Amazon Recruiting FTC Ex-Staffers as It Prepares for Antitrust Battle

Amazon is recruiting FTC ex-staffers to prepare for an extensive antitrust battle with the US agency.

These individuals, who used to work for the FTC, will provide valuable insights and intelligence into the ongoing dispute with the agency. Amazon’s hiring efforts have been made more accessible by the alleged management style of FTC Chair Lina Khan.

Several disgruntled staffers have left, accusing her of being a “tyrant” and possessing an “abusive” management approach. These departures may have facilitated the recruitment of FTC ex-staffers.

FTC Will Take Legal Action Against Amazon

Lina Khan has already taken action against the e-commerce giant by filing three separate unrelated cases. Now, the agency is preparing for a significant antitrust suit focused on its core online marketplace.

FTC investigators and Khan’s office have meticulously crafted the complaint for several months. They are finalizing crucial details, including determining where to file the suit.

Khan and her colleagues are eager to file before personnel changes in August, although there is a possibility of timing delays.

Biden Administration’s Crackdown on Big Tech

Khan’s appointment has intensified the Biden administration’s crackdown on Big Tech, including legal actions against Google, Meta Platforms (formerly Facebook), and an investigation into Apple.

Amazon has called for Khan to recuse herself due to her public statements about the company. However, Khan has continued to lead the case against Meta, despite a non-binding recommendation from the agency’s top ethics official to step aside.

An ethics memo stated that Khan could serve as a prosecutor on giant e-commerce cases. While it suggested recusal in the agency’s administrative court cases, it did not conclude Amazon.

This move could avoid prolonged legal battles concerning Khan’s potential conflict of interest, although it could make winning the case more challenging. The e-commerce giant executives will be able to present their case before the FTC’s three commissioners, including Khan, in a meeting referred to as the “last rites.” However, the scheduling of this meeting has yet to be determined.

Amazon allegedly got caught in more shady shenanigans.

The FTC is expected to file a major antitrust lawsuit alleging that Amazon abuses its market power to reward third-party merchants who use its logistics services and punish those who don’t.

This is a big deal.

— Robert Reich (@RBReich) June 29, 2023

Expansive Marketplace

Amazon’s expansive marketplace lies at the core of its e-commerce operations. More than half of the company’s online sales come from third-party merchants who pay commissions on each sale and can also utilize services, such as warehousing, shipping, and advertising, for an additional fee.

The FTC has gathered evidence suggesting it disadvantages sellers who do not use its services. Additionally, the agency is investigating an algorithm for selecting merchants for the highly coveted “Buy Box” on the web store, where consumers can conveniently add products to their cart using a single click.

The expected allegations align with a 2020 report from a US House subcommittee, where Khan was a staff member. They also parallel a European antitrust case that accused Amazon of favoring sellers utilizing its fulfillment services and leveraging merchants’ sales data to boost its retail business.

Amazon Customer-Obsessed Principle

As reported by Bloomberg, the e-commerce giant has long emphasized its commitment to prioritizing customers, a principle taught to employees during antitrust training.

This antitrust suit would be the FTC’s fourth case this year, challenging the company’s famed customer focus. In May, the FTC filed two separate cases. The e-commerce giant did not delete the data it collected from Alexa speakers about children. The second was the alleged illegal spying on Ring doorbells and camera users.

While Amazon disputed the FTC’s allegations, they paid $30.8 million to resolve the cases. The most recent cases filed by FTC were about deceptive practices using dark patterns.

According to sources familiar with the situation, executives were taken by complete surprise with the filing of this case. The US agency is also investigating Amazon’s proposed $1.65 billion acquisition of iRobot Corp, the maker of Roomba vacuums.

FTC Investigation on Antitrust Violations

The FTC investigation into potential antitrust violations has been ongoing since June 2019, as per documents seen by Bloomberg. The investigation began with a request for records regarding how Amazon’s warehousing and delivery services impact the placement of third-party sellers’ products on the website.

The FTC also sought information on any arrangements between Amazon and Apple, explicitly focusing on the rationale behind those agreements. They had previously entered a deal allowing Apple to sell its products directly on Amazon’s marketplace, which drew scrutiny from the FTC.

In February 2020, the agency issued compulsory document requests seeking further information on these issues and its cloud computing division. It responded by providing a considerable amount of information throughout 2020 and 2021.

Resources for the Investigation Were Limited

However, the resources allocated to the investigation were limited due to the FTC’s primary focus on another case involving Meta Platforms. Lina Khan reworked the Amazon investigation in June 2021. She chose John Newman, an academic with Justice Department experience, to assist in leading the investigation.

In 2022, the FTC conducted under-oath interviews with nearly 30 Amazon employees as part of the investigation. The e-commerce giant is anticipated to mount broad attacks on the tech-focused antitrust legislation proposed by Congress.

The company spent $20 million on lobbying efforts last year. It launched an advertising campaign to oppose the bills, while mobilizing sellers in lawmakers’ home states, to publicly voice their opposition.

Written by Janet Grace Ortigas

Sources:

New York Post: Amazon poaching Federal Trade Commission officials before antitrust lawsuit; by Lydia Moynihan
Web Pro News: FTC Preparing Its Most Ambitious Antitrust Case Yet Against Amazon; by Matt Milano
Fortune: FTC chief Lina Khan is gunning for Amazon with a planned antitrust lawsuit that goes at the heart of its core business; by Anna Edgerton, Leah Nylen and Bloomberg
Bloomberg: FTC Is Preparing Potential Antitrust Case Against Amazon; by Leah Nylen and Spencer Soper

Featured and Top Image by E Gillet Courtesy of Flickr – Public Domain License
Inset Image Maya Ibuki Courtesy of Flickr – Creative Commons License