Lina Khan’s FTC Is Totally Outmatched Vs. Amazon

Thin resources, shaky case law, and a stable of lawyers switching sides set up an impossible battle.

Bill Kovacic ran the U.S. Federal Trade Commission from 2008 to 2009 and has been watching the agency’s landmark antitrust case against Amazon. Speaking frankly of its chances, he’s not bullish.  

“If Amazon were the only case, the FTC could staff it to match the other side punch for punch  — it's not the only case,” he told Ranjan Roy and me in a recording of Big Technology Podcast last Friday. “It's not that the FTC doesn't have capable people. The real rub is that you don't have enough experienced people to run cases.”

With limited funding and staff spread thin across multiple tech antitrust pushes, the FTC’s resource mismatch may be the determining factor in its Amazon case. The U.S. government is on track to spend more than $6 trillion this year, but it’s allocated only $430 million to the FTC, which is suing both Amazon and Meta. In just a few hours, those tech giants make what the FTC spends in a year, and they’re shelling it out to ensure their businesses continue unimpeded. 

Amazon, most prominently, has spent its riches hiring hallways of FTC lawyers. Former FTC associate general counsel Brian Huseman is now Amazon’s VP of public policy. Former FTC attorney Amy Posner joined Amazon in 2020 after 13 years at the agency and is now senior corporate counsel. Former FTC Bureau of Competition attorney Elisa Kantor Perlman joined Amazon a few months later and has the same title. Former FTC attorney Sean Pugh also left for Amazon.

“To me, it’s just the brain drain element,” one ex-FTC lawyer told me. “These aren’t just random attorneys — they are the cream of the cream of the crop.”

The lawyers remaining at the agency are spread extremely thin, especially with FTC Chair Lina Khan bringing multiple lawsuits at once. Going after Facebook, Amazon, and others in tandem means the FTC’s experienced lawyers must fan out, leaving junior staff to assume prominent roles. 

“They're running the Meta case, which is another bet your agency case, they are running very complicated and difficult merger cases, which also demand top talent,” said Kovacic. “You come to a point — we have to put up a larger number of people who are very bright, great intellectual gifts, but they're rookies. They're relatively inexperienced. That's a mismatch.” 

Even under ideal circumstances, the FTC’s challenge would be significant, but throw in the legal lift required to win and its case looks even more daunting. The FTC is trying to show that Amazon illegally used its monopoly power to maintain its dominance, but upstart rivals like Chinese shopping apps Shein and Temu are making that case harder to prove. 40% of Amazon users now use Temu, according to data I obtained from Apptopia. And that usage is accelerating. 

Kovacic said modern judges may be willing to consider a case where Amazon has a monopoly in a commerce niche vs. all U.S. commerce, but during a multiyear case, the dynamic could change. “This is a real difficulty for the case,” Kovacic said. “As these other developments take place. The judge starts to wonder, what are we focusing on here? What's the point of this?”

Without a victory, the FTC could still influence Amazon and its fellow tech giants to alter some practices. Amazon, for instance, made it easier to cancel Prime after the FTC threatened to take action, and eventually did. But still, Kovacic said it’s understandable that the vibe within Amazon is fairly relaxed today. “They can take some comfort from the fact that defendants generally come through this process relatively unscathed,” he said. “With the caution that antitrust trials are awkward and it does open the curtain.” 

When Lina Khan took over the FTC in 2021, many anticipated she’d change the U.S. government’s sheepish approach to Big Tech. They expected more than just making Amazon feel a bit awkward. But as her signature case gets off the ground, it’s clear that her more ambitious agenda is running into an old problem — severe underfunding — which may end up erasing the effort. And that may just be the intent of those who allocate the money, the U.S. Congress.

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What Else I’m Reading, Etc.

Apple is the leader in AI acquisitions [Quartz]

Can AI startups live up to the infrastructure spending? [Sequioa]

Social media traffic to news sites is plunging [Axios]

WeWork missed $95 million in interest payments [New York Times]

Flexport will lay off 30% of its workforce [WSJ]

Inside the WOJ vs. Shams battle, the NBA’s only remaining rivalry [Washington Post] 

I joined the Compound and Friends podcast to talk OpenAI, Meta, and SBF [Pod.link]

Venture capital is now officially democratized [Fundrise] (sponsored)

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Number Of The Week

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Increase in wholesale professionals including AI on their LinkedIn profiles. That’s starting from a low base, of course, but also an indication the AI boom is more widespread than concentrated.

Quote Of The Week 

There is still a Sam-Bankman-Fried-shaped hole in the world that now needs filling.

Author Michael Lewis on SBF, during a widely condemned interview on 60 Minutes. 

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The Joy, Misery, and Fame Of An Extremely Online Life — With Taylor Lorenz

Taylor Lorenz is a technology columnist at the Washington Post and author of Extremely Online: The Untold Story of Fame, Influence, and Power on the Internet. She joins Big Technology Podcast to discuss her book, exploring the tradeoffs of life as an online influencer, and whether people have a choice to pursue power online. Stay tuned for the second half, where we discuss Lorenz's various controversies, including her view on content moderation, and then close with a discussion of why the internet is less fun than it once was.

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