Amazon.com Inc. and Lina Khan have a fraught history. Khan made her name as a law student in 2017 with an article in The Yale Law Journal that made an example of Amazon to argue for a broad re-imagining of U.S. antitrust law. Now she’s the chair of the U.S. Federal Trade Commission, which had already sanctioned Amazon for privacy lapses, sued the company for antitrust violations Tuesday after a multiyear investigation. Amazon’s place in the U.S. economy has only grown since Khan’s article was published, especially after so much consumer spending moved online during the COVID-19 pandemic. But much of U.S. antitrust law is more than a century old, written for a very different economy, making the FTC’s case an important test of whether Khan’s interpretation of the law will hold up in court.
What business practices is the FTC investigating?
The investigation, which began in 2019 during the administration of U.S. President Donald Trump, has focused on Amazon’s online marketplace, which features Amazon’s own products as well as items from third-party merchants who pay Amazon a commission for each sale, according to internal documents and people familiar with the probe. Some merchants have complained that Amazon’s marketplace illegally gives preferential treatment to those that are willing to use Amazon’s logistics service. The FTC is also expected to argue that Amazon’s Prime subscription service is anticompetitive, because the perks and convenience that goes with it has the effect of "locking in” consumers and keeping them from patronizing competitors, and that Amazon punishes merchants that post lower prices elsewhere by reducing their visibility.