In the name of providing consumers access to lower prices, District of Columbia Attorney General Karl A. Racine has launched an antitrust lawsuit aimed at Amazon. Strangely, if Racine's lawsuit were to succeed, the result would be that Amazon would show consumers…higher prices.
Racine's suit alleges that Amazon is engaging in anticompetitive behavior by barring third-party sellers from selling at lower prices on their own websites through a policy that amounts to a "most-favored nation" clause in the third-party seller agreement, leading to higher prices on other sites.
These sorts of clauses are a favorite target for modern antitrust hawks, and there's a lengthy section about Amazon's use of these sorts of policies in the giant House Antitrust Report released by Democrats on the Antitrust Subcommittee last fall. That report was a 400-page compendium of complaints about seemingly every minor business practice by a large tech company. Yet even that report, with its maximalist view of antitrust regulation, notes that such clauses are "not inherently anticompetitive"—before, of course, alleging that Amazon's use of them is.
It's true that Amazon used to explicitly bar sellers from charging lower prices elsewhere, but that policy ended in 2019 and was replaced with a less strict agreement known as the "Fair Pricing Policy."
The Fair Pricing Policy allows sellers to set their own prices, but it also allows Amazon to respond by removing the seller's listing from the Buy Box. The Buy Box is the main price you see on an item's sale page, so it's the one that most consumers pick, even when there are multiple sellers selling the same item. In many cases, it shows the lowest price for the item. Obviously, sellers work hard to get their listings into the Buy Box and adjust their pricing accordingly. But it's also true that you can click through to see other listings at other prices.
Vendors who sell through other outlets have objected to this arrangement, however, with one telling Wired that after putting up items for sale on non-Amazon sites at lower prices, they found their products were in some cases no longer in the Buy Box. "You could still buy the product," he explained, "but it was an extra click."
In some ways, that's the crux of the issue: a single extra click. That the attorney general for the District of Columbia has launched a major suit over that extra click shows how nitpicky a lot of modern antitrust activism is. Page through last fall's House antitrust report, and it quickly becomes clear that a faction of big tech-skeptical activists and policymakers on the left has decided that just about every modern business practice in the tech economy, no matter how minor or perfunctory, is an antitrust violation, and needs to be regulated, managed, or outlawed by federal overseers.
And, of course, a lot of that regulation would end up being counterproductive, potentially harming consumers rather than helping them. Sen. Elizabeth Warren's (D–Mass.) push to prohibit companies like Amazon from offering house-brand products, for example, would result in the elimination of a bunch of inexpensive, high-quality brands and subbrands for everything from HDMI cables to couches. In service of protecting consumers, Warren's antitrust crusade would end up making consumers worse off.
The D.C. A.G.'s suit could produce a similar effect. As an Amazon rep tells Recode, "The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law." The Buy Box is built to show Amazon customers the site's most appealing deals. It's a consumer-focused product. Upending that system, as this suit aims to do, would result in customers seeing higher prices and worse deals on the site.
The new suit against Amazon is typical of so many of today's antitrust pushes in that it's both nitpicky and counterproductive. But it's also a portent of things to come. As Elizabeth Nolan Brown reports in the cover story for the latest issue of Reason, the new antitrust crusaders on both the left and the right are determined to use—or abuse—antitrust law to pursue a wide array of preexisting political agendas. And there's a large contingent of policymakers and politicians who don't seems to care if consumers are harmed in what is supposedly a battle to protect consumers.