The Federal Trade Commission is suing Amazing (AMZN) for "illegally maintaining monopoly power," alleging the tech giant wielded that power to "inflate prices, degrade quality, and stifle innovation for consumers and businesses." In a statement, Amazon refutes the charges, saying in part, "the practices the FTC is challenging have helped to spur competition and innovation across the retail industry."
Former FTC Commissioner Mozelle Thompson tells Yahoo Finance Live that the FTC is "pushing the boundaries" with the suit. Thompson says the FTC has two goals "change the law as it currently stands" and "to condition the market to think a little differently," adding that the regulatory body may be trying to provide "a little bit of a chilling effect" to let large companies know that "someone will be policing their actions."
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- The antitrust lawsuit against Amazon by the Federal Trade Commission and 17 states comes as the agency has seen a string of losses in court attempting to crack down on big tech companies. Joining us now is former FTC commissioner Mozelle Thompson. So Mozelle, let me just start with your reaction to the news. How strong, Mozelle, do you think the FTC's case is?
MOZELLE THOMPSON: Well, I think that they're pushing the boundaries and they're trying to make some new law here. But I also think that they have two goals. One is to change the law as it currently stands, but the other thing is to condition the market to think a little differently.
I think that they are designed to provide a little bit of a chilling effect to large companies and to-- that someone will be policing their actions. I think that's very important. I'm-- this case has a lot of novel ideas, and I think some on the law and some on the facts. In either case, it's going to take a while for them to sift through it.
JULIE HYMAN: Mozelle, it's Julie here. What's interesting about this case is most antitrust cases like this have to prove that the customer is being-- the consumer is being disadvantaged by having to pay higher prices. In this case, the government seems to be arguing it's sort of indirectly causing those higher prices on other sites because of the burdens put on the sellers on Amazon, if I'm understanding it correctly.
So when you talk about sort of the novel way they're approaching it, that seems to be what they're doing. Is that way-- is the traditional way of measuring things just by price, is that outdated, do you think? Does that need to be changed?
MOZELLE THOMPSON: Well, I think that the FTC would probably-- current FTC would probably argue that it is. But one of the things that will happen here when you start looking at the facts of the case is that you're going to have two different competing interests here. One is some real tangible consumer benefit versus some hypothetical consumer benefit in the future. That's going to be an interesting thing for the judge to sift out and that in and of itself.
In many cases when you have an antitrust case, you don't necessarily-- the actual consumer benefit may be small. But in this case, the Amazon Prime is extremely popular and it's also provided a lot of benefits to not only consumers, to businesses. So consumers actually have a view here, and so it's going to be an interesting thing to see there are strong defenses.
And-- and I think that what was outlined earlier, part of it is going to be on the law early on is to try to say these are two markets and that they're distinct markets that are cognizable under the antitrust law. That's going to be an interesting challenge. Then after that, you get into the facts. And then you also have 17 states who have their own interests.