In a recent article published in Real Clear Markets, Market Institute President Charles Sauer sheds light on Massachusetts Senator Elizabeth Warren’s controversial stance regarding the proposed acquisition between Amazon and iRobot. Despite the potential adverse effects on local jobs, Senator Warren advocated for federal intervention to block the deal, demonstrating a disregard for the economic well-being of her constituents. This interventionist approach, backed by FTC Chair Lina Khan, overlooks the competitive dynamics of the market and raises concerns about government overreach.
He writes:
“Most politicians would try to stop a federal agency from taking an action that would adversely impact a business in their state, especially if that action would cause their constituents to lose their jobs. But not Massachusetts Senator Elizabeth Warren. Senator Warren recently encouraged a federal agency to intervene to stop an acquisition between two businesses, ignoring the fact that government intervention could cost her constituents their jobs. Senator Warren does not seem troubled that she is advocating the federal government to increase unemployment in her state. Nor is she bothered by the fact that American regulators may have worked behind the scenes to “assist” their European counterparts in blocking the transaction.
The agency in question is the Federal Trade Commission(FTC), headed by Warren’s fellow progressive heroine Lina Khan. The specific case is Amazon’s proposed acquisition of iRobot, manufacturer of the popular robot vacuum Roomba. Senator Warren spearheaded a letter to FTC Chair Khan urging the agency to block Amazon from acquiring iRobot. The letter argued that “dominant” companies like Amazon should not be allowed to” buy their way out of competing.” The letter disregards the fact that Amazon tried and failed to compete with iRobots Roomba by making their own robot vacuum. When Amazon’s robot vacuum flopped, the company adopted a “if you can’t beat them, acquire them” approach.
Warren and her co-signers were concerned that if Amazon acquired iRobot it would use its position as the leading online retailer to promote Roombas and other iRobot products over those of other companies that use Amazon’s platform to sell similar products. Khan and her allies share this concern. In fact, it is one of the reasons the agency launched an investigation into whether it should block the Amazon-iRobot deal.
Manipulation of algorithms to ensure certain products, such as those made by the company that owns the platform, appear at the top of the search, is known as preferencing. The argument against preferencing assumes people are too lazy or stupid to scroll past more than one page of search results to locate a name brand product. It also assumes that tech companies have an obligation to ensure third-party vendors they allow to use their platforms are treated “fairly,” as defined by politicians and bureaucrats.
Senator Warren, Commissioner Khan, and their allies never consider that if preferencing is such an effective way for a large tech company to crush smaller competitors, why didn’t Amazon use it to crush Roomba? While the FTC was investigating the Amazon-iRobot merger, with Warren and other progressives cheering them on, they were not the direct cause of Amazon’s decision to back out of the deal.
Instead, Amazon and iRobot abandoned the deal because they are expected to be blocked by European regulators . If the deal was killed by European regulators, why are so many free market conservatives blaming American progressives? Because, as European Commission Executive Vice President Margrethe Vestager admitted, European bureaucrats were in close contact with the Federal Trade Commission regarding the Amazon–iRobot deal. This is not the first instance of Lina Khan “cooperating” with European regulators to the detriment of American businesses, workers, and consumers. Last year Khan, complaining that the FTC agency is underfunded, found the funds to dispatch two FTC staffers to Brussels to ”assist” their European counterparts in implementing the Digital Markets Act. This act would force large tech companies like Amazon to share their intellectual property with their competitors. The act also bans preferencing.
The FTC may be working with the EU regulators because Congress has refused to pass legislation giving the FTC authority to prohibit preferencing. So Lina Khan has to “outsource” preferencing bans to her European friends.”
