businesses have access to a robust marketplace.
