Antitrust lawsuit accuses Amazon of harming consumers and small businesses

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• Geoff Bennett:

  The Federal Trade Commission and 17 states have brought a sweeping lawsuit against Amazon, accusing it of violating antitrust laws.

  It's the federal government's latest suit aimed at curbing the power of big tech. The FTC and the states allege Amazon has illegally built and maintained a monopoly that harms its customers and competitors. Amazon does this, in large part, the FTC says, by essentially punishing and strong-arming third-party sellers if they offer lower prices elsewhere or don't use Amazon's add-on services.

  More than 160 million Americans have a Prime membership, and the company's net revenue last year was half-a-trillion dollars.

  To explain more about the case, we're joined by John Newman, deputy director of the FTC's Bureau of Competition, who is leading this case.

  Welcome to the "NewsHour."

  John Newman, Deputy Director, Bureau of Competition, Federal Trade Commission: Thank you so much, Geoff. It's great to be here.

• Geoff Bennett:

  So, as we said, the FTC alleges that Amazon illegally wields monopoly power by maintaining higher prices, harming customers, weakening competition.

  How exactly does it do that, in your view?

• John Newman:

  Well, in the view of the commission, and not just the commission, but 17 state attorneys general joined with us in this case, Amazon has engaged in a set of tactics.

  It's not just one thing, and it's not just two things. It's really a set of tactics, and they all work together. Now, they have different facets. They have slightly different aspects. They have somewhat different effects on different people, but the upshot is all the same.

  They all prevent any rivals from threatening Amazon's power by competing on the merits, by offering lower prices, by offering better service. All the things that we want companies to do in a free enterprise system, Amazon has taken great pains and engaged in an interconnected set of tactics to stamp out.

  And what that does is keep Amazon really, really big and powerful and prevent anyone else from gaining the scale that would be needed to actually meaningfully compete against Amazon.

• Geoff Bennett:

  Amazon calls this lawsuit — quote — "wrong on the facts and the law."

  In a statement, it further says: "If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses, the opposite of what antitrust law is designed to do."

  How does the FTC characterize Amazon as a monopoly when, according to government data, the company accounts for less than a third of total e-commerce sales in the U.S. over the last four quarters, and has the thinnest operating margins of its big-tech peers?

• John Newman:

  Well, what you have to do to really understand the way that Amazon competes and the way that Amazon stamps out competition, Geoff, is to look at who Amazon competes closest against.

  So, in some vague sense, it may be true that everybody competes with everybody, but that's really not what you would want to understand if you wanted to understand how these markets work. And how these markets work is that Amazon competes closest against other online superstores.

  Big online superstores offer a variety of products, not just one thing, not just a few things, but a variety of products that consumers want. And in that market, Amazon is a big, dominant monopoly. They have, our complaint alleges this, as high as 82 percent of that market.

  And that makes Amazon extremely important, crucial, critical for sellers, because so many people are shopping on Amazon's online superstore, sellers need to reach those people, and they end up needing to use Amazon's marketplace.

  And so we also allege that Amazon is a monopolist over sellers in a different market called the online marketplace services market. So, in our view, it's wrong on the facts and the law to set Amazon up as competing against literally everybody else in the world. That's just not how the law works. It's not how the economics work either.

• Geoff Bennett:

  So what's the proper remedy then? Does the FTC want to see Amazon broken up into smaller companies?

• John Newman:

  So, Geoff, this complaint, which the commission voted out unanimously and is joined by 17 states, is really about describing the facts that could give a court reason to find liability.

  This complaint takes great pains and does so in great detail. It describes Amazon's conduct. And that's really the purpose of a complaint, is to really set forth facts that can give rise to liability, so a court could find that the law is violated.

  And the complaint does ask for relief. And it's in keeping with the great traditions of antitrust law that relief for a violation of the antitrust laws does include stopping the illegal conduct. It also includes restoring the lost competition.

  And we look out and we see, and a lot of sellers see, and a lot of Americans see a competitive landscape that has been really badly distorted in favor of one dominant player. So, if we have done our job at the end of all this — and this will be a lengthy proceeding — there will be a trial at the end of it.

  But at the end of all of this, a judge should, if we have done our job correctly, order relief that will restore the lost competition.

• Geoff Bennett:

  The FTC has lost several high-profile battles against big businesses, including Microsoft's purchase of Activision and Meta's takeover of a V.R. start-up.

  What are the stakes as you see them, not just for the marketplace, but also for the FTC?

• John Newman:

  I think the stakes are very high, but it's not so much because of the FTC's win-loss record, although I will stack our record up against any past administration's.

  The stakes are high here because this case affects so many people. I'm a student of antitrust history, as are most of us here at the Federal Trade Commission. And I can say that very, very seldom in the history of the U.S. antitrust laws, which goes back over 100 years, has there been one case that could do so much good for so many people.

  And that's why the stakes are high here.

• Geoff Bennett:

  We should say we have also invited Amazon to sit down with us as well.

  John Newman is deputy director of the FTC's Bureau of Competition.

  Thanks so much for your time and for your insights this evening.

• John Newman:

  Thank you, Geoff.