FTC’s ‘Ideological Crusade’ Is Very Bad for U.S. Small Businesses

By SBE Council at 17 September, 2023, 11:22 am

by Raymond J. Keating –

Government regulators “throwing the dice” on an ideological crusade? What could possibly go wrong?

That’s what the Federal Trade Commission’s (FTC) attack on Amazon amounts to in the end. And its previous (and likely continuous) attacks on U.S. technology leaders and big companies that plan to merge with, or acquire, smaller startups.

In a MoneyWatch article at CBSNews.com about the FTC, under the leadership of Lina Khan, having its sights set on breaking up Amazon, the following observation was made: “For FTC Chair Lina Khan — who first came to prominence while still in law school by writing a paper arguing that Amazon is a monopoly — an effort to fracture the company would amount to a career-defining throw of the dice.”

The article continued: “Of late, meanwhile, the FTC has lost battles to block high-profile mergers, including Microsoft’s $68.7 billion purchase of Activision and Meta’s takeover of VR startup Within. ‘The point of her article was that traditional antitrust, in the last 40 years, is a very awkward fit for addressing competitive concerns with Amazon, so it kind of makes sense that the FTC has struggled to bring the case,’ said Rebecca Haw Allensworth, associate dean for research at Vanderbilt University Law School.”

So, in essence, President Biden appointed an ideologue to lead a federal agency who wishes to distort federal regulatory actions, law and interpretations to fit her views that are devoid of any economic common sense.

This FTC crusade against Amazon is another glaring signal from the Biden administration and its appointees that starting up and building a business into a global leader will only draw the wrath of politicians and government. For good measure, a basic understanding of economics makes clear that entrepreneurs, businesses, workers and consumers are deeply intertwined in our economy, and therefore, government actions taken against large businesses will have consequences for consumers, and for the small businesses that are customers of those large businesses as well as suppliers to and partners with such businesses.

Make no mistake, the small businesses that partner with Amazon and use its platform to expand opportunities and sales are under assault by the FTC as well. Consider that, as Amazon has reported, “more than 60 percent of sales in Amazon’s store come from independent sellers – most of which are small and medium-sized businesses.”

As SBE Council reported in its latest “Small Business Check Up Survey,” regarding the fallout from FTC antitrust actions against Amazon, 79 percent of small businesses using Amazon’s services expect a negative impact for their enterprises.

The contrast between small businesses owners seeking new and improved ways of reaching customers, and regulators like the FTC effectively seeking to undermine U.S. entrepreneurs and businesses as they work to drive sales and revenue, is quite stark – indeed, dramatically so. And while the courts seem to be doing a solid job at reining is Khan’s outdated and distorted view of economic dynamism and opportunity, Congress needs to continue to keep Chair Khan in check through regular oversight hearings.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist and The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist.