Federal Trade Commission Chair Lina Khan has gained notoriety for taking on the biggest names in tech with novel legal theories. In 2017, Khan’s star rose when she published a law review article reframing the debate around corporate consolidation. But in her latest lawsuit against Amazon, Khan abandons novelty in favor of a set of arguments that have already failed so badly and repeatedly that they put D.C.’s worst perennial political candidates to shame. Welcome to the Marianne Williamson of legal cases.
The same arguments set forward by Khan in the case against Amazon have either flopped or resulted in compromise settlements in other American and foreign jurisdictions. To make matters more challenging, even Khan recognized that the FTC’s case has a high legal bar to clear based on a precedent set by the Supreme Court in antitrust cases.
Facing significant hurdles, Khan is relying heavily on two arguments. First, she claims Amazon’s “buy box” and the company’s pricing policies prevent sellers from offering fair prices to shoppers despite their fundamental role in facilitating price transparency. Second, she argues that Amazon’s fulfillment services are anti-competitive despite being a valuable tool to small sellers.
The “buy box” is a popular feature on Amazon’s platform that allows shoppers to quickly add items from specific sellers to their shopping carts. The European Commission looked at Amazon’s “buy box” policies but chose to settle with the company.
Given the EU’s generally more aggressive stance toward American tech companies and its more favorable legal system, it’s surprising that Khan would choose to litigate an issue where European regulators embraced a settlement.
What makes her case even more surprising is that a similar case brought by the District of Columbia’s attorney general was thrown out of court for lack of merit last year. Judge Hiram Puig-Lugo saw through the District’s failed complaint and underscored that “Amazon’s rivals charge lower fees and commissions … (which) contradicts the AG’s claim that Amazon’s policies are creating a floor for products sold through other retail channels.”
The second pillar of Khan’s case stands on similarly weak legal ground. Fulfillment by Amazon (FBA) is a component of Amazon’s business that allows third-party sellers and small businesses to store their products at Amazon fulfillment centers, taking the difficult coordination factor off sellers’ hands. Regulators in the EU and the United Kingdom have settled on the FBA issue because FBA is an optional tool worldwide that supports third-party sellers’ goals.
The popularity of Amazon among U.S. consumers raises additional questions about why Khan has pursued a warmed-over case against one of America’s favorite online marketplaces.
Amazon customers love two-day shipping. And third-party sellers and small businesses love the success they’ve found through Amazon’s marketplace services. The company’s clear benefits to consumers and businesses alike might be why the EU and UK have already settled similar claims against Amazon more amicably than Khan’s case.
While the FTC pursues this case, there is a real need for the agency to tackle antitrust violations successfully to create a better environment for consumers and businesses. But a comparison of Khan’s initial tenure with that of other recent FTC chairs shows that Khan has brought fewer overall antitrust actions and successfully finalized fewer merger settlements than her predecessors in a comparable period.
Khan has repeatedly noted that the FTC is under-resourced and understaffed, but the agency continues to pursue long-shot cases instead of focusing on more attainable goals. For an agency that has historically protected consumers from faulty products, it’s time for the FTC to do some self-reflection and do what Marianne Williamson should have done four years ago: throw in the towel on a set of failed arguments.
