Mod 15 Case Analysis

Read the following excerpt byLina M. KhanfromThe Yale Law Journal(Links to an external site.):

"Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. Although Amazon has clocked staggering growth, it generates meager profits, choosing to price below-cost and expand widely instead. Through this strategy, the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses that depend upon it. Elements of the firm's structure and conduct pose anticompetitive concernsyet it has escaped antitrust scrutiny."

Ms. Khan then makes a couple arguments why Amazon may be in violation of antitrust laws:

1. The economics of online platform markets create incentives for companies to pursue growth over profits, a strategy that investors reward. It is therefore highly rational for online companies to engage in predatory pricing (as Amazon does).
2. Online platform companies serve as critical intermediaries and therefore can integrate across business lines in ways that allow them to control the essential infrastructure on which their competitors depend. This dual role allows them to exploit the information they collect on companies using their services to undermine them as competitors. For example, with Amazon now operating as a merchant (Amazon Pay) for a large percentage of online purchases, they can learn about their competitor's costs and margins and develop strategies to defeat them.

Ms. Khan then notes, "It is as if Bezos charted the company's growth by first drawing a map of antitrust laws, and then devising routes to smoothly bypass them."

Is Amazon in violation of anyantitrustlaws? Is Ms. Khan correct that Amazon needs to be regulated further under antitrust frameworks?

Use theIRAC method of analysisfor your response.