Amazon’s monopoly problem

Wednesday, September 27, 2023:

Hey readers,

Are you watching tonight's Republican debate? In case you need a refresher on who's running, here's a great place to start. Otherwise, here's what we're following today:

Up first: The FTC sues Amazon over monopoly allegations.

In other news: NYC struggles with its migrant surge, Hollywood writers return to work, and Target shuts down nine stores because of theft.

Also, dedicated Sentences fans, you might notice the return of the Verbatim section! If you ever have thoughts, questions, or comments about this newsletter, don't be shy. Email newsletter@vox.com. We read every email!

—Izzie Ramirez, Future Perfect deputy editor

UP FIRST

The government's case to break up Amazon, explained

Vox; Chip Somodevilla/Getty Images

The Federal Trade Commission's latest target is Amazon. The federal organization — which monitors consumer protections and enforces antitrust law — is suing the online retailer, alleging that Amazon is an illegal monopoly.

The lowdown: The commission and 17 states filed a lawsuit on Tuesday accusing Amazon of making it nearly impossible for other e-commerce companies to compete.

The lawsuit alleges that Amazon has inflated prices and harmed third-party sellers that participate in Amazon's marketplace. The complaint covers 20 charges, including monopoly maintenance, unfair methods of competition, and violations of various state antitrust laws.

It's a significant milestone in the antitrust reform movement led by FTC chair Lina Khan. This is the first case filed under her leadership that takes on Big Tech's business practices — and it's against the company she built her career on criticizing.

However, antitrust cases are hard to win in the US. The law and the judiciary tend to be friendly to businesses and make "consumer welfare" — usually thought of as how much consumers have to pay for things — the basis for whether a company is illegally monopolizing a market.

The stakes: Tech reporter Sara Morrison breaks down the implications, big and small, should the FTC win or lose.

"Assuming the suit isn't dismissed or dropped before it reaches a trial, it will likely take several years to play out in court, which means it'll be years before we know what the impact of it will be," she writes. "At that point, we'll likely have decisions in the Google and Meta antitrust trials as well, and maybe an Apple antitrust lawsuit still to be fought."

Let's say the FTC wins. Amazon could be subject to penalties such as being forced to break up into smaller companies to handle its separate lines of business. That could create a more level playing field for sellers that currently just can't compete with Amazon's reach, resources, and control.

An FTC loss, on the other hand, would indicate that Big Tech companies aren't doing anything wrong in the eyes of current US antitrust law. That could set the antitrust reform movement back even further and embolden tech companies to become even bigger.

Read Sara's full explainer here »

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NEXT UP

New York City's not-so-sudden migrant surge, explained

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As hundreds of thousands of migrants flood New York City, the city's mayor changes his tune. Mayor Eric Adams has increasingly used inflammatory rhetoric to describe the influx, recently claiming that the city could be "destroyed" if it doesn't get more federal funding. Here's what you need to know:

Since April 2022, more than 116,000 migrants have arrived in New York City. Some have been sent to New York and other cities in the north by GOP-led states like Florida and Texas. Most are seeking asylum, a form of protection that would allow them to remain in the United States and not be deported. [NYC Office of the Mayor]

Many aren't eligible to work because of asylum rules. These rules require migrants to wait about six months for a work permit. The Biden administration hasn't expedited applications because it worries that will worsen the influx of migrants, leaving the administration vulnerable to GOP attacks. At the same time, without steady work, these migrants won't be able to find permanent housing. [New York Times]
More than 60,000 migrants remain in the city's shelter system. If migration continues at its current pace, the city is on track to spend $12 billion over the next three fiscal years to shelter and support immigrants. [Vox]
The city is now starting to turn some asylum-seekers out of shelter. Earlier this year, Adams asked a judge to temporarily relieve the city of the legal obligation to shelter migrants, since its shelter system is overwhelmed — a request now before a court. [Politico]
New York's struggles are just one symptom of federal gridlock on immigration reform. Cities across the US and northern Mexico are finding it hard to keep up with a flow of migrants that can top 8,000 per day. Without a congressional solution, which is not forthcoming, the difficult situation migrants and cities are in won't change. [CNN]

VERBATIM

🗣️ "I also feel — am I allowed to say this? — a little bored by the idea that Meta has stolen my life. ... I am an author, sure, but I am also a man who put some words in order amid the uncountable others who have done the same. If authorship is nothing more than vanity, then let the machines put us out of our misery."
—Ian Bogost, "My books were used to train Meta's generative AI. Good." [Atlantic]

AROUND THE WEB

The US Army private who illegally fled into North Korea is back in US custody. The 23-year-old soldier, Travis King, crossed the DMZ in July because he was allegedly "disillusioned" about the army's "inhumane treatment" and racial discrimination," North Korea's state-run news agency claimed. [NBC]
Ruh-roh — Joe Biden's dog, Commander, bites yet another Secret Service employee. This is Commander Biden's 11th bite since October 2022. The German Shepherd is the second of the president's dogs to display aggression. The first dog, Major, was sent to live with friends in Delaware in 2021. [Guardian]
Hollywood writers return to work today. While leadership approved the deal, members of the Writers Guild of America still have to ratify the contract, but are allowed to return to work. The new three-year contract establishes rules on AI usage, minimum staffing requirements, and streaming residuals. [NPR]
Target says it will close nine stores in major cities due to increased theft.
The chain is the latest in a wave of retailers that says they're struggling to contain store crimes. That said, some skeptics say retailers haven't backed up their claims that theft has gotten any worse than it has long been. [CNN]