In a column last Friday, I noted a spate of matters being rushed through the Federal Trade Commission (FTC) in the final weeks of Lina Khan’s tenure as chair. I was hardly the only one to notice (see the dissenting statements of Chairman Andrew Ferguson and Commissioner Melissa Holyoak on the FTC’s closed Jan. 16 commission meeting).
The internet is now abuzz with reports of even more curious behavior from the commission—namely, that the FTC has been “building its antitrust case against Amazon on the strength of testimony from” Temu, a Chinese-owned online marketplace that connects customers directly with manufacturers in China and that competes directly with Amazon. It’s a dubious case, and new FTC leadership ought to take a good hard look at the details, and at the question of whether this specific antitrust case is a sensible way to deploy FTC resources.
Others have noted that it’s hard to square the FTC’s approach with President Donald Trump’s public views on America’s rivalry with China, tech and otherwise. The president, after all, confidently declared to House Republicans in a retreat at his Miami-area golf course Monday night: “We’re going to unleash our tech companies and we’re going to dominate the future like never before.”
But this latest FTC fishing expedition would have been considered just as strange a year ago under President Joe Biden. Talking to competitors is not itself odd, even if it can be a fraught exercise: competitors are often very good sources of both information and bias. But the consultation with the Chinese firm—reportedly, written questions from the FTC were answered via telephone, from China—seems tailor-made for a low signal-to-noise ratio and input that may be very hard to verify, not to mention at odds with U.S. policy in several areas.
Of course Temu is happy to support a case—any case—against Amazon. And from the FTC’s perspective, Temu isn’t even one of Amazon’s competitors. The definition the FTC has put forward for the “online superstore” market is limited to Walmart, Target, and eBay, and just the online portions of Walmart and Target, at that.
It all seems “nuts,” to use a technical term from antitrust. And that’s in a case that seemed dubious from the outset, not least because of the FTC’s gerrymandered “online superstore” market definition—implausibly broad in some ways and implausibly narrow in others (no, they don’t average out). For details, see this issue brief by my International Center for Law & Economics (ICLE) colleague Geoff Manne, as well as this piece by Herbert Hovenkamp, widely regarded as the dean of American Antitrust.
In brief, the “online superstore” market seems rigged to support the FTC’s allegations of market power, not engineered to reflect the way American consumers shop or, for that matter, how Amazon competes in retail. According to the FTC, it’s online only, U.S. sales only, and online perishable groceries don’t count, because they don’t.
Neither do in-person brick and mortar sales at Walmart and Target, which are considerable. And only “superstores” count, so Costco is out, a huge volume of online sales and a wide variety of products notwithstanding, partly because too many of Costco’s sales take place at Costco stores, and partly because Costco’s broad offerings (food, wine, clothing, consumer electronics, sporting goods, etc.) do not meet the FTC’s seemingly arbitrary breadth-of-offerings criteria.
Last April, my ICLE colleague Brian Albrecht and I polled economists who work on antitrust issues for the Yale Journal of Regulation’s “Notice and Comment” blog about the blitz of anti-tech actions launched by federal enforcers during the Biden administration. A follow-up poll in September, in the wake of the Google Search decision, included both economists and professors of antitrust law. The polls had their limitations, to be sure, but the respondents in both polls consistently ranked the FTC’s Amazon antitrust case as the worst of a strained lot. This latest wrinkle certainly doesn’t make the case any stronger.
