If the Michigan lawsuit against Amazon does not help Amazon shoppers, whom does it help? The most obvious beneficiaries will be other large online retailers like Walmart and Target, who will gain market share from a weakened competitor. Indeed, the Federal Trade Commission, Michigan’s partner in bringing the lawsuit, has leaked to the press its allegation that Walmart, the largest company in the world in terms of revenues, was a victim of how Amazon does business.[19]
Protecting Amazon’s competitors, even if it comes at the expense of Amazon’s customers, appears consistent with the policy agenda at the FTC. The head of the agency, Lina Khan, was known for her negative views toward Amazon well before she joined the FTC.[20] One of her earliest antitrust publications was “Amazon’s Antitrust Paradox,” in which she claimed that Amazon keeps its prices low to get people to buy from Amazon and drive its competitors out of business, after which, she predicts, Amazon will be dominant and will raise its prices.[21]
In a 2019 article, Khan asserted that when Amazon sells products in competition with other suppliers on the Amazon platform, the company has an unfair advantage over those of other sellers. According to Khan:
One feature dominant digital platforms share is that they have integrated across business lines such that they both operate a platform and market their own goods and services on it. This structure places dominant platforms in direct competition with some of the businesses that depend on them, creating a conflict of interest that platforms can exploit to further entrench their dominance, thwart competition and stifle innovation.[22]
Note that Khan is claiming the problem with Amazon is not that it is bad for consumers, but rather that it is dominant. Khan argues that Amazon’s dominance means the FTC should consider the company too big relative to its competitors like Walmart, with little consideration for whether consumers are benefiting.
The Michigan lawsuit against Amazon takes the same approach — giving lip service to helping consumers but really targeting Amazon for its dominance. In other words, this amounts to little more than picking winners and losers in the economy. Government officials should, instead, serve as neutral referees of the competitive process. Empowering a state government to substitute its judgment for the judgment of consumers makes government officials another beneficiary of this lawsuit. They will have gained new powers to influence the economy.
In addition to government regulators and Amazon’s competitors, the third main beneficiary if Michigan prevails against Amazon will be the larger third-party merchants who want to free ride on the Amazon Marketplace. The smaller sellers on Amazon benefit greatly from access to Amazon’s massive customer base, reputation, easy entry into a vast geographic market and fulfillment services.[23] Larger merchants may not benefit as much from these services but would definitely gain from being able to list their products on the platform for free.