Jeff Bezos made his fortune on a really big idea: What if a retailer did everything it could to make customers happy?
His brainchild, Amazon, fueled by power, sold as many items as possible at the lowest possible price and delivered them as quickly as possible. The result is that $40 of every $100 spent online in the United States goes to Amazon and Mr. Bezos is worth $150 billion.
Lina Khan made her reputation with a very different idea: what if pleasing the customer wasn’t enough?
Low prices, he argued in a 95-page article. amazon exam in the Yale Law Journal, can mask behavior that stifles competition and undermines society. Published in 2017, when he was still a law student, it is already one of the most important academic articles of modern times.
These two very different philosophies, each driven by an outsider who isn’t afraid to take risks, finally have their long-awaited showdown. The Federal Trade Commission, now led by Ms. Khan after her surprising rise from political pundit to political player, filed a lawsuit against Amazon in federal court in Seattle on Tuesday. The lawsuit accused Amazon of being a monopolist that used unfair and illegal tactics to maintain its power. Amazon said the lawsuit was “factually and legally incorrect.”
Bezos, 59, is no longer in charge of Amazon on a day-to-day basis. He handed the CEO reins to Andy Jassy two years ago. But make no mistake: Bezos is the CEO of Amazon and he owns more shares in the company than anyone else. It is his innovations, carried out over more than 20 years, that Ms Khan is challenging. The FTC complaint cites it repeatedly.
Silicon Valley spent the summer paralyzed by the prospect of Elon Musk and Mark Zuckerberg literally fighting each other, even though the odds of this actually happening were close to zero. But Khan and Bezos are a real thing: a court showdown that could have implications far beyond Amazon’s 1.5 million employees, 300 million customers and $1.3 trillion valuation.
If Khan’s arguments prevail, the competitive landscape for technology companies will be very different in the future. Big antitrust cases tend to have that effect. The government achieved only a confusing victory in its attempt to take over Microsoft 25 years ago. However, that still had enough force to distract and weaken a much-feared software empire, allowing 1,000 startups, including Amazon, to flourish.
It is largely due to Khan, 34, that imposing major changes on the retailer is even conceivable. After spending a few days interviewing her and those around her for a profile of her in 2018, I thought I understood Mr. Bezos because she was so much like him. Very few people can see possibilities that others don’t and work successfully to achieve them for years, getting others to join them along the way. But these were attributes they both shared.
“How does change occur in history?” asked Stacy Mitchell, an early Khan ally who is co-executive director of the Institute for local self-reliance, a research and advocacy group that promotes local power to fight corporations. “Lina has captured the imagination in a way that has allowed the reform movement to engage a broader group of people.”
Khan and Bezos were even similar in their silence. For years, every article about Amazon included the phrase “Amazon declined to comment,” another form of scrutiny. Likewise, Ms. Khan never voluntarily gave me any personal data, even if she was inconsequential.
Amazon and the FTC declined to comment for this article.
The improbable saga of Bezos long ago entered the realm of myth. He spent his childhood summers on his grandfather’s ranch in West Texas, wanted to be a theoretical physicist but became a Wall Street analyst. He had no retail experience. He was interested in ideas, not things.
Amazon was not the first online store; It wasn’t even the first online bookstore. He spent a lot of money foolishly and kicked out many employees mercilessly. The entire company almost failed in the dot-com crash of the early 2000s. But the media was fascinated, customers liked it, and that gave Bezos room to run.
A former Amazon engineer once memorably described Bezos as doing “Ordinary control freaks look like stoned hippies.” A company that posts “attendance reminder” signs in bathrooms to tell warehouse workers they will be “reviewed for termination” if they mess up their time is a company with overwhelming ambition.
Reformers are like entrepreneurs: they too fight against reality, trying to make room for their vision of how things could improve. Khan’s journey to confront Amazon in federal court is, in some ways, an even less likely story than Bezos’. And so, like Bezos in the early years of Amazon, she has become a fascinating figure.
The daughter of Pakistani immigrants who came to London, Ms. Khan had the natural instincts of a good journalist. At Williams College, where she worked on the school newspaper, a friend of hers described her as especially interested in understanding power, particularly the way she hides herself to seize more power. She was in her early 20s when she wrote her article about Amazon, about the age Bezos was when he left his job on Wall Street to drive with his wife at the time, MacKenzie Scott, west toward Seattle and their destination.
Antitrust law was the traditional tool used to rein in companies that became too powerful. Antitrust laws played an important role in the 1890s, ushering in the Progressive Era, and again in the 1930s under the New Deal. But in the early 1980s, antitrust laws were at their lowest ebb. The so-called consumer welfare standard reduced antitrust to one issue: the price customers paid. If the prices were low, there was no problem.
The Microsoft case was important and influential, but it was largely an aberration. In the early years of this century, the prevailing laissez-faire philosophy allowed not only Amazon but other startups to grow much faster than they would have otherwise. Facebook and Google charged users nothing and were allowed to earn their way to mastery. six of the eight most valuable American companies They are technology companies, seven if Tesla is considered a technology company.
The government was slow; Silicon Valley was fast. The market would decide the fate of corporate empires. In 2015, when Khan was entering law school, almost no one was interested in promoting competition through government intervention. Criminal justice reform, environmental law, immigration — those were the topics that attracted students. She opted for antitrust law, practically alone.
Anyone with a radical idea in Washington faces so many obstacles that it’s no surprise this happens so rarely. When Ms. Khan was nominated to chair the FTC in 2021, Amazon complained that she was biased.
“She has argued on numerous occasions that Amazon is guilty of antitrust violations and should be dissolved,” the company wrote in a 25-page petition calling for Ms. Khan to be recused from any trial on the matter.
The logic: if you are critical of a company, you cannot be allowed to approach it as a regulator. Ms. Khan survived this challenge, but it was only her first. To go against the live-and-let-live attitude of many bureaucrats requires relentless determination.
A hostile media is another obstacle. Dozens of editorials, opinion essays and letters to the editor from the Wall Street Journal have criticized Ms Khan for the past two years. They asked Congress to investigate herHe argued that he didn’t understand that. monopolies were really good and accused her to let people die blocking the merger of a pharmaceutical company.
Then there is the lobby. Amazon spent $10 million in the first half of this year, five times the 2013 level. gave money to hundreds of trade associations and nonprofits in 2022, some of which issue pro-Amazon reports without making their funding public. Under the “know your enemy” philosophy, Amazon has also hired Khan’s former FTC colleagues.
Going to court offers little relief. Well steeped in decades of consumer welfare standards, the judges are not particularly encouraging of Ms. Khan’s arguments. Cases against Meta, Facebook’s parent company, and more recently against Microsoft, have failed. The Amazon case incorporates aspects of the consumer welfare standard, which could make it more acceptable in court.
That’s a formidable amount of opposition. Even some of his ideological enemies are impressed that Khan is having such an impact. By sheer intellectual force, he is opening a conversation about how companies are allowed to behave.
“Five years ago, you would have been laughed at if you challenged the consumer welfare standard,” said Konstantin Medvedovsky, a former antitrust lawyer who is now a hedge fund analyst. “Now serious people make that argument at major conferences and are taken seriously. That is Lina’s triumph.”
Medvedovsky is not very sympathetic to Khan’s law enforcement agenda. He was one of the critics who mocked the reform movement as “hipster” antitrust. Still, he said, “it’s hard not to feel a little awe.”
