The FTC’s lawsuit against Amazon has sparked predictable criticism from some in the business community, but this venture capitalist argues that the suit is essential to protect the future of competition and innovation. The author, an early-stage venture capitalist, explains that when considering investments, the dominant position of tech giants like Amazon, Meta, Apple, Microsoft, and Google often discourages them from funding startups that directly compete with these giants. The reason is simple: the incumbents’ unchecked dominance makes it nearly impossible for startups to thrive, let alone survive.
While the author expresses no animus towards Amazon and acknowledges its greatness, they argue that allowing such companies to continue dominating the retail market without checks will harm the economy in the long run. Every company, no matter how innovative it once was, eventually becomes bureaucratic and stagnates. The author points out that past giants like IBM and GE are now second thoughts, replaced by newer tech giants.
The author contends that the results of antitrust action in the past, such as the Department of Justice’s pursuit of Microsoft in the late 1990s, have been beneficial. They suggest that had Microsoft not faced antitrust litigation, Google might not have had the opportunity to rise to its current prominence.
In the case of Amazon, the author envisions two potential outcomes. Either the market becomes fertile ground for new competitors to emerge, replace Amazon as major employers, and drive innovation, or Amazon’s continued unchecked dominance stifles competition to the point that no one can challenge them when they eventually falter.
The author emphasizes that the FTC’s role is not to vilify big businesses but to ensure that they don’t employ anti-competitive practices that prevent new entrants from competing fairly. While Amazon may argue that its practices don’t violate existing regulations, the author believes that the lawsuit’s mere filing indicates that the government recognizes the need to safeguard future markets and encourage innovation by preventing excessive concentration of power in tech giants.