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Dear Reader,

As I write this, the San Francisco Superior Court has denied Amazon's motion for a summary judgment on a claim in its defense of a State of California lawsuit alleging anticompetitive behavior [1]. California Attorney General Rob Bonta (and several commentators) describe the decision as a victory for the forces challenging the tech giant, but the actual trial won't start until January of next year. In the meantime, we also wait for the massive Amazon antitrust action filed by the Federal Trade Commission (FTC) and 17 (now 18) states plus the territory of Puerto Rico [2].

This seems like a lot of heat for the world's largest online vendor, but as you can imagine, they are probably used to it. Actually, I don't remember a time when there wasn't some kind of big antritrust action brewing in the high tech industry. In the '60s and '70s, it was all about IBM. In 1982, the feds took down telecom giant AT&T (operators of the phone network and creators of the Unix operating system). Then it was Microsoft and Intel, and now it's the big social media companies and Amazon.

The rules and procedures for antitrust suits are vast and arcane – and best left for another kind of journal – but for the current purpose, I'll summarize to say: You need two things, and the suit won't work unless you have both of them. First, you have to prove the company has monopoly power over the industry. Second, you have to prove they are leveraging that power to maintain or extend their monopoly control through anticompetitive practices. Of course, both of these factors are in the eye of the beholder, which is why this kind of litigation requires armies of lawyers and costs millions of dollars.

On paper, the Amazon case isn't exactly a slam dunk by old-school standards. They don't control anywhere close to the market share that IBM or Microsoft owned in their day, and it doesn't seem that they are using their monopoly to raise prices on consumers. But it's all so complicated. The vast extent of Amazon's endeavors – from selling pencils to producing films to hosting cloud instances – still offers many a fulcrum for leverage.

It is not surprising that Amazon doesn't fit the mold. In 2017, attorney Lina Khan, who later became head of the FTC, published an influential paper in the Yale Law Journal entitled "The Amazon Antritrust Paradox" [3]. Khan argued that "… the current framework in antitrust – specifically its pegging competition to 'consumer welfare,' defined as short-term price effects – is unequipped to capture the architecture of market power in the modern economy. We cannot cognize the potential harms to competition posed by Amazon's dominance if we measure competition primarily through price and output."

Predatory pricing, where the dominant company prices its goods below cost, used to be easier to spot and perhaps less common because, well, what company would choose to lose money? But according to Khan, "… current doctrine underappreciates the risk of predatory pricing and how integration across distinct business lines may prove anticompetitive." In the online context, investors often reward the pursuit of market share over profits. Add to this the weird reality that the underpinnings of the web itself become the infrastructure for competition, and the deeper you go with controlling the infrastructure, the more power you have.

These legal arguments are quite fascinating to me (a Linux guy raised by a law professor) and to the New Brandeis Movement of legal scholars who are attempting to redefine antitrust [4], but the question is, will this new approach be enough to sway judges and juries? We will start to see the answer early next year when the Amazon case goes to trial.

Joe Casad, Editor in Chief