Amazon goes to the dogs
Something strange happened to Amazon in 2021 but perhaps it's just pandemic effect and not a break in its monopoly power over vendors
In a city without watchdogs the fox is the overseer.1
In May of 2021 I wrote about the lawsuit filed by Washington D.C. Attorney General Karl Racine against Amazon, alleging it was using monopoly power to pressure its third-party vendors.2 Judge Hiram Puig-Lugo dismissed the lawsuit in March 2022, saying Racine had failed to state an anticompetitive effect.
About a month later, Racine asked the court to reconsider its oral dismissal of the case. The Department of Justice’s antitrust division even weighed in to support the appeal writing in a statement of interest that the court erred in its dismissal.
If left uncorrected, the Court’s ruling could jeopardize the enforcement of antitrust law by improperly raising the bar on plaintiffs challenging anticompetitive contractual restraints in the District of Columbia.
The DC court rejected the request anyway. District of Columbia Attorney General Karl Racine has now filed a formal notice of appeal in his antitrust lawsuit against Amazon.com Inc..
I am also working on an article for the Chicago Booth Review about the state of antitrust and monopoly power regulatory activities and I have been reading some great books and papers on the subject to provide background.
Dave Dayen’s Monopolized: Life in the age of corporate power is the only one that mentions the Big 4 audit firm oligopoly!
Matt Stoller’s Goliath: the 100-year war between monopoly power and democracy, and
Zephyr Teachout’s, Break'em up: Recovering our freedom from big ag, big tech, and big money, are also great reads if you want to catch up on this topic.
A paper that just came out in NBER by Filippo Lancieri, Eric Posner, and Luigi Zingales, The Political Economy of the Decline in Antitrust Enforcement in the United States, was also very helpful and provided some ideas for writing I’d like to do on the audit industry.
Finally, on the subject of Amazon, FTC Chair Lina Khan’s paper written while she was still a law student, in 2017, “Amazon's antitrust paradox,” in the Yale law journal is a must read.
I’ve also been working on materials for my Wharton MBA students this term and put together a homework assignment on Amazon's statement of cash flows.
A weird wild thing happened at Amazon in 2021. Someone had asked me about the possibility of this over a year ago and it happened!
“Do you know what it is?” I asked on Twitter and began a lively discussion.
Is it possible for Amazon’s free cash flow metric to turn negative for the full year 2021? What will happen in 2022, quarter by quarter?