This piece originally appeared in RealClearMarkets.
Five years after Lina Khan declared Amazon to be a monopoly in the Yale Law Journal, the Chairman of the Federal Trade Commission has finally got her wish. Last week, the FTC unveiled its much-anticipated case against Amazon, claiming that the e-commerce giant has abused its market position to stifle competition and increase prices. But, as with other recent cases against Big Tech, Khan’s ideological crusade against bigness has required the Commission under her direction to bend over backwards and concoct market definitions that defy reason.
Market definitions stand at the heart of antitrust litigation, acting as the lens through which antitrust enforcers discern competitive landscapes. These definitions determine the boundaries of competition and the relevant players; legally dictating who competes with whom. It can be difficult to draw a bright line between markets, especially for online industries, where traditional boundaries often blur. While the nature of online industries requires antitrust enforcers to define the new boundaries for novel, digital markets, narrow or static definitions have led to misplaced interventions, potentially stifling innovation and entrepreneurship.
We first saw this phenomenon two years ago with the FTC’s case against Facebook, which alleged that Facebook had used anticompetitive means to maintain a social media monopoly. But the FTC could not reasonably assert that Facebook had a monopoly over the whole of the incredibly diverse market for social media. Instead, it claimed Facebook held a monopoly over the market for “personal social networking services.”
