As She Attacks Amazon, Lina Khan Shouts at the Past

When Henry Ford incorporated his eponymous car company, he promised to create an automobile for “the great multitude.” Before Ford, cars were rarer than incredibly rare millionaires.

That Ford made cars fairly common is very telling with the present in mind. One guesses the growing ubiquity of Model Ts signaled substantial market share in the automobile sector for Ford Motor Company. Rightfully so. Ford created a mass market that previously didn’t exist.

It’s something to think about as the ankle-biters inside the FTC slap AmazonAMZN with lawsuits related to its 38 percent market share in the internet-shopping sector. FTC Chair Lina Khan looks at Amazon’s impressive share with fear. Unknown is why.

Amazon founder Jeff Bezos (like Ford with the car) didn’t invent the internet or e-commerce as much as he saw its immense possibilities and acted. Paraphrasing Ford, Bezos brought the internet to “the great multitude.” Before Bezos, users of the internet for commerce were theoretically rarer than incredibly rare billionaires. Of course Amazon’s market share is large in much the same way that Ford’s once was. Innovators discover, only for their discovery to serve as a lure for new entrants.

Having created a market for the multitude, Ford soon enough faced enormous competition, including General MotorsGM. While Ford was for a time content to continue manufacturing just the Model T, GM created models for all manner of differing buyers within what was a growing automobile market.

Amazon is of course experiencing similar competition in the internet space. And with the latter mind, it’s no reach to suggest that the 38 percent market share number thrown around solemnly by Khan is small in percentage terms relative to Amazon’s past share. Which really is no revelation. Lest readers forget in the way that Khan seems to be, for the longest time Amazon carried with it a pejorative in “.org” to reflect its seeming inability to earn profits. It’s no reach to suggest that during this stretch, Amazon’s share of internet commerce was quite a bit larger than it is now.

All of which speaks to the oddity of the FTC pouncing on Amazon now, but also the inevitability of it. Let’s start with odd. It’s odd simply because having discovered and created a market for e-commerce, Amazon presently faces increasingly ferocious competition within it, including from the biggest of the big retailers like WalmartWMT, TargetTGT, and Costco.

As for inevitable, it is simply because the federal antitrust crowd inevitably pounces on the biggest of any sector right as its market share is soon to shrink. Crucial here is that the shrinkage will be born not of Amazon sliding, but of it having succeeded in creating a massive market, and its success attracting numerous well-funded competitors for e-commerce sales. See above.

Which means the FTC is attacking at a time when Amazon’s share of a growing market is set to decline. Crucial here is that investors are already aware of the previously expressed truth. In other words, Amazon’s present in the internet space is already priced. Call it the past. Sadly, the FTC’s e-commerce focus is evidence that with its lawsuit, it’s presently shouting at the past right as Amazon looks to the future.

Yes, Amazon’s gaze is on what follows the internet. And if it’s correct about what’s ahead, don’t expect the FTC to bite its collective nails about its near 100% market share in a space that no one’s ever heard of. Which is the point…or should be.

Republished from RealClearMarkets


  • John Tamny

    John Tamny is a popular speaker and author in the U.S. and around the world. His speech topics include "Government Barriers to Economic Growth," "Why Washington and Wall Street are Better Off Living Apart," and more.

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