Tech industry group weighs in on FTC's case against Amazon
ARI SHAPIRO, HOST:
Did one of the biggest companies in the world hold on to its place at the top of the pile by breaking the law? That is the question at the heart of a lawsuit against Amazon. We'll note that Amazon is among NPR's financial supporters, but we cover it like any other company. Yesterday we talked with the chair of the Federal Trade Commission, Lina Khan. Her team brought the suit along with 17 states. And today we have a perspective from the other side. While Amazon declined to come on our program, they pointed us to Adam Kovacevich. He's CEO of a tech industry coalition called the Chamber of Progress. Amazon is one of its corporate partners. Adam, thanks for joining us.
ADAM KOVACEVICH: Thanks for having me.
SHAPIRO: When you read this lawsuit, what jumps out at you?
KOVACEVICH: I think the thing that jumps out at me is that Chairwoman Khan and the FTC have a very different impression of Amazon than most Americans do. I think that she's looked at Amazon from her days as a law student as a threat when, in fact, this is a company that has some of the highest customer satisfaction ratings in the country. More than half of all Americans subscribe to Amazon Prime. And I just don't see Americans clamoring for the government to take action against Amazon as one of their top priorities. So I think that's the big thing that stands out to me.
SHAPIRO: It's an interesting data point that more than half of all Americans subscribe to Amazon Prime because that's one way the FTC says Amazon leverages its monopoly to say to sellers, we will not give you access to our Prime customers unless you meet these certain conditions. And when Amazon has more of the market share than the next 15 largest online retail firms combined, the FTC says that's abuse of monopoly power. How do you see it?
KOVACEVICH: Well, I think there's two separate issues there. One, I think that this lawsuit clearly is designed to carry the complaints of sellers, people who try to sell on Amazon, over the interests of consumers, of shoppers. Sellers as a term is mentioned 368 times in the FTC's complaint. But the word shopper or consumer's only mentioned about 50 times. And I think that reflects who this lawsuit is trying to help. And with respect to kind of who Amazon competes with, I think that, you know, the FTC put forward an idea that Amazon, you know, is a monopoly and kind of - really no one else can compete with them. But by most independent analyses, Amazon comprises only about 3% of all retail and at most about 37% of online retail. And, of course, the FTC has constructed kind of a narrow market definition that gives Amazon a higher share. But I don't know that that will necessarily hold up in court once it's really tested.
SHAPIRO: So you're pointing to the distinction between sellers and buyers, the people who sell on the Amazon marketplace and the consumers, those of us who shop online. Lina Khan, the chair of the FTC, described the way these things are connected when we spoke with her yesterday. She says Amazon charges sellers fees that they pass on to customers. And if sellers post a better deal somewhere else, here's what she said happens.
LINA KHAN: You can basically disappear from Amazon's storefront if you put a lower price somewhere else. And for sellers, you know, given the significant shopper traffic on Amazon, if Amazon makes you disappear from that storefront, that can be quite fatal for your business.
SHAPIRO: And so the complaint argues that the sellers have no choice but to pass on higher prices to customers even if they would otherwise be able to offer a lower price elsewhere. Is that what's going on?
KOVACEVICH: Well, I think there's really two issues at the heart of the FTC's case. The first is that this infrastructure that Amazon has built over the years originally to kind of serve its own sales of products - they then opened up to third-party sellers for a fee. And I think that many of the, you know, sellers don't have to use that infrastructure. They have other ways of also selling their goods. But many sellers don't like the fees that they have to pay. But Amazon's argument is that that's what makes Prime work for customers because the value proposition of Amazon Prime is that you're going to get your product in two days. And Amazon's rules for making sure that merchants are fulfilling their products through their own service are how they make that happen.
The other part of the complaint really has to do with which merchant is selected as kind of the default seller of a product in what they call the buy box. And Amazon's rules there really are designed to make sure that they're guaranteeing to consumers the lowest price on the internet. And so you see a clear tension here between the interests of sellers - individual sellers who have clearly complained about some aspects of Amazon's behavior versus the interests of consumers. And the complaint tries to link those two things together. I'm not sure that they are linked together. I think the interests of shoppers here may be distinct from the interests of some of the sellers who have complained.
SHAPIRO: Amazon said in a statement that if the lawsuit succeeds, there will be fewer options, higher prices and slower deliveries. You know, the concept of capitalism and economic competition says that more options filling the market will lead to everything being better for the consumer. It sounds like Amazon is reaching the opposite conclusion. Can you explain that?
KOVACEVICH: Sure. I think that, you know, again, when you go back to Amazon Prime customers, we actually - our organization did a survey earlier this year. And we asked Amazon Prime users what are the things they valued most about Amazon Prime. The two things they valued most were two-day shipping and discounted products. The FTC's lawsuit actually aims at both of those things. But these things sort of go to the heart of Amazon's value proposition to consumers. But with respect to sellers and merchants, they have options. And so no one's beholden to Amazon. In fact, some sellers see downsides in using Amazon's marketplace, but it's up to individual sellers to choose.
SHAPIRO: Adam Kovacevich, CEO of the Chamber of Progress. Thank you so much.
KOVACEVICH: Great to talk with you. Transcript provided by NPR, Copyright NPR.
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