Will the Government Break Up Amazon?

The Federal Trade Commission and seventeen states have filed a lawsuit accusing Amazon of monopolistic practices. This aggressive step hearkens back to the 1980s when the FTC broke up the Bell Telephone monopoly.

It’s hard for people born since the invention of the cell phone to believe, but at one time, Bell Telephone controlled not only your service but what kind of phone you could buy and who you could buy it from. If you purchased a phone in the 1950s, it had to be black, and you had to buy it from Bell. Later, in the 60s and 70s, they sold phones in harvest gold and avocado green (everything at that time was in those two colors, I don’t know why), and you still had to buy your phones from them.

The FTC won the case and broke Bell into seven smaller companies nicknamed the Baby Bells. In the 90s, the seven became three through mergers: AT&T, Verizon, and Qwest.

It’s hard to tell the FTC’s intention regarding punitive actions towards Amazon should they win the case. The Sherman Anti-Trust Act is still the law, so if they find there were criminal acts involved, the Justice Department could take steps to break Amazon up.

Here are two quotes from the FTC website. I suggest you read the entire FTC statement in “FTC Sues Amazon for Illegally Maintaining Monopoly Power.”

The complaint alleges that Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging. By stifling competition on price, product selection, quality, and by preventing its current or future rivals from attracting a critical mass of shoppers and sellers, Amazon ensures that no current or future rival can threaten its dominance.

“FTC Sues Amazon for Illegally Maintaining Monopoly Power,” September 26, 2023

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