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What Amazon tells us about antitrust today

What Amazon tells us about antitrust today


It’s a reflection of how market power gets exercised

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Should we break up Amazon and Facebook? Columbia Law School academic fellow Lina Khan, who wrote the impactful “Amazon’s Antitrust Paradox” for The Yale Law Journal, joins Verge editor-in-chief Nilay Patel to discuss whether Amazon and Facebook should be broken up and what it might look like if that were to happen.

You can listen to their discussion about the case for breaking up Amazon and Facebook in its entirety on The Vergecast right now. Below is a lightly edited excerpt from the interview.

Nilay Patel: You wrote a paper for Yale Law Review called “Amazon’s Antitrust Paradox.” Walk us through the argument you made there.

Lina Khan: Sure, so the argument I made was that Amazon is a really elegant illustration of how the current framework in antitrust, the consumer welfare framework, really fails to capture forms of market power and forms of dominance that should be relevant to antitrust and do raise competition concerns. And so I was writing about Amazon because I think aspects of Amazon’s business strategy, specific practices that it used to become as dominant as it is, are a really useful vessel for talking about these broader shifts in antitrust. And so, you know, before I went to law school I was a journalist and a policy researcher and had spent some time interviewing the merchants that sell on Amazon. Just to try and understand it. You know, what are the business practices here? What are the contractual terms? What are the kind of day-to-day reality for these millions of merchants that feel dependent on Amazon, right?

They feel that the only way they can really get to market in the internet age is by using Amazon, by selling on Amazon. And then also by interviewing investors, hedge funds, venture capitalists to try and see how Wall Street was thinking about Amazon and the dominance it was amassing. Those perspectives, [the] kind of people who have money on the line and interacting with Amazon and how they see the company, really helped shape how I think about the company’s power. And then thinking about how these people were thinking about Amazon and then thinking about how current antitrust law perceives Amazon just revealed this gap. I was interested in exploring this back gap and interested in thinking about how antitrust should be reformed in order to reflect the new realities of how market power gets exercised.

And so the really TL;DR version of where we are right now with antitrust as a standard is something called the consumer welfare standard, which if you’ve been listening to The Vergecast, we talk about a lot actually. But it’s the notion that there’s only an antitrust problem if prices are going up, right? If companies consolidate a part of the market, they have a monopoly, they raise consumer prices, there’s some harm. We should break that up to add more competition, but if prices are stable or going down, you probably don’t have a problem. And Amazon obviously has very low prices, but they have all this ancillary power all across the rest of the internet, basically. Google’s prices are zero. So it’s very hard to articulate a harm in Facebook, right?

Or we pay in data. I’m reluctant to say that there are free services. But the dollar amount we pay is zero. That’s right.

The Vergecast /

Weekly tech roundup and interviews with major figures from the tech world.