How Lina Khan may have screwed up Amazon antitrust case

Lina Khan has gotten sloppy with her big antitrust case against Amazon, according to critics – and some fear her alleged screwups will enable Jeff Bezos’s e-commerce giant to wiggle out of the federal government’s monopoly allegations. 

Khan – the 34-year-old chair of the Federal Trade Commission under President Biden – has built her antitrust case filed against Amazon in September partly with an argument that it unfairly shut down a program known as “Seller Fulfilled Prime.”

The program enabled third-party sellers to fill Amazon Prime orders – popular with customers since they enable free, two-day deliveries – without paying the tech giant a fee. 

Khan claims in her suit that 95% of sellers met the two-day deadline Amazon requires for Prime shipments and that Amazon ended SFP in 2019 because it wanted to extract higher fees from vendors. 

SFP has been a talking point the FTC is pushing as part of its PR efforts. Director of communications Douglas Farrar tweeted a screenshot of the arguments and claimed Amazon’s decision to shut down SFP was as one of the reasons the company is “an illegal monopolist.” 

In response, however, Amazon claims the FTC’s argument is “highly misleading” – and provided drastically different percentages surrounding the workability of the program.

“The fact is that in 2018 sellers using Seller Fulfilled Prime were promising deliveries within two days less than 16% of the time—far worse than the performance of sellers using Fulfillment by Amazon and far below the high standards and expectations our customers have for Prime,” Amazon spokesman Tim Doyle said in a statement.

Amazon reinstated the program earlier this year. While some speculated that pressure from the feds may have been a factor, Doyle gave a different account.

“We have learned a lot, and over the last several years we updated the program requirements,” Doyle said. “We’ve now reopened enrollment to an improved Seller Fulfilled Prime program that can meet our customers’ expectations.”

In this particular skirmish, antitrust watchdogs worry that Amazon’s version of events rings uncomfortably true. Not only is Khan’s misfire “embarrassing,” it’s also part of an unfortunate pattern that has hurt other regulators’ efforts to rein in Big Tech,

“DOJ is actually putting in the work to address legitimate issues and leveraging tried and true theories,” Joel Thayer, principal at Thayer PLLC said, told On The Money. “Whereas the FTC under Khan appears more disorganized and doesn’t seem to be as thoughtful as the DOJ when crafting its theories or strategy.

“Sadly, actions like the FTC’s make it harder to make real movement on antitrust reform that is desperately needed, because it undermines the credibility of the movement,” Thayer added. 

Part of the problem, some sources suggest, is that Khan’s arrogant, micromanaging leadership style has alienated and otherwise driven away many of the career staffers who typically triple-check each case for errors.

Earlier this year, former commissioner Christine Wilson resigned, writing in a scathing Wall Street Journal op-ed that “Under [Lina Khan’s] leadership, knowledgeable career staff have been scorned and sidelined.”

“In 2020, the last year under Trump appointees, 87% of surveyed FTC employees agreed that senior agency officials maintain high standards of honesty and integrity. Today that share stands at 49%,” Wilson added.

In a statement, FTC spokesperson Douglas Farrar said “Amazon, not the sellers, set the delivery estimate for sellers enrolled in Seller Fulfilled Prime, and sellers met or beat Amazon’s own delivery estimates 95% of the time. If Amazon was worried about SFP shipping speed they would let sellers work with third party logistics services, but instead we allege they force sellers to use Fulfilled By Amazon in order to protect their illegal monopoly so they can keep collecting monopoly rents from sellers, which jacks up the price on American consumers.”