Amazon Arrogance Backfires, Tries to Smear Incoming FTC Chair Lina Khan as Needing to Recuse Herself Because She Knows Them Too Well

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Amazon had jumped the shark. It has just made a ludicrous demand, that newly appointed FTC chair Lina Khan needs to recuse herself on Amazon matters because she wrote academic papers about the retail giant that concluded that Amazon behaved badly. Mind you, Amazon didn’t just engage in normal big company huffing and puffing. It filed a motion with the FTC, which we embedded at the end of this post.

I am struggling to come up with anything even remotely similar in terms of a company eye-poking an important regulator. Even an egomaniac like Jamie Dimon never pulled a stunt like this. The closest I can think of is Charles Keating for a while winning in his war with the Federal Home Loan Bank Board, by virtue of owning five Senators.

Amazon apparently believes it can stare down the turn in opinion inside the beltway against the power of tech titans. Khan is a well known anti-trust hardliner. Per Amazon, her sins were having written a law review article as a student describing how antitrust law had not reined in Amazon, working for an antitrust organization where she again called for curbing Amazon, and later serving as counsel to the Senate Judiciary Committee during its investigation of technology platforms. Both Democrats and Republicans applauded Khan’s nomination.

Amazon’s heavy-handed move is not only almost certainly a non-starter, but it also comes at the cost of confirming the bad opinion that people in power increasingly hold about Amazon, as well as registering negatively with fence-sitters. Has the Seattle titan not worked out that at least some of the Congresscritters that it thought it had acquired didn’t stay bought?

Even the Wall Street Journal, which attempts to depict Amazon’s filing as something other than petty or stupid, conceded that efforts to force regulators onto the sidelines for having expressed opinions have generally bombed:

Wayne State University law professor Stephen Calkins, a former general counsel of the FTC, said there is “very little history of successful challenges” to commissioner participation in recent times. However, he added, some important government ethics cases have involved court rulings that vacated FTC enforcement actions on the grounds that a commissioner should have been disqualified.

The examples Calkins cited were from 1966 and 1970, when appearances were taken far more seriously than now.

The Financial Times was less equivocal and by happenstance pointed out that Khan had already addressed one of the two cases cited by Calkins:

During Khan’s Senate confirmation hearing in April, Mike Lee, Republican senator from Utah, raised the issue of impartiality, citing a 1966 court decision to disqualify then-FTC chair Paul Rand Dixon from a case due to his earlier work with a House subcommittee.

“Let me say upfront, I have none of the financial conflicts or personal ties that are the basis for recusal under federal ethics laws,” Khan said in response. “I would be approaching these issues with an eye to the underlying facts.”….

Government and agency ethics panels would have “examined these issues for Khan extensively when she was nominated”, said William Kovacic, a former FTC chair.

Quite a few of the normally pro business Financial Times readers weren’t buying what Amazon was selling:

strong>European American (formerly a good European)
Ok, well it seems Amazon has already made up its mind about that! They must have some very flakey lawyers to come out with a preference of such astonishing clumsiness?

David Edick Jr.
Truly breathtaking arrogance on the part of Amazon.

I wonder who handles government affairs for Amazon? Bezos? This is a political own-goal of the first order.

Bounded Rationality
Of course, her work has a bias. All academic work does. But then she is not the judge and the jury where such an objection will be relevant. It is that bias which makes her a perfect candidate to lead the investigations, and courts will decide if they find her claims merit-worthy. Unless Amazon would like to accuse her of cooking up evidence, they just need to shut up and focus on preparing their legal defense. I for one find Amazon very useful but that is neither here nor there in fact-finding.

Amazon should be asked to provide a list of other commissioners that they have already bought, just for transparency’s sake.

A 1.7 Trillion dollar market cap company is afraid of Lina Khan. Love it. All the more reason she should absolutely stay in place.

Amazon running chicken, lol. By this logic, Planned Parenthood can petition the Supreme Court that Amy Coney Barrett recuse herself from Roe v Wade re-match?

The Twitterverse was up in arms. A few examples:

Now having said that, there are two possible rationales for Amazon’s Hail Mary pass. First is to try to create a public perception that Khan is anti-Amazon. The problem is that public perception doesn’t count for much in this arena.

In addition, Khan has the solid backing of Congress. That likely reflects considerable unhappiness in many quarters in the US about how the retailing behemoth throws its weight around. The fact that Amazon found itself under attack during its effort to set up a second headquarters in New York City is another proof the company is not well loved despite being widely used.

The second reason, to paper the record for litigation, appears a tad more logical but I don’t see it as having good odds of having an impact.

As a regulator, the FTC issues enforcement actions and fines. Most companies settle but some get their dander up and force the regulator to proceed with a lawsuit. Amazon looks to be preparing the ground to fight. But it’s hard to see Amazon’s whining making any difference except with the sort of conservative judge who is also on board with the World According to Amazon. In other words, I don’t see this caviling by itself resulting in an FTC action being voided. But it could potentially serve as one of several arguments leading to that end.

And Amazon has just put Khan to be particularly careful about her statements and decisions. But regulators almost universally are; it goes with the terrain.

As quite a few observers pointed out, Amazon looks mighty worried about Khan. Let’s hope that she proves those fears to be well founded.

00 Amazon recusal petition
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  1. Amit Chokshi

    I’m a cynic but i see Biden as Corleone and Kahn is a young professor w no political experience, going into the wolfs den re big tech. big tech like amzn has former biden/obama people so it’s almost like these purported staunch anti monopoly types like kahn r being set up to fail spectacularly. where biden sticks the landing putting in basically kids that wrote a report but don’t have the political chops or relationships to succeed in any capacity, but big tech allows govt to finger wag ala liz warren w no repercussions. biden gets accolades for putting “tough critics” in power as a token, and gets quiet accolades from the corps that back him that knew the fix was in. optically voters say well biden tried.

    1. NotTimothyGeithner

      Given the hiring practices of the last three administrations, everyone decent will have a limited political resume or be ancient.

    2. Dean

      Now I’m sad but you’re probably right. You don’t survive in DC as long as Biden has without knowing how to play the game.

      1. lordkoos

        That may be true but Biden’s current cognitive state seems iffy. Makes me wonder who really calls the shots these days.

    3. Oh

      “Accolades from the corps” —-> Money for speeches after retiring from office, money for son and family, high positions for staff, etc.

    4. Yves Smith Post author

      Huh? She won over most of the Senate, including Republicans who ought to be her opponents, via her 16 months working with the Judiciary Committee as its counsel on an antitrust report. That’s a huge and politically very tricky job and she performed with flying colors.

      The solid Senate backing says she has the right relationships already and not the wrong ones (the bought and paid for kind). And as the head of the FTC she has a power base. Please tell me how anyone gets to her. She’s well bunkered.

  2. Tom Stone

    I read the first 14 pages, which gave me the flavor.
    Is Robbie Mook running this campaign for Amazon?
    I was trying to think of who was a lawyer and both arrogant enough and boneheaded enough to write this.
    Robbie came to mind.
    I’m sure this brief made Bezo’s feel happy, if you are billing at $1,200 an hour in minimum 15 minute increments keeping a client happy is your job.
    As far as Bezo’s judgement the last few years, he dumped Mackenzie Scott for Lauren Sanchez..

    1. Harry

      I fear Amazon. They are smart and rich and have bought everyone who can be bought. So I would caution against assuming “stupid” and focus on Yves two thoughts with regard to reverse engineering their response.

      The advantage of a lawsuit is they get to pick the ground. FTC staffers vs Amazons unlimited resources. Which means they will slow Ms Khan down at every step and try and exhaust her resources. Nothing stupid or arrogant about that, even if they are stupid and arrogant.

  3. Fazal Majid

    Khan, not Kahn. Pakistani-American, not Jewish…

    That she is seen as a hard liner just shows how cowed US antitrust authorities are, neutered as they were by Robert Bork’s (yes, that Bork) jurisprudence, establishing the completely spurious “consumer welfare” standard from the market-infallibility ayatollahs at the Chicago School, flouting both the letter and intent of antitrust law. It’s a textbook example of right-wing judicial activism creating legal doctrines out of thin cloth, just as with qualified immunity. Any solution perforce requires invalidating this by Congress, the FTC and Khan alone can’t do it. Fortunately we may be at a rare convergence where both parties agree on the need to reform antitrust, even if they don’t agree on specifics.

    Here’s more from a source that can’t be accused of being biased against Bork:

  4. The Rev Kev

    If only Amazon had said that Khan was not sufficiently supportive of Israel, there would be no problem and she would be out the door. Oh wait, that is only for the jobs of SecDef, SecState and some Ambassadorships.

  5. Carolinian

    Arrogance has always been the Amazon business model as seen by the games they used to play to pretend no point of presence in particular states and therefore no necessity for charging sales tax. As a Wall Street darling struggling to make a profit they were given a pass back then and no doubt expect to be treated similarly after reaching behemoth status. The problem for them is that they are a behemoth still dependent on a business model the country could do without and on dubious attempts to diversify–AWS the only big success.

  6. Darius

    Five years ago, Obama was delivering eligiacal odes to big tech. He had his head so far up Amazon’s keister, he even gave a fawning speech at an Amazon warehouse.

    1. The Rev Kev

      Was that when he said that an Amazon job was the new middle-class job? Despicable.

  7. cnchal

    > Amazon had jumped the shark.

    A couple of days ago in WC was this.

    UPDATE The Bezzle: “How Amazon Bullies, Manipulates, and Lies to Reporters” [Mother Jones]. “

    When journalists write anything critical of Amazon they get harrased by media relations, which I thought was headed by Carney, but instead he is just a convenient titular figurehead that Bezos can point to and say, see I care, when the reality is that a longtime Amazon whip cracker close to Bezos runs the show.

    This ultra aggressiveness runs company wide. In every transaction they push as hard as possible for advantage whether demanding subsidies to build warehouses from governments, the taking of positions in companies selling on Amazon’s platform at grossly advantageous terms, the insane return rate, the inhumane working conditions inside Amazon warehouses, the copying of third party sellers products, the string of fires from Amazon Basics crapola, the copying of copywrited material, the hugely profitable business of storing zeros and ones for the government, where one buck out of three in revenue is profit, , the 150% churnover rate (FFS really? This is acceptable or not???) . . . and so it goes.

    Pulling this aggressive in your face move is typical. Everything looks like a sickly gazelle to them so I’m hoping Amazon gets kicked in the jaw good and hard here.

  8. drumlin woodchuckles

    Amazon should be exterminated from the face of the earth. Anyone who criticizes Amazon should be asked the following question: ” What are you doing to help exterminate Amazon from the face of the earth”?

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