Last week, Project DisCo covered the recent “Economics Day” hearing in the FTC’s case against Amazon. The agency, once again, struggled to define what market Amazon has monopolized, a basic requirement to prove Amazon has engaged in anticompetitive behavior.

The FTC is Still Unsure About How it Defines Amazon’s Market

Despite nearly six years of investigation, the agency has yet to clearly establish who Amazon competes with. After arguing for more than a year that Amazon competes in the narrowly defined “online superstore market” for consumers and “online marketplace services market” for third-party sellers, the FTC walked back these claims in the hearing. The agency even admitted it was “possible Amazon might not be competing against anyone in those [markets], leaving an open question of what relevant market definition the agency now prefers.”

Real-World Market Share Reveals Amazon’s True Competition

In reality, Amazon competes across retail, with consumers interchangeably shopping at Big Box stores, online marketplaces, Direct To Consumer (DTC) websites, social shopping channels and more. Consumers seek out several methods of shopping even within certain channels – for instance, a customer who buys online but picks up in store is shopping both on and offline. The FTC’s argument that Amazon competes in an artificially narrow market with other “online superstores” that the agency defines as just three other companies is not verified by experience or data. In contrast, studies show there is strong competition between online and offline shopping channels. Given this wide variety of choices, it is no surprise that Amazon accounted for only 4% of retail sales in the US in 2023.

Similarly, when the FTC asserts that Amazon lacks competition in “online marketplace services,” they ignore the many small and medium-sized businesses that also sell across multiple platforms. Independent sellers typically sell in multiple channels, both on and offline. A recent survey found that the average small business retailer utilizes a combination of three e-commerce and two other (primarily in-store) sales channels, and 79% of survey respondents said e-commerce sales created opportunities to get their products into physical stores. Besides this, over 22 Fortune 500 companies indicated that Amazon was a direct competitor in their 10K statements. The FTC’s narrow market definitions fail to capture this reality, raising doubts about the accuracy and strength of their case.

Unanswered Questions as the Case Proceeds

The FTC cannot both allege that Amazon is a monopoly and decline to define what market it is that Amazon monopolizes. 

To read DisCo’s coverage of the case, read here. For more information on Amazon’s case, read here, here, and here.