Saturday, September 8, 2018

Can Amazon be challenged on anti-trust grounds? Lina Khan thinks so.

An American lawyer born in London of Pakistani parents thinks so. Her name is Lina Khan and a current article in The New York Times centers on her work:
In early 2017, when she was an unknown law student, Ms. Khan published “Amazon’s Antitrust Paradox” in the Yale Law Journal. Her argument went against a consensus in antitrust circles that dates back to the 1970s — the moment when regulation was redefined to focus on consumer welfare, which is to say price. Since Amazon is renowned for its cut-rate deals, it would seem safe from federal intervention.

Ms. Khan disagreed. Over 93 heavily footnoted pages, she presented the case that the company should not get a pass on anticompetitive behavior just because it makes customers happy. Once-robust monopoly laws have been marginalized, Ms. Khan wrote, and consequently Amazon is amassing structural power that lets it exert increasing control over many parts of the economy. [...]

The paper got 146,255 hits, a runaway best-seller in the world of legal treatises. That popularity has rocked the antitrust establishment, and is making an unlikely celebrity of Ms. Khan in the corridors of Washington.
Her inspiration is over a century old:
Ida Tarbell, the journalist whose investigation of Standard Oil helped bring about its breakup, wrote this about John D. Rockefeller in 1905:

“It takes time to crush men who are pursuing legitimate trade. But one of Mr. Rockefeller’s most impressive characteristics is patience. … He was like a general who, besieging a city surrounded by fortified hills, views from a balloon the whole great field, and sees how, this point taken, that must fall; this hill reached, that fort is commanded. And nothing was too small: the corner grocery in Browntown, the humble refining still on Oil Creek, the shortest private pipeline. Nothing, for little things grow.”

When Ms. Khan read that, she thought: Jeff Bezos.

Her Yale Law Journal paper argued that monopoly regulators who focus on consumer prices are thinking too short-term. In Ms. Khan’s view, a company like Amazon — one that sells things, competes against others selling things, and owns the platform where the deals are done — has an inherent advantage that undermines fair competition.

“The long-term interests of consumers include product quality, variety and innovation — factors best promoted through both a robust competitive process and open markets,” she wrote.

The issue Ms. Khan’s article really brought to the fore is this: Do we trust Amazon, or any large company, to create our future? In think tanks and universities, the battle has been joined.

“It’s one thing to say that antitrust enforcement has gotten far too weak,” said Daniel Crane, a University of Michigan scholar who doesn’t agree with Ms. Khan but credits her with opening up a much-needed debate. “It’s a bridge much further to say we should go back to the populist goal of leveling playing fields and checking ‘bigness.’ ”

As Mr. Crane writes in a forthcoming law review article: “Antitrust law stands at its most fluid and negotiable moment in a generation.”

The resistance is fierce and prominent.
Which, of course, is not at all surprising. There is more, of course, in the article. Including this:
Ms. Khan was not the first to criticize Amazon, and she said the company was not really her target anyway. “Amazon is not the problem — the state of the law is the problem, and Amazon depicts that in an elegant way,” she said.

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