US Looks At Breaking Up Amazon
Why the FTC Is Looking At Taking on the Tech Behemoth
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Here’s another thing you can blame on the heat wave: rising gas prices. Michigan, Florida, and other states are seeing their highest prices of the summer as record temps slow refinery production.
Analysts for GasBuddy warn another heat wave and a bad hurricane season could push national prices above the $4 mark.
BTW— We’re also still awaiting another Trump indictment, which could come down as soon as today. You’ll hear from us when it does.
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🎙The Mo News Podcast: Talking about two new studies about alcohol usage; the death of the actor who played Pee Wee Herman; and what to expect in Apple’s next iPhone.
🗞 US GOVERNMENT TAKING ON AMAZON
There is an epic government vs. Big Tech battle brewing, and it could play out over the next few years. The U.S. Federal Trade Commission is preparing to file an antitrust suit against Amazon that could one day lead to a breakup of the $1.4 trillion technology conglomerate.
The case would rank among the most famous and largest in American history, including Standard Oil, AT&T, and Microsoft.
KEEPING BIG TECH IN CHECK
The case could be launched as soon as this month, and would be one of the Biden administration’s most aggressive and high-profile efforts to tame the power of tech giants. The FTC has reportedly collected millions of documents from Amazon and third parties over the last three years to build its case.
Sources tell Politico these are the specific practices that the U.S. government will target in its lawsuit to fracture Amazon:
Rules requiring its vendors to offer their lowest prices on Amazon, not allowing lower prices on competing sites;
Policies that pressure merchants into using Amazon’s logistics and advertising services;
Amazon Prime, which the FTC fears is dominating the market share with its bundle, including books, music, and video streaming
The FTC has zeroed in on the company in recent months:
Amazon was recently forced to pay a $30 million settlement for a pair of lawsuits involving its Ring doorbell cameras and Alexa smart speakers made for kids.
The FTC is investigating Amazon for making Prime unnecessarily difficult to cancel and the company’s purchase of robot vacuum maker iRobot.
WHO’S CALLING THE SHOTS AT THE FTC?
FTC Chair Lina Khan, a longtime big tech skeptic who beefed up her team leading the probe into Amazon not long after she took the reins. She’s hoping to cement her legacy with what would be a career-defining lawsuit against Amazon.
🧠 Background: Khan first came to prominence in 2017, while she was still in law school, over a paper she wrote arguing Amazon was a monopoly that needed to be regulated. That’s one of the reasons Amazon has argued that she should recuse herself from this case.
TRACK RECORD
This isn’t the Biden admin’s first rodeo when it comes to tackling high-profile mergers— though it has a mixed record:
The FTC lost its bid to block Microsoft’s $69 billion purchase of Activision in July.
It also recently lost a case to block Meta’s acquisition of a popular virtual reality app.
The slew of recent losses is putting pressure on the FTC to bring a successful case against Amazon— and it knows that in order to succeed, the it needs to thoroughly prove how Amazon's business practices break century-old antitrust laws.
AMAZON’S INFLUENCE
Looking for cloud computing? Amazon has it. Looking for an ad agency? Amazon’s got you covered. Need to go grocery shopping? Amazon will deliver Whole Foods right to your doorstep. How about a film studio? Yep, Amazon owns that too.
And check out this stat that Amazon announced yesterday: it can have your order ready for same-day delivery in just 11 minutes.
So how dominant is too dominant? That’s what the FTC wants to find out.
But despite the government’s concerns about Amazon’s size, it actually ranks 5th on the list of the world’s largest companies by market cap:
Apple: $3.09 trillion
Microsoft: $2.49 trillion
Saudi Aramco: $2.09 trillion
Alphabet (Google): $1.68 trillion
Amazon: $1.37 trillion
✔︎Mo News Reality Check: This is a challenging case and could take several years, over multiple administrations.
While the headline here is sexy, and there are a lot of people who’d like to see Amazon broken apart and more competition, Amazon has a huge legal team and has been preparing for this battle for years. And, even if the FTC is successful and can break up Amazon, remember the case of AT&T. The government broke it up for being too big in 1984. Over the last few decades, it managed to put itself back together again and become even bigger than before.
⏳ SPEED READ
🚨NATION
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📱BUSINESS & TECHNOLOGY
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🎬 SPORTS & ENTERTAINMENT
📌 Paul Reubens Dies: The actor best known for playing Pee-wee Herman died Sunday night after a private bout of cancer. He was 70. (VARIETY)
📌Angus Cloud, actor from Euphoria, dies at age 25 (AP NEWS)
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📌 Cardi B reportedly asked concert crowd to 'splash' her with water amid microphone throwing incident; fan files battery charges. (INSIDER)
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🗓 ON THIS DAY: AUGUST 1
1944: The final entry was recorded in the diary of Anne Frank, the Jewish girl who spent two years in hiding during the Nazi occupation of the Netherlands. The Gestapo would find Anne and her family, and transfer them to Nazi death camps 3 days later.
1981: 'Jessie's Girl' by Rick Springfield reached #1 on the Billboard Hot 100
BACK STORY: What is this song about? Springfield was taking an art class with a friend Gary and his girlfriend. He had a crush on the girlfriend. Springfield initially wanted to use Gary’s name, but instead decided to go with Jessie.
1987: American boxer Mike Tyson defeated Tony Tucker and was unanimously recognized as heavyweight champion.
1996: American author George R.R. Martin published ‘A Game of Thrones,’ the first installment in his hugely popular fantasy series ‘A Song of Ice and Fire’.
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