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National Review
National Review
5 Jun 2024
Tom Hebert


NextImg:Lina Khan’s Amazon Flip-Flop

F ederal Trade Commission chairwoman Lina Khan made her bones in progressive circles with a law-school paper arguing for the government to break up Amazon. Now, a new development in the FTC’s case against Amazon pits Khan’s law-school arguments against the arguments the FTC is making.

As a Yale law student, Khan argued that Amazon was an unassailable monopoly that engaged in predatory pricing, setting prices below the market rate to snuff out would-be competitors. In her paper, Khan says antitrust regulators should ignore the impact of Amazon’s low prices on consumers, jettisoning five decades of antitrust precedent.

The FTC’s case against Amazon now takes the opposite approach, claiming that Amazon uses monopoly power to raise prices and degrade service for shoppers. The FTC’s case hangs on a hyper-narrow “online superstore” market wholly of the FTC’s invention, pretending that Target, eBay, and Walmart are Amazon’s only competitors. If you had doubts about the tortured logic at work here, consider that the FTC’s gerrymandered market includes Walmart’s online business but none of the thousands of Walmart stores across the country.

Amazon competes aggressively with each of these so-called online superstores, all of which are very large companies and none of which need government rescue from Amazon. Amazon also competes with all stores, not just those with a large online presence. Amazon only accounted for 4 percent of total retail sales in 2023. The FTC is artificially narrowing the market that Amazon operates in to claim Amazon is a monopolist.

In law school, Khan argued for bureaucrats to break up Amazon for low prices. As FTC chairwoman, Khan says that Amazon’s prices are too high. What does Khan truly believe?

A new filing from the American Booksellers Association, first reported by the Wall Street Journal editorial board, brought Khan’s flip-flop in stark relief. ABA has long groaned that large companies are an existential threat to mom-and-pop bookshops, a dubious claim at best. While ABA’s membership is down from its peak, its membership has doubled since 2016, adding 200 stores in 2023 alone. ABA CEO Allison Hill expects 190 additional bookstores to open in the next two years, telling the Associated Press: “Our numbers are really strong, and we have a solid, diverse pipeline of new stores to come.”

Brick-and-mortar bookstores are not covered under the FTC’s self-invented “online superstore” market, so the ABA filed a motion to join FTC v. Amazon that largely echoed the arguments Khan made in law school. Khan filed a brief opposing the ABA’s motion to join the case, arguing that the booksellers’ motion “would essentially create a whole new suit” because their claims are “different from those in this case,” per the WSJ. This also puts Khan at odds with Open Markets Institute executive director Barry Lynn, Khan’s mentor and former boss, who supported the ABA’s motion to join the FTC case. A judge denied the motion, agreeing with the FTC’s argument that ABA’s intervention would create a “whole new suit.”

This example might seem arcane, but it demonstrates three important things about Khan’s approach to antitrust:

  1. The progressive antitrust movement that Khan leads is ideologically incoherent. Progressives believe that the government should break up Amazon simply because it is a big company and will say or do anything to reach their desired goal. The FTC’s and ABA’s arguments, while contradictory, both amount to the legal equivalent of flinging spaghetti at the wall and seeing what sticks.
  2. The Biden administration’s embrace of this approach to antitrust allows it to target companies it doesn’t like for political gain. During the 2020 campaign, Biden falsely smeared Amazon as a tax cheat for using lawful deductions and credits extended by Barack Obama. As president, Biden has scapegoated economic turbulence during his administration on “corporate greed,”a favorite fictional punching bag of the progressive left. If the FTC allowed the court to hear the ABA’s argument that Amazon was keeping prices too low, it would undercut Biden’s messaging on corporate price-gouging.
  3. Congress should act to prevent further abuse of antitrust law. Lawmakers should codify the consumer-welfare standard, which stipulates that consumers must be demonstrably harmed for antitrust enforcers to act. Breaking up a company is a massive use of government power that should be difficult to use and narrowly confined to demonstrable consumer harm. Statutorily constraining antitrust to consumer welfare, measured by tangible effects such as price, innovation, and quality, would prevent politicians from weaponizing antitrust for their own aims.

Khan’s flip-flop isn’t because of new evidence. It’s because of a singular motivation to score points against Amazon. Consumer welfare, not political agendas, should be the focus of antitrust agencies moving forward.