The European Union’s anti-trust cop has taken an aggressive lead in regulating US tech giants in recent years. But with its latest query into Amazon.com Inc., the EU is echoing the views of a 29-year-old legal scholar across the Atlantic.
EU competition commissioner Margrethe Vestager has begun a preliminary probe into whether data the e-commerce giant collects from retailers that sell on its site gives Amazon an edge in marketing its own products to customers and squeezing out more sales as a result. Vestager said the EU was looking into the issue because it came up in a broad e-commerce sector investigation concluded last year, but also because “this is also what a lot of people are talking about by now, so we do the follow-up”.
And to a large degree, Lina Khan, an academic fellow at Columbia University Law School, helped shape that debate.
As a student at Yale Law School, Khan wrote a paper for the Yale Law Journal called “Amazon’s Anti-trust Paradox”, which argues that the current anti-trust enforcement framework is ill-equipped to tackle Amazon’s dominance and the potential harm it poses to competition.
Khan has highlighted what the EU cited as a preliminary concern: that Amazon can exploit information it collects about third-party sellers to better compete against them. Vestager noted Amazon’s dual role as a platform for retailers to sell their goods as well as a merchant in its own right. That position makes Amazon privy to data about the customers of retailers it competes with.
“The question here is about the data” Amazon collects from smaller merchants on its site, Vestager said. “Do you then also use this data to do your own calculations, as to what is the new big thing, what is it that people want, what kind of offers do they like to receive, what makes them buy things? That has made us start a preliminary” investigation, she said.
Khan’s ideas on Amazon fit into a broader movement that is led by a small group of policy wonks who are encouraging tougher competition enforcement by the US. They argue the current playbook for policing mergers and anti-competitive conduct has fallen short and want to return anti-trust policy to its early 20th-century roots — when regulators went after monopolies in railroads and oil — to take on new corporate giants, particularly in the tech sector.
It’s a message that is gaining attention in Washington. Its proponents, who call themselves “New Brandeis” after the Supreme Court justice, have sparked debate at academic and professional conferences. This month, the Federal Trade Commission, which shares anti-trust enforcement jurisdiction with the Justice Department, opened a series of hearings to consider whether the existing framework needs a revamp.
One of the panels will consider looking at conduct by tech platforms that may be harming competition.
Similar to Vestager’s concerns, Khan says Amazon’s current business structure presents a conflict of interest that stems from how it competes with the same companies that depend on its platform to reach consumers. That dynamic allows Amazon to solidify dominance and thwart competition, she said.
“Amazon uses its marketplace as a petri dish to identify which independent sellers’ goods are doing well and then rolls out direct replicas,” Khan said. That lets Amazon appropriate rewards from the risks that independent sellers take on.
In a forthcoming paper in the Columbia Law Review, Khan argues for separating Amazon’s business of selling its own products and its business as a platform used by other retailers. Such a structural fix isn’t radical, she insists, and has been used in other industries.
“We should recover this principle for dominant tech platforms that serve as critical intermediaries,” she said.
Policing the tech giants
While the EU has long taken a more aggressive approach to regulating data and tech companies more broadly, the new chairman of the US Federal Trade Commission, Joe Simons, has said one of his key goals is to examine the online economy and whether tech giants including Google, Facebook Inc. and Amazon are undermining competition.
The debate surrounding anti-trust scrutiny for Amazon has also picked up steam because the company has come under fire in recent months from US President Donald Trump, who has accused the company of crushing small businesses, violating anti-monopoly laws, dodging taxes and taking advantage of the US Postal Service.