Amazon vs. Regulators vs. Walmart

Jason Del Rey is the author of Winner Sells All Amazon, Walmart, and the Battle for Our Wallets. Matt Stoller is the director of research at the American Economic Liberties Project, and writes the Big newsletter on Substack. Ranjan Roy is the author of Margins. The three guests come together with host Alex Kantrowitz for an in-depth discussion about Amazon's challenges from government regulators and Walmart, and whether government action against the company could have an impact. --- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. For weekly updates on the show, sign up for the pod newsletter on LinkedIn: https://www.linkedin.com/newsletters/6901970121829801984/ Questions? Feedback? Write to: [email protected] Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Alex Kantrowitz?

  This episode is brought to you by Genesis. What does it actually take to put Agentic AI to work across an entire enterprise? I recently spoke with Genesis chairman and CEO Tony Bates about why orchestration is emerging as a competitive advantage in customer experience and what companies need to get right in the AI era. Then I sat down with Adam Mitchell, head of enterprise business solutions at Voya Financial, to go inside a large-scale Agentic CX transformation, including the business decisions, trade-offs, and lessons along the way. You can watch both conversations now on my YouTube channel today. It's never been more challenging to get frontier compute. How do you know where to look, who to trust, or how much to pay?

• 0:43Alex Kantrowitz?

  Akash is an open cloud that provides easy access, flexibility, and peace of mind. That's how companies like Razer were able to cut their inference cost by 15 times. Visit akash.network/alex for a free consultation. That's akash.network/alex for a free consultation.

• 1:09Alex Kantrowitz?

  Welcome to Big Technology Podcast Friday Edition, where we break down the news in our traditional cool-headed and nuanced format. We have a packed show for you today in a packed week of news. Amazon, well, it's in the sights of the FTC. The big one might be coming for the company. It's also, right now, under threat with another lawsuit from the Federal Trade Commission about its practices with Prime. First of all, Ron John Roy is here with us as always on Fridays. Welcome, Ron John. This is going to be a fun one. We also have Jason Del Rey. He's the author of the brand-new book Winner Sells All: Amazon, Walmart, and the Battle for Our Wallets. Welcome, Jason. Thanks for having me, guys. Thanks for being here. Matt Stoller is here. He's the Director of Research at the American Economic Liberties Project,

• 1:54Alex Kantrowitz?

  and he also writes a great newsletter on Substack called Big. Welcome, Matt.

• 1:58Speaker 01

  Thanks for having me.

• 1:59Alex Kantrowitz?

  Thanks for being here. This is a dream panel, honestly. Dream group of folks to talk about some massive, massive stories. So why don't we just start with the first one, which is that the big one, right? Which is how Bloomberg titled it. The big case against Amazon that it seems like Lina Khan at the FTC has been rearing up, ready to bring. It looks like it's on its way. It might even be here before August. Matt, you are the one who's been following the antitrust stuff, you know, probably more than than most in the world. What is going to happen?

• 2:32Speaker 01

  Oh, stop it, you. Oh, you. He wrote the book.

• 2:36Alex Kantrowitz?

  Yes, sir. What is the big one?

• 2:39Speaker 01

  So, right. So, one way to think about what's happening is you have this person, Lina Khan, at the Federal Trade Commission, who's just got it out for Amazon and wants to do something to rein in their power. And then that's not the way that I see things. There are a series of arguments from a lot of different people in the economy and a series of legal actions to address what are basically practices, unlawful practices that harm consumers and third-party sellers and companies that produce goods and sell online and rival retailers and fundamentally communities in America. And those unlawful business practices have to be distinguished from the awesome stuff that Amazon does as a, as a new and innovative

• 3:24Speaker 01

  retailer. So, there are a couple, there are a bunch of different antitrust suits from state, basically state attorneys general and then private plaintiffs that talk essentially about Amazon Prime and some of the unlawful business practices around Amazon Prime that end up harming consumers in different ways. The FTC suit, which Bloomberg reported, so I don't, you know, we don't know if it's, if that's the extent of the suit. There might be stuff on cloud, there might not be, there, the suit might look different. But it looks like the FTC suit is going to be fairly similar to some of the other antitrust suits that have come out of Washington State, Washington DC, some private plaintiffs, and I believe in California.

• 4:05Speaker 01

  And what they essentially say is that Amazon Prime, in order to finance two-day shipping, right, and/or same-day shipping and keep prices lower than everywhere else, right? You know, how do they do that? They're not magicians, right? They have some good logistics technology, but it doesn't make sense that you would be able to get a good or service from Amazon plus free shipping and not be able to find it anywhere else online for cheaper. Why, how are they able to do that? Well, the answer is they sign, they say if you want to sell through Amazon, right? If you want to sell particularly to Prime members, and remember, there's 150 to 200

• 4:46Speaker 01

  million Prime members, so that basically means if you want to sell online, period, then you have to keep your prices elsewhere through other non-Amazon channels, including walmart.com or other, you know, other, um, other retail channels, including your own website. You can't sell for a cheaper price than is listed on Amazon to Prime members. And this pushes up prices everywhere in the economy. And so while to the consumer, it looks like Amazon Prime is the best deal, right? It's the cheapest price. That's only because Amazon has prohibited other firms who might be able to sell it

• 5:29Speaker 01

  cheaper or more efficiently or in through other, you know, differentiated ways prohibits them from doing it. And that's the practice that these antitrust lawsuits have attacked, and it looks like that's the practice that the Federal Trade Commission is going to attack.

• 5:46Alex Kantrowitz?

  Well, Jason. There are a few other things. Yep, Jason, your book is all about competition between Amazon and Walmart. It's not like Amazon is competing against a lightweight here. I mean, you have Walmart, which is the biggest commerce company, you know, in the globe.

• 5:58Speaker 01

  Yep.

• 5:59Alex Kantrowitz?

  So how, I mean, what do you think about these allegations? And if they're true, why hasn't Walmart been able to punch back?

• 6:07Speaker 02

  Yeah, so I mean, I I think just in recent years Walmart's

• 6:12Speaker 02

  finally been able to at least hold their own a little bit more and they, you know, they have in the past. I I outlined in the book some anecdotes about sort of pricing war between the two companies where Walmart's going and squeezing, you know, competitors, uh, sorry, squeezing brands that are selling on Amazon and vice versa because of Amazon's algorithm driving down the price. And so there's been, you know, in recent years Walmart's gotten their act together a little bit, but the history of how Amazon got ahead of Walmart, you know, who many thought would never be, you know, uh, upended, you know, has a couple of different reasons for it. So one is, you know, you could make the argument as some do that, um, you know, government was a sweep at the wheel for a long time and anti, as as it pertains to antitrust.

• 6:58Speaker 02

  Amazon also had, you know, the tax advantage online for many years where uh, they were not collecting sales tax tax from customers and so not charging sales tax, which which some argued, uh, you know, was just an inherent pricing advantage. Um, but really Prime was, you know, the key piece of the Amazon machine or what they would call the flywheel for many, many, many years. And so if you attack Prime as FTC did in their, in the lawsuit in the past week and and in some ways it seems like will in the antitrust suit. You know, a whole lot of, a whole lot could change about Amazon's advantages.

• 7:39Speaker 03

  Well, uh, on this, cause Matt, you'd mentioned the price goes up elsewhere in the economy. Like, how do we differentiate? Prime from a consumer standpoint, obviously people generally seem to love it. You get your video, you get two day shipping, you get everything. So how does the case lay out how this actually negatively affects the economy as a whole? When every individual consumer seems to be pretty happy.

• 8:04Speaker 01

  Right, so it's a great question. So first of all, the suit that Jason's referring to that the FTC filed a week ago is about how it's like really hard to unsubscribe from Prime. And it's a consumer deception claim. As they say, it's sort of, Amazon sort of tricks people into signing up for Prime in certain ways and then they make it, it's like, I don't know, six clicks and lots of different screens to like unsubscribe. So, and I think that that, the point, and there are internal discussions at Amazon about, they call it, I think, the unsubscribing process project Iliad after-

• 8:38Speaker 03

  It's a Homeric Odyssey to try to get out. That was incredible.

• 8:43Speaker 01

  It was, it's kind of hilarious. But it's just, I think it shows the importance of what Jason's saying. Prime is really important to Amazon, to the point where I think the FTC would claim they're deceiving users into cancelling it. So I think, now, you may not agree with that, but like, I think that the premise that people really like it is kind of undercut by the fact that Amazon makes it really hard to quit. So clearly, people are cancelling and they are trying to prevent people from cancelling. But I think your broad point that people really like Prime is true. But the reason that they really like it is because they never see any alternatives because people, rivals have, except for, you know, Amazon, or except for Walmart, which

• 9:27Speaker 01

  has massive amounts of capital, no one, you know, no one else really can, is legally allowed, I think, based on Amazon's practices, to actually give a better, a better price or better service, right? It's like, if I have a widget and I'm selling it on Amazon and it say it costs $6 for me, you know, the price, and then it's $4 for me to use Amazon's fulfillment business to make sure that the shipping conforms to Prime standards, right? I can't break that out to customers and say it's, it's $6 for the product and then $4 for all of the fees that I have to pay to Amazon. I just say it's $10. And then

• 10:08Speaker 01

  everywhere else in the economy, maybe not in like retail stores, but everywhere else online, it's going to be at least $10. I could, if Amazon, and then if I, if I say, oh, it's actually $6 here plus, you know, $4 shipping, or if you want to get it for a little bit later-

• 10:26Speaker 01

  A dollar shipping or something. If I do that, then Amazon will not make that product accessible to Prime members. And so my business will get wiped out. And that's called a, they used to do that in contract. It was called a price parity agreement. Then the Senate wrote them and said, this looks illegal. And Amazon said, oh, we're not going to do that anymore. And now they just do it through algorithm. And so I think the reason that consumers love Prime and see it as a great service is that they don't know that they're getting a worse price. And instead, like, Amazon takes that $4, which is not just shipping, but also just about $100, $150 billion of extra cash for Amazon, and they pump it into

• 11:07Speaker 01

  all of these services, like music and movies and games and all of these things that nobody's actually trying to pay for themselves. And they just get this stuff that looks free.

• 11:18Alex Kantrowitz?

  Right.

• 11:19Speaker 01

  But in fact, it's not free. People are paying for it. They just don't know they're paying for it.

• 11:22Alex Kantrowitz?

  It is interesting, the way that the FTC is approaching this stuff. So last week, so we've talked a little bit about how hard it is to cancel Prime. And last week, I was like, all right, let me give this a shot. And I went and tried to cancel Prime, and it took me less than a minute. And when I tweeted about that, I'm like, what am I missing? Jason pointed out that they had actually made some changes, right? And they had done this in response to some of the action that they're getting from government, whether it's in Europe or in the US. And, you know, what is interesting, I think the main question about the FTC now is the unwillingness to compromise that they have with these companies, or the unwillingness to let them fix the problems and the desire to go ahead and sue no matter what. So this is coming from Bloomberg, where it talks about the compromises that

• 12:06Alex Kantrowitz?

  Europe's made. And the story says, well, Amazon could make a similar offer to the US market, kind of signaled opposition to such compromises, telling a Senate committee last year that the FTC would strongly disfavor such remedies. So Jason, you know, I'm curious, because again, like, you're looking at this from the competition element. You know, on your, you know, in your book, I'm curious, why do you think the FTC is so strongly in opposition to the companies taking moves to like, quote unquote, you know, self-regulate? And how do the companies feel inside? I mean, you're covering Walmart and Amazon in your book, right? These are the two companies that have like some of the most government scrutiny on them.

• 12:47Alex Kantrowitz?

  They're probably used to this type of stuff, but it does feel like there's a different regime, right? Regulatory regime in place. So how are they handling?

• 12:55Speaker 02

  I mean, I think Matt also would have some interesting insights on this, but my sense is we've gone decades with no action, right? And so to now put it in the hands of these companies and trust that they will self-regulate, I mean, just seems like beyond wishful thinking, just very naive. And I think-

• 13:20Alex Kantrowitz?

  But isn't there, isn't there a point where like it's not self-regulation, but it's bring the action, see how they respond, and then decide whether you're satisfied with that response or not?

• 13:29Speaker 02

  Yeah, I mean, I think it's, I think, I think some of it or a lot of it might also be about the optics and sending a message and, and we are here and we're not going away. I don't know what Matt thinks about that idea, but you're, you're talking Alex essentially, just to make sure I'm understanding, like, why not just settle like the FTC has with smaller companies with, you know, similar practices versus, you know, filing the suit?

• 13:53Alex Kantrowitz?

  Well, let's go back to that example I gave about the prime cancellation, right? Obviously, prime is a lot easier to cancel now than it was previously, yet the FTC is still bringing that suit. So I'm curious, you know, is it like more like, don't keep doing this, or we're going to punish you? Or like, what is the purpose in that, in that moment?

• 14:12Speaker 02

  Yeah, Matt, go ahead.

• 14:13Alex Kantrowitz?

  Yeah.

• 14:14Speaker 01

  Yeah. So I, I wouldn't, okay, so, so first of all, I think it's a, you know, I'm not totally sure. You might have had a, an easier experience canceling prime. That's not necessarily true for everyone. Amazon's very complicated and there's lots of, of, of, you know, they can personalize experiences.

• 14:31Alex Kantrowitz?

  I could have had the tech reporter flow.

• 14:35Speaker 01

  Who knows, right? But I think there's a, there's a really, there's a couple of important points in your story. First of all, Amazon changed their process because of legal pressure, right? Which is something that we see in general. They've also changed some of the ways that they handle third-party sellers in response to potential legal pressure on, from the FTC on this antitrust suit. They've reopened seller fulfillment and other antitrust suits. So you're already seeing legal pressure work, but one of the things to understand about Amazon is that it has engaged in extremely bad faith for a long time vis-à-vis regulators and, and pressure.

• 15:17Speaker 01

  So in 2018, Senate, Senator Richard Blumenthal wrote the, Amazon and said, "You have these price parity agreements. This seems problematic. It seems like you're raising prices on consumers." And Amazon said, "Oh, yeah, yeah, okay, we'll get rid of them." And they just lied, like they didn't, right? And you might think it's not a big deal to lie to the Senate, but...

• 15:37Alex Kantrowitz?

  No, I do not think that. Sure not.

• 15:39Speaker 03

  Do you think that, Alex?

• 15:40Alex Kantrowitz?

  No, no, would not, would not recommend that to anybody listening.

• 15:43Speaker 01

  I was, I was being passive aggressive. That's the way you do it.

• 15:47Speaker 03

  Actually, Matt, on that, you mentioned that they got rid of the, they said they're getting rid of price parity agreements, but then they kind of hid it within an algorithmic function, like they tried to use an algorithm as a cover. How do they get away with that? Or how does an algorithm provide you cover from like a specific contractual agreement? Or does it? And that's just the way they...

• 16:07Speaker 01

  It doesn't. It doesn't. You have to bring a lawsuit, right? I mean, that's the thing is it's like, they, you know, they just say, "Oh, well, we're not going to force you to, to, you know, give us the best price with a contract, but we're just not going to let you sell on Prime through, through the buy box if you do," right? And, and we're just going to hide it in an algorithm. That's the same thing functionally. It's just there's no document saying it necessarily. So that, you know, it just requires more investigation and evidence. So the other thing about Amazon, if you read the complaint on Prime, the subscription service one, it's pretty clear that Amazon repeatedly refused to honor document requests, lied about document requests, lied about their internal processes, and...

• 16:54Speaker 01

  Effectively, the reason the FTC was able to keep the case going is because Business Insider got a leak about how hard it was to cancel Prime. And then the FTC was like, they have been asking Amazon for documents. You're legally compelled to give documents to the FTC and Amazon just wouldn't. And then they lied. They're like, oh, there's nothing here. Then it came out that Business Insider, like, yeah, there are lots of documents. And so it's like, this is a great service and lots of consumers use it. But it's also like a, like an, almost an organized crime racket, right? Like, you can't lie to the government repeatedly without consequence.

• 17:35Speaker 01

  And so what the FTC is probably seeking with the Prime suit is not just some sort of remedies here beyond what they've already done, but also a cease and desist order, like a, an order that's set from a court that says you can't do this anymore. Because the thing is, is that if you compromise with these firms and you say, like a bad faith actor, like if it's a, you know, I think they, they compromise with Epic Games, right? And Epic Games said, oh yeah, we're not going to do like deceptive user interface anymore. And that's because Epic Games, you know, was willing to, to change their practices. Or lots of smaller firms, firms that just operate in good faith, give documents. Most firms do that. Amazon doesn't. They hire a bunch of people from the FTC and they go to war.

• 18:18Speaker 01

  They fund the Chamber of Commerce in, in DC to like, basically get attacks on Lina. I mean, they're, they're just trying to destroy the government. Like, that's what's really going on here. So, so they, so they engage in this bad faith and what the FTC is seeking is a cease and desist order so that if Amazon violates that cease and desist order, there are, there is real teeth that say the FTC has authority to really make changes to your business if you do not actually stop deceiving consumers. And with a potential compromise with a firm like that, if Amazon just says, oh, we won't do it anymore, we've already seen that they're willing to just like,

• 19:01Speaker 01

  Not not do what they said they were gonna do. So I think there's like a pretty good reason. I think it's a lot of what Jason said. It's like, there's been a hands up policy for a really long time. And these companies, the big ones, look at the law as a kind of suggestion, set of suggestions, rather than actually something to pay. And smaller firms don't don't do that. They pay attention to law and try to obey it. It's all it's like Amazon and a few of the big ones that don't.

• 19:24Alex Kantrowitz?

  That clarifies things for me for sure. Jason, like you have some very interesting stuff in your book that talks a little bit about Amazon's strategy at fighting the government. I mean, it's very fascinating. So for instance, you know, they will fight and try to dunk on politicians on Twitter. So I'm just kind of curious, like, you know,

• 19:43Speaker 02

  Didn't go well.

• 19:44Alex Kantrowitz?

  What what is going through the the company's head in in terms of this stuff? And, you know, do they have, I mean, what Matt is saying is pretty, pretty damning. So do they have any, like, what would be their argument against that?

• 19:57Speaker 02

  Yeah. So I mean, there are a couple of a couple of things at play here in recent years. One is, there is, I mean, and executives who are fans of the company would tell me that this, not just critics of the company, that at the very highest level of the company, there is a complete bubble around the leadership team in a way where, and I think part of it is how long they've been at the company, that they really believe they are just a force for good and like cannot accept really any valid criticisms without attacking it as conspiratorial or, you know, something along those lines. And, you know, a lot of that came from Jeff

• 20:39Speaker 02

  Bezos himself and the group of, you know, mostly men he's had around him over the course of the company's history. And so you you're referencing, you know, tweeting at, you know, snarky or adversarial comments at senators, I think, and and also congressmen, you know, that was back in, I'm forgetting, all my years are running together, but in the last couple of years, like, that was, as I reported back then, and then I think the Wall Street Journal added to my reporting. That was like Bezos being pissed that they were getting attacked too much and he, you know, he, he thought in an unfair way. And so I think the journal and they're reporting he and the

• 21:20Speaker 02

  former head of public relations, Jay Carney, former Obama spokesman, they like were crafting tweets themselves. I mean, it sounds ludicrous and it is ludicrous, but you know, so there's this, there's, there's like feeling that we are still, we, we are this young innovative company and like we're a force for good and like, these are all haters. Like that's, that's part of it. Another thing is, you know, they've long, they've always been combative with critics and I think there were some really smart folks internally who had experience in DC who were trying to force them into sort of a different path, not a path of like being walkovers when, when you

• 22:03Speaker 02

  think the government's wrong, but just, you know, not being sort of arrogant. And many of those folks, you know, either got pushed out or, or chose to leave because, uh, Amazon didn't seem to be learning any lessons from, you know, even a player like Walmart, which, you know, decade or two ago would at least pretend to listen to critics and, you know, sort of go on a listening tour, whether that was totally self-serving or not, you know, sort, sort of beside the point. But, um, anyway, so that those are some, that's some of, you know, the reporting I uncovered, um, you know, while writing the book and, uh, yeah, it, it doesn't seem like all that much has changed on, under Andy Jassy as CEO. Again, he's been at the

• 22:47Speaker 02

  company a really long time, but they, I think they made more enemies than they needed to in DC over the last couple of years with their approach.

• 22:56Speaker 01

  Can I just give like a quick anecdote to kind of confirm what Jason is saying?

• 23:00Speaker 02

  Absolutely.

• 23:01Speaker 01

  Because I think a lot of this is just, so, so two things. So they bought MGM, right? And then they like wrote down a lot of the values. It was a stupid acquisition. Um, and it's just like, that's just a bad business decision that they made. And no one's going to be held accountable for it internally. And that's the symptom of a giant bureaucracy that's just kind of a little bit out of touch. But the other one, and I think this is the kind of thing that really upsets people. And there's no defense to it, is there's a, there's a chemical called sodium nitrite, which is teenagers, it's like really useful if you want to commit suicide. Right. And so there was this trend where teenagers would go on Amazon and they would buy it if they wanted to kill themselves. And then Amazon's algorithm was like, hey, you, people who bought this also bought like this guidebook on how to kill yourself.

• 23:45Speaker 01

  And like all of these different tools. And it was just like them, just horrible. And so there's a plaintiff's lawyer who said to, you know, representing some of these families of, of kids who bought this and killed themselves, like that went to different online retailers and said, would you please stop selling sodium nitrite? And all of them did, except Amazon. And they were just like, it's our right to sell sodium nitrite. And they fought it legally. And they're still fighting like a lawsuit. Now there are like state proposed laws saying, you know, you can't sell sodium nitrite unless, you know, unless you're selling it to a business. And it's like, why are you doing that? Like, that's crazy, you know, to, to, you know, and, and, you know, you, the economies of scale work until they become diseconomies of scale.

• 24:30Speaker 01

  Like, it's not a good thing that it's really easy to like, get yourself a package of stuff that makes it easy for kids to kill themselves. So that's like the kind of thing, and there are like a lot of examples of that. And so that's the kind of thing that makes, that indicates that there's like a little bit of an out of touch vibe at the top of Amazon. But also it's gonna really upset people, you know, across the, across the aisle.

• 24:52Speaker 03

  Well, when you're obviously hearing terrible things like that, make it seem like, how come more people don't know about it and are aware of, you know, have a negative view of Amazon versus I get all my stuff in two days. How do you think the FTC is playing out their strategy in terms of kind of like combating the optics of Amazon is the greatest way to shop online? Already the way you laid it out is kind of interesting to me. It's like, Starting with the subscription FTC suit and basically making it clear that no, not everyone loves Prime and it actually is difficult to cancel and starting there, then going for the big one, seems to be kind of strategic in that way. But, but again, like I hear that, you know, Amazon is crushing its suppliers or, you know, being putting onerous terms on them.

• 25:36Speaker 03

  So I can get, you know, some giant package in 24 hours still doesn't necessarily turn me off. Like, like, how does Lina Khan battled that whole perception?

• 25:48Speaker 01

  Yeah, I mean, I think so. You have to look at it in a broader context and I'm not just saying that because that's an easy way to dodge a question when you say something like that.

• 25:55Speaker 03

  It is though.

• 25:59Alex Kantrowitz?

  Really about the broad context here.

• 26:01Speaker 01

  Yeah.

• 26:03Alex Kantrowitz?

  Let's take a step back.

• 26:06Speaker 01

  Let's take a step back and talk about something different.

• 26:10Alex Kantrowitz?

  The real issue is.

• 26:13Speaker 01

  Okay, we're gonna stop, guys.

• 26:15Speaker 03

  All right.

• 26:16Speaker 01

  The, um, there is a monopoly crisis in America writ large. Okay. And I think that's like where, where Lina Khan comes out of and also Jonathan Cantor, the Antitrust Division, and a lot of politicians at a state and local level, uh, and at a federal level, and Joe Biden, right? He just gave a speech on this last week. You know, there, there's consolidation everywhere and it's driving, uh, down wages. It's driving up costs in all sorts of areas like pharmaceuticals. I don't know if you've noticed, those are not cheap. And there's also all sorts of shortages and that's because you have similar dynamics within the pharmaceutical supply chain as you do with Amazon. Um, and you can see it. I, I do a lot of like writing about different monopolies. There's monopolies in everything from mail sorting software to, to cheerleading to, you know, you see an oligopoly in airlines right now, like United is a disaster.

• 27:01Speaker 01

  So, so there's a broader dynamic here, like too big to fail in 2008, nine, 10 is actually something that is a problem across the economy. I mean, not even to mention banking. So like, it's really easy to like, say, oh, Lina Khan is crazy and focus on her. And there's a lot of attempts to sort of personalize this. But the truth is Americans writ brought like writ large are upset with two, with big companies because they are causing a lot of problems. And we saw that very clearly during the financial crisis, but we keep seeing those problems over and over and over and over. And Amazon is a little bit of a pace setter here for these kinds of.

• 27:43Speaker 01

  Exploitation of loopholes, for example, like the tax, um, sales tax, which is where Amazon got its start with that advantage, predatory pricing, selling below cost, which we've seen, you know, Uber and Lyft do and destroy taxi markets everywhere. Um, the tactics that Amazon has pursued really define the modern economy. And so this case, um, whatever, you know, comes is really important, not just for Amazon, but for this broader, uh, broader monopoly power crisis. Okay. So with that, um, in mind, like, how do you make the case about, uh, a product and service that consumers broadly like? I mean, I think the answer is you can disaggregate the idea of, of flight, right? This great technology from the business

• 28:28Speaker 01

  practice of a baggage fee, right? People can understand those two things. I like to be able to fly places. That's amazing. I don't like getting nickel and dimed. And so I think that's kind of the core messaging challenge from the FTC. Like this is not anti-Amazon. This is about specific unlawful practices that cause problems for rivals who are trying to compete in a fair market. And there are, at this point, hundreds of thousands of people who have the experience of trying to use the Amazon marketplace, maybe millions at this point, uh, who understand at a core level that there's something rigged and unfair about what Amazon is doing. And I also think broadly speaking, while people do love Amazon,

• 29:11Speaker 01

  they also know that there's something dangerous about having a firm that is so big and so powerful and essentially unregulated. So that, I think there's a, there's a messaging challenge here, but I would move it a little bit away from the personalization here of Lina Khan and sort of recognize that it's a, there's a broader dynamic. She's, she's obviously a leader in this, but she's also a product of this broader dissatisfaction that we see with big, with big business in general.

• 29:39Alex Kantrowitz?

  Yeah. And another thing people really don't like is just like the revolving door between the, you mentioned, Matt, for instance, that Amazon has hired a bunch of people from the FTC. I mean, ex FTC employees and lawyers are all over big tech right now and the conflicts of interest go even deeper. So this is actually a story, this story just broke as we were about to go on air today, but, um, this is meta, but, uh, I think it's relevant to sort of what we're talking about where L'Oreal Panki, who's the FTC's designated agency ethics official, asked Lina Khan to recuse herself. From the Metta case, but she did that while owning between fifteen thousand and fifty thousand dollars in Metta stock. And I think people just do see this

• 30:19Alex Kantrowitz?

  this failure of of institutions in some ways, and they see like the revolving door and this type of stuff and and they they start to question like whether the government can be effective in this area. So I am curious. Jason, let's go to you. Like, do you think that we're talking a lot about FTC? Do you think the FTC or regulators in general really can cause can win these suits and can cause real change inside an Amazon or Walmart for that matter?

• 30:46Speaker 02

  I mean, listen, I was gonna add one other point, which is

• 30:50Alex Kantrowitz?

  Yeah, go for it.

• 30:51Speaker 02

  Just you were asking about like,

• 30:54Speaker 02

  I think you were kind of asking like if consumers love this service or this company, like, how do you how do you how do you make this government? How do you make a case against them and the sort of public sphere? And so I, you know, my book came out about ten, ten days ago, and I've been doing some local book chats, you know, one in my town at my library. I've done bookstores. And something came out related to my book, which was like, you know, people who who read the book said, wait, so like, if Walmart can't compete against, like, I love Amazon. But if Walmart can't really compete against Amazon, like, and I also hate Walmart, but like, what like, what gives like, and and so you see,

• 31:35Speaker 02

  I think if people do a little digging, like the they do, they can love a service and still, I think, as Matt was saying, be concerned about,

• 31:44Speaker 02

  you know, the power or how this is possible that this company upended this, what we thought was the unbeatable retailer. And so I don't know that that'll change consumer shopping habits, but I think I think there is a way to get through, you know, walk this line. Can the so and sorry, Alex. So your question was, can can the FTC be successful? Was that essentially?

• 32:04Alex Kantrowitz?

  Yes.

• 32:08Speaker 02

  I think if you believe, if you believe there's something really wrong and unlawful, you have to try. And that's, I think that's what we're seeing. And, you know, if you look to Europe, I'd be curious Matt's thoughts on this too. You know, some of the changes Amazon has been forced to make to its business practices just in the last, I don't know if it's been six months or a year since some action in, in Europe. You know, you have to think FTC has a shot here. Now, you know, the, the obvious question is how long does this take and what happens in the interim, right? And so that, that's, that's the big

• 32:48Speaker 02

  unknown for me is beyond whether this administration lasts, you know, beyond the next election, you know, what happens in a really dragged out lawsuit? And so I'm sure Matt's thought about it. I'm curious if either of you, you know, Ron, John, or Alex have, but I, you know, do you, can you win a five, seven year battle? You don't know unless you try, but that's sort of the big thing on my mind. And maybe I shouldn't be looking ahead that far, but I, but I can't help but.

• 33:22Speaker 03

  Well, I, I think, like, look at Facebook and Giphy, you know, it's not a huge transaction that got blocked, caused a lot of pain for Facebook. And Facebook is no longer acquisitive. They no longer, you know, have their entire strategy is just buy up whoever's a threat. So even these smaller things do seem to work. But I would be curious, because I get this a lot where, you know, like from friends, what is, why has the FTC and Lina Khan already not put a stop to big tech? Big tech valuations are up. God knows how much this year it looks like power is getting concentrated again. Like, are we headed in the right direction regarding antitrust to Matt?

• 34:02Speaker 01

  There's so many questions, um, and, and you're, you're forcing me to express my contempt for Europeans.

• 34:11Alex Kantrowitz?

  Oh, God.

• 34:12Speaker 03

  Oh, God.

• 34:13Alex Kantrowitz?

  The French, the French hate.

• 34:15Speaker 03

  Go for it.

• 34:17Speaker 01

  No, it's particularly the antitrust enforcer, Margaret Vestager, who is a lot more bark than bite. And I have a very specialized contempt for Europeans.

• 34:29Speaker 03

  No, no, lay, lay out the, lay out your bark.

• 34:32Speaker 01

  Well, they're just, you know, she just, she's just been saying, oh, we're dealing with big tech in Europe and we, the American, you know, back in the mid 2010s. And we're fighting Google and like they made zero change in the market structure of Google and Facebook in Europe. Because it's, it's like they don't actually want to enforce anything real. Um, I don't, I haven't looked exactly at what's going on there. I think it's probably a little bit better. There, but I'm not, I just don't think that they're serious about the laws that, you know, the GDPR didn't matter like there's, I don't think Europeans are particularly serious about addressing market power questions. They just want to pretend like they are. So, um, that said, I mean, is the FTC successful?

• 35:17Speaker 01

  You know, you, you, you noted that now you can unsubscribe from Prime in very quickly, right? Which is a result of regulatory pressure.

• 35:26Alex Kantrowitz?

  From Europe.

• 35:26Speaker 01

  And, oh, you're from, you're talking about Europe.

• 35:29Alex Kantrowitz?

  I think, well, Europe probably helped push that forward, but no, you're right. I think the regulatory stuff does, does cause that, those changes, but that goes back kind of to my self-regulation question of like, is that the best possible outcome we're going to get? Like this is, it was actually Norway that actually pushed Amazon almost the strongest of anyone to do, to do the changes to Prime.

• 35:49Speaker 01

  So in the FTC complaint in the US, because Amazon can change their practices in Norway and not in the US.

• 35:54Alex Kantrowitz?

  Right, right.

• 35:55Speaker 01

  And they do that.

• 35:55Alex Kantrowitz?

  Yeah.

• 35:55Speaker 01

  Companies do that all the time. In the FTC complaint, they mentioned how in response to the investigation, Amazon changed. Prime practices.

• 36:05Alex Kantrowitz?

  Okay.

• 36:05Speaker 01

  So it is.

• 36:05Alex Kantrowitz?

  Yeah, yeah.

• 36:06Speaker 01

  You know, I don't know if you call that success, but it's like.

• 36:08Alex Kantrowitz?

  That is success in my book. Absolutely.

• 36:10Speaker 01

  And they've also, they also, um, one of the, the sort of key, the linchpins of the argument from antitrust enforcers is that you have to use Amazon's fulfillment service to get into, to get your products prime eligible. And I think Amazon a couple of weeks ago announced that they're going to allow sellers to be prime eligible.

• 36:30Alex Kantrowitz?

  Mm hmm.

• 36:30Speaker 01

  If, even if, if they sign up for something called seller fulfill prime, which means you don't have to use their logistics. You just have to guarantee that it's two day shipping and other things. I mean, who knows whether that's true, but that's clearly a response to pressure from antitrust enforcers. And you can generally see that across the board. Like there's an expression in uh, antitrust, uh, among antitrust nerds that says the trial is the remedy.

• 36:52Alex Kantrowitz?

  Mm hmm.

• 36:52Speaker 01

  Um, so businesses change their behavior in response to regulatory pressure, in response to public exposure on trials, even if the, um, even if the government, you know, regardless of whether government wins or not, or, or not. So a good example back in the sixties was IBM was bundling its software with its hardware. And so no one was buying software because it was like, oh, you just buy the IBM three sixty and you get this machine that works. And then there was an antitrust suit. And IBM, one of the things they did is they unbundled their software and hardware and all of a sudden now there's a commercial software industry. And that was a response to an antitrust suit. That suit ended up getting dropped in nineteen eighty-two with no remedy. Right? So, but there was an immensely successful suit, even though the government eventually

• 37:37Speaker 01

  dropped it. A lot of things happened in that suit to create the modern, um, technology industry. So, yeah, I think these, these things really do matter.

• 37:45Alex Kantrowitz?

  Um, right.

• 37:46Speaker 01

  I forgot the last, the last point about like the broader, oh, is Linacon successful? I mean, I think you can have a look to look like to other things, not just Amazon. I mean, big tech is very important, but if you look at mergers and acquisitions this year. They're down pretty substantially, not just the raw number, but the types of acquisitions are changing pretty dramatically and across the board on lots of different industries. And partly that's a funding issue, partly that's, you know, interest rates are higher, it's harder to get, you know, the levered loans you would need to buy other companies. But partly that's because of stronger antitrust challenges to mergers in

• 38:26Speaker 01

  everything from the pharmaceutical sector to, you know, big tech. It's just, you know, if your merger is going to be not maybe six months, but it's going to be 18 months, and it's going to be like, you're going to have to spend a lot of money on legal fees and, you know, could potentially get blocked. And, you know, the CEO is often held accountable when a merger doesn't go through. So Penguin tried to buy Random House, that merger was blocked, and then the CEO of Penguin had to resign. And then Illumina tried to buy Grail, that merger got blocked, the CEO of Illumina had to resign. Right? So these are, this is like a big deal. And so even just the prospect of a case changes behavior, and you're seeing just a lot less M and A. And I think that's a big

• 39:09Speaker 01

  success. You've also seen reduction in list prices for insulin, which I think is a big deal. There's a lot of things that are happening in the economy that are linked to antitrust, but just like your, your experience with Amazon Prime being easier to unsubscribe, they don't necessarily link it to official, to what policymakers are doing, but it is a result of what policy.

• 39:27Alex Kantrowitz?

  Exactly. Yeah. And that's kind of, that was what I was curious about. It's like, is this pressure can actually push these companies? Jason, one more question for you about competition. So it's kind of interesting how you talked about how people are like, and I guess that's one of your conclusions, is that Walmart's really struggled to come to compete against Amazon. So can you just take us into the state of that competition today? I mean, obviously, the pandemic helped Walmart accelerate its digital offering in a way that, you know, it took, it took it a while to do. And then like, can't Walmart use some of its competitive power to like, go to suppliers, for instance, and say, you don't have to listen to this bullying by Amazon, and we'll give you the better deal?

• 40:08Speaker 02

  Yeah, so two questions there. So state of the battle. I mean Walmart, to be clear, some of Walmart's struggled to compete. Not all, but some was was internally created, right? I mean, just disputes between store teams and e-commerce teams and leaders and profitability versus growth and which all does kind of go back to the from day one, Amazon on Wall Street, you know, they Jeff Bezos and his then CFO told investors, we're going to focus on growth, not profits and they so they got this what some would call, you know, a hall pass for a really long time while Walmart was was, you know, expected to turn profits, which most businesses are.

• 40:54Speaker 02

  Anyway, so the current state is, you know, Walmart is, has poached a lot of Amazon folks. They are were forced during the pandemic to start utilizing their stores as pickup locations and, you know, mini delivery centers and you know, they're at a point now where they are, you know, somewhat formidable competitor, but without and they knew this without getting people to leave Prime for their now new service called Walmart Plus. In the long run, many of their top executives believe they will lose large portions of their customer base to Amazon. You know, Walmart CEO,

• 41:34Speaker 02

  internally, I reported my book, you know, told his board, made a presentation, basically calling Amazon an existential threat to their business, which again, is absurd when you look at the size, it sounds absurd when you look at the size of Walmart. So so current state is like they are sort of a clear number two.

• 41:55Speaker 02

  And, you know, are are have fought back somewhat successful in the last couple of years, but market share numbers online are still, I don't know, six or seven times smaller than than Amazon. There was a second question in there, I believe, Alex, but I have trouble keeping track of more numbers above one sometimes.

• 42:15Speaker 03

  Uh, one thing actually, I'm curious, like if you have a view into the company with Amazon, how do people feel about jacked Jeff Bezos and this whole, like, I literally was saw a headline yesterday that Lauren Sanchez, do you know she landed a helicopter herself? She flew it and landed it

• 42:34Speaker 02

  Oh my goodness.

• 42:35Speaker 03

  500 million dollar super yacht, which is how TMZ put it, but, but like, obviously having this kind of like villainous character in this whole perceptual battle.

• 42:43Speaker 02

  Should we ask Jeff himself?

• 42:44Alex Kantrowitz?

  Okay, so listeners.

• 42:45Speaker 03

  Wait, Alex, describe what Jason is holding.

• 42:48Alex Kantrowitz?

  The Jeff Bezos action figure.

• 42:51Speaker 02

  Um, I did, I did not, um,

• 42:54Speaker 03

  Where does one get one of those?

• 42:56Speaker 02

  You know, you have to know very, very special, no, no, then, um, um, this was one of

• 43:05Alex Kantrowitz?

  Hold it up a little higher.

• 43:07Speaker 02

  Um, one of his robots from some event, um, no, I did not buy these, is sort of a fun, um, gift from someone who was sent it, uh, I think, but it is a, uh, rare collectible. Um, I was gonna do a giveaway.

• 43:24Alex Kantrowitz?

  I love how we got into the collectible part of the show. This is crucial.

• 43:27Speaker 02

  I'm gonna do a giveaway with my book, um, and you could do whatever you want with that action figure. But, um, anyway, there was a question about, uh, jacked Jeff Bezos.

• 43:37Speaker 03

  And in internally, how, how does that, how are people dealing with that or thinking about that? Or like, like, I'm, I'm more surprised that there's not some type of coordination on his image management, given like the current regulatory pressure, just obviously you don't want the founder and the face of the company, even if he technically is not the CEO any longer, you know, having his wife land a helicopter on your 500 million dollar super yacht doesn't look great.

• 44:06Speaker 02

  Yeah, I mean, there, I mean, someone mentioned like, lack of self-awareness or out of touch. I mean, again, executives who, I mean, this goes back to the whole, um, years ago, the, you know, the divorce, his divorce and all the publicity around National Enquirer and the like, and it, and you know, the team around him. You know, a lot of people would tell me and other some other journalists that like we don't. We thought we knew this guy, but we don't know who this guy is. And yeah, I mean, a lot of people really pissed at the company that he's been a distraction. And if not worse than a distraction that,

• 44:47Speaker 02

  you know, the publicity around not only his wealth, but his extracurricular activities have, you know, only hurt the company if anything. And because, you know, he gets more attention for this and there's just overall more attention, attention on the company and you know, smart people would say they Amazon could do without a little, a little extra scrutiny these days. And so, I would say, well, some just look at it as kind of a joke or like good for him, like having, living his best life. I think folks who are, you know, in, in roles of power inside that company have largely not been thrilled, but

• 45:28Speaker 02

  not many, despite, you know, what, you know, open debate at Amazon and all the, you know, the leadership principles I'd, you know, there are certain people that sort of in a bubble and, and aren't challenged often and not surprisingly, uh, number one on that list is Jeff Bezos.

• 45:46Speaker 01

  Can I have a political observation about the Jeff Bezos is so, so I just note like,

• 45:52Speaker 02

  Please.

• 45:52Speaker 01

  It resonated far beyond the company, obviously. And I think the reason is because people look at Bezos as a political figure. And they look at Amazon as a political institution. It's not just a business, right? And I that and what's happening, one way to understand the, a lot of the legal background, political background of what's to the current moment is as an attempt of the legal regime to catch up to that reality. That Amazon is a, essentially a public utility style core piece of social infrastructure. And yet you have this guy who's just running it. I mean, even if he isn't running it, he's running it. Who seems to not, there's like a disjunction between like

• 46:36Speaker 01

  the way he's living his life and the expectations that people have for somebody who owes the public something.

• 46:45Speaker 01

  Whether that's, whether that's fair or not, I'll just say, I think that's one of the reasons why you have so much interest because he's not the first rich guy to do something outlandish.

• 46:53Alex Kantrowitz?

  Don't you think he should, he should, so speaking of that, don't you think he should sell the Washington Post?

• 47:00Speaker 01

  Me?

• 47:03Speaker 01

  I mean, I would, yeah.

• 47:05Speaker 02

  Go ahead, Matt. I haven't, I haven't thought that, that hard about that, but it seems like you think you should, Alex.

• 47:11Alex Kantrowitz?

  I mean, you look at the disclosure now, it's not just Jeff Bezos is the owner, but the person running it is part of Bezos' orbit as well. Like, there's a full paragraph in every Washington Post story about disclosures with links to Bezos. So I do think he should sell it. I mean, I'm not saying the journalists are like doing his bidding, but like, come on.

• 47:28Speaker 02

  No, I mean, I would say the, I mean, a former, former Amazon beat reporter at, at the Washington Post, Jay Green. I think he may, he, he is up there on the list of, of most hated journalists inside Amazon. So, um, he's no longer there, but, um.

• 47:45Alex Kantrowitz?

  There's a, there's a soft power to it though. Okay, last, last, last.

• 47:48Speaker 01

  I think that's right.

• 47:49Speaker 02

  Yeah.

• 47:49Speaker 03

  Well, I also, why does he, I still don't quite understand what the goal is or what the end game is with it. Again, I think either you go for world's richest man Playboy and just stick to that role and go all in. But like the, yeah, the Washington Post ownership, I still don't quite understand. There was a moment where I feel there was a story to be told about digitally transforming it. The way that, you know, bringing that Amazon energy.

• 48:14Speaker 01

  Yeah.

• 48:14Speaker 03

  Well, has it?

• 48:15Speaker 01

  You know, the, the other thing is he bought a giant house in DC and has, throws like lavish sort of DC society parties. And they did the Amazon, you know, they're, they're building a huge thing in Northern Virginia, right outside the Pentagon. Like, he's, you know, he's a political actor. Like, the view of him as a, almost a politician is correct, right? And so the Washington Post, obviously he should sell it. Like, that's outrageous. Like, it's crazy. But also this, you know, you're seeing something very scary in our country, which is historically, this has been different from the like monarchies of Europe, right? And aristocracies of Europe. I really hate Europe. Um, and.

• 48:51Alex Kantrowitz?

  You should spend more time there. It's actually, it's quite nice.

• 48:53Speaker 03

  Sounds like you're a little pro Europe right now.

• 48:55Speaker 01

  I was actually born there. Um, they, you know, their commercial centers and their political centers are the same place, right? Paris, London, those, you know, and that, in here, people thought, when we were founding the country. That's a threat. It's too much concentration of power. So Washington DC was never a commercial center. It was a political center and it wasn't that nice because you don't want your politicians to be, you know, to essentially recreate royal courts. And what is happening for the first time, and it's not just Amazon, the top five defense contractors all have their headquarters in DC, right? Amazon has a giant commercial operation in DC and you have one of the world's

• 49:35Speaker 01

  richest men making DC part of his home. That's a really, in owning the Washington Post, like, this is a really scary concentration of political and economic power that we've never seen in America before. And like, that's the broader, that's broader context here.

• 49:52Alex Kantrowitz?

  Yeah. So let's just end on this. Jeff Bezos, Elon Musk, and Mark Zuckerberg in a steel cage? Who walks out alive?

• 50:03Speaker 02

  I thought we were gonna do a wager, the over/under on how much Amazon spends on their, "Don't take our Amazon Prime campaign once the FTC suit drops," but...

• 50:13Alex Kantrowitz?

  You could do that, sure.

• 50:15Speaker 03

  On par with Facebook, we save small businesses, I think. Definitely on par with that.

• 50:21Alex Kantrowitz?

  New York Times and the Journal are gonna be happy with the op-ed.

• 50:23Speaker 01

  You know what, I'm gonna say what Jeff Bezos would probably say, which is he'd say, "The person who comes out alive is the person who serves, who delights consumers."

• 50:33Alex Kantrowitz?

  That's right. Okay, us...

• 50:35Speaker 01

  And then he will murder everyone.

• 50:38Alex Kantrowitz?

  Us four, us four in a steel cage versus them three.

• 50:41Speaker 02

  Oh, man.

• 50:43Speaker 03

  Oof. I mean, as long as killer Tim Cook isn't on their side, I think we have a shot.

• 50:49Speaker 02

  If someone says mean enough things, they may cry and give up. So we'll lead with Matt.

• 50:57Speaker 03

  The journalists take.

• 50:59Alex Kantrowitz?

  The book is Winner Sells All: Amazon, Walmart, and the Battle for Our Wallets. You've heard a preview of it here today, but it's a great book by Jason Del Rey, available at all bookstores. Go check it out. And Matt Stoller, you can get his newsletter, BIG, on Substack. It's thebignewsletter.com. You could also get Ron John Roy's margins at ReadMargins.com. Thank you so much, Matt, Jason, and Ron John for joining us. What a great addition. And we had a very nice, lively, live audience on LinkedIn chiming in all throughout. So thanks to everybody who watched. We will see you next time on Big Technology Podcast. Thanks so much for joining us.

• 52:00Speaker 04

  Now, more than ever, we need someone on our side. But Rob Whitman? Whitman's votes drove up costs, cut Medicaid, and risked 350,000 Virginians' health care to pay for tax breaks for himself and his donors. He's not on our side. Shannon Taylor will fight corruption, cut taxes, and bring down costs. This November, vote for Shannon Taylor. She's for us. Paid for by HMP, the HouseMajorityPac.com. Not authorized by any candidate or candidate's committee.

• 52:30Speaker 05

  In this life, you can't win.

• 52:32Speaker 06

  When the world gets you down.

• 52:33Speaker 05

  No!

• 52:34Speaker 06

  Escape to Pluto TV.

• 52:35Speaker 05

  This is objectively fantastic.

• 52:37Speaker 06

  Relax into the movies and shows you already know and love, all for free.

• 52:41Speaker 05

  Schwing!

• 52:41Speaker 06

  Even our news is uplifting.

• 52:43Speaker 02

  You stay classy, San Diego.

• 52:45Speaker 06

  Watch School of Rock, Crazy Ex Girlfriend, Anchorman: The Legend of Ron Burgundy, The Ex Files, Wayne's World, and so much more.

• 52:50Alex Kantrowitz?

  We're not worthy!

• 52:52Speaker 06

  The best things on TV really are free. You just have to know where to look. Escape to Pluto TV. Stream now, pay never.