ABA Calls on FTC to Look Into Amazon Monopoly

The American Booksellers Association is urging the Federal Trade Commission Bureau of Competition Technology Task Force to investigate Amazon’s anticompetitive conduct and rapidly growing dominance in the technology sector.

In a comprehensive 21-page letter, ABA CEO Oren Teicher makes the case against Amazon for antitrust violations, providing FTC regulators with a thorough examination as to how “industry trends and data clearly indicate that Amazon is well on its way to becoming a tech industry monopoly, and it is already a monopoly in the book industry.”

This past year has seen an increased call for a look into potential antitrust violations in the technology sector, including Amazon, which has a business model that has expanded well beyond retail and distribution. Democratic presidential candidates Elizabeth Warren and Bernie Sanders have made reinvigorating antitrust enforcement part of their presidential platforms, especially within the tech sector. Warren even provided details on the manner in which Amazon should be broken up. President Trump, no fan of Jeff Bezos, in a 2018 tweet cautioned that Amazon has a “huge antitrust” problem, as reported by Bloomberg.

As calls for a renewed look at antitrust enforcement have increased, at the end of February 2019, the FTC’s Bureau of Competition announced the creation of a task force dedicated to monitoring competition in U.S. technology markets, investigating any potential anticompetitive conduct in those markets, and taking enforcement actions when warranted. The new task force is led by Patricia Galvan, currently the deputy assistant director of the Mergers III Division, and includes approximately 17 staff attorneys.

In Teicher’s letter, he notes that while many experts liken Amazon to Standard Oil, a more apt comparison is with A&P, which was broken up for antitrust violations in 1949. The similarities between the two retailers (when A&P was at the height of dominance) is striking, he writes.

“Like Amazon, in the 1920s and 1930s the Great Atlantic and Pacific Tea Company (A&P) changed the way people shopped. And like Amazon, A&P ultimately used its size in an abusive manner,” said Teicher. “The business model of A&P was based on two things: Spreading innovative formats (such as the economy store and then the supermarket), and using threats, bribery, and extortion to destroy competition and control suppliers….

“Also, like A&P, Amazon not only controls the retailing channel, but it is now beginning to dominate the distribution channel, third-party marketplace, as well as the web services channel. All told, just as A&P made it extremely hard for its competitors to avoid doing business with them, so too does Amazon force its competitors to do business with it.”

Amazon’s dominance also has a negative impact on free expression, Teicher warns: “We are additionally concerned that consolidation in the book industry could have implications for free expression by limiting the diversity of titles available, likely at the cost of books by new authors and authors with marginalized identities or viewpoints.”

Putting Amazon’s growth into context, Teicher contrasts the current market landscape with a hypothetical world in which Amazon has not used it market dominance to trend toward monopolization: “It is not an overstatement to claim that a world in which Amazon does not exist would have a more diverse and productive retail economy, a greater number of job offerings and better work environment, a more wide-ranging offering of book titles and new authors, and more dynamic and aesthetically pleasing neighborhoods with bustling Main Streets.”

To underscore this, Teicher cites the study Prime Numbers: Amazon and American Communities, conducted by Civic Economics, which notes: “The growth of online sales in general and Amazon in particular has had a visible impact in American communities, exhibited by the much-discussed ‘retail apocalypse’ as retail activity increasingly moves from commercial districts to industrial parks.”

Prime Numbers estimates that, in 2016 alone, Amazon’s retail sales displaced 44,000 storefronts employing 637,000 retail workers. Even considering Amazon’s massive distribution network, the net result is a loss of more than 500,000 jobs nationwide. The 44,000 displaced storefronts is an increase of almost 50 percent from 2014.

Read the FTC letter in its entirety here.