The FTC is primed for Amazon

This is an audio transcript of the FT News Briefing podcast episode: ‘The FTC is primed for Amazon’

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Marc Filippino
Good morning from the Financial Times. Today is Wednesday, September 27th, and this is your FT News Briefing. US regulators said that Amazon is monopolising online markets. JPMorgan Chase settled lawsuits that deal with Jeffrey Epstein. And yet again, the US government is on the brink of a shutdown. I’m Marc Filippino, and here’s the news you need to start your day. 

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The Federal Trade Commission accused Amazon of being a monopoly in a lawsuit yesterday. It is a big moment for FTC chair Lina Khan. She’s pushed for stronger antitrust laws for years. And in June, the FTC said the tech giant was tricking customers into signing up for Amazon Prime. I’m joined now by the FT’s US legal and enforcement correspondent, Stefania Palma, who is covering the lawsuit. Hi, Stefania. 

Stefania Palma
Hi, Marc. 

Marc Filippino
OK. So what is in the lawsuit? 

Stefania Palma
It’s a very extensive complaint, but the lawsuit focuses on a couple of alleged schemes. And the first one involves sort of strategies to stop sellers from actually offering lower prices on other platforms across the internet. And the other alleged scheme says that Amazon was basically requiring merchants to use its own fulfilment service for, say, logistics network and delivery that, the FTC argues, is quite costly and therefore makes it more expensive for sellers to actually, you know, offer their products also on other platforms. 

Marc Filippino
Which basically leaves Amazon as the most attractive and in many cases only option, right? 

Stefania Palma
That is what the FTC, as well as the 17 state attorneys-general who have also joined the complaint, that is what they are accusing Amazon of doing. 

Marc Filippino
So how has Amazon responded to this? 

Stefania Palma
Amazon put out a statement saying that the lawsuit basically made clear that the FTC is radically departing, as they said, from its own mission in, when it comes to protecting competition in the US as well as consumers. And fundamentally, they also said that the complaint was wrong, both on the facts and the law. 

Marc Filippino
So, Stefania, what could happen to Amazon then as a result of this lawsuit? I mean, FTC chair Lina Khan has had them in her crosshairs for a while. 

Stefania Palma
One big question that many have is whether the FTC will ultimately seek to break up Amazon. When Khan was asked yesterday whether she would look to break up Amazon, she basically would not be drawn on that question or on specific details about additional remedies. 

Marc Filippino
Stefania Palma is the FT’s US legal and enforcement correspondent. Thanks, Stefania. 

Stefania Palma
Thank you. 

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Marc Filippino
JPMorgan Chase said yesterday that it settled two lawsuits related to Jeffrey Epstein’s human trafficking operation. Epstein was a client from 1998 until 2013 when JPMorgan ended the relationship. He died by suicide in jail while awaiting trial. The bank said it will pay $75mn to the US Virgin Islands, where Epstein had a home. The money will go to anti-trafficking charities, legal fees and mental healthcare for Epstein’s victims. JPMorgan strongly denied any responsibility for Epstein’s crimes. Now the bank also settled with Jes Staley, a former private banker and ex-Barclays CEO. JPMorgan sued him for allegedly not disclosing the extent of his relationship with Epstein. Staley’s lawyers did not respond to an FT request for comment, but Staley has previously denied any wrongdoing. The terms of the settlement with Staley were not disclosed.

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In Washington, Congress is trying to avoid a government shutdown. Lawmakers have until midnight on Saturday to pass a budget deal, and it is not looking good. Democrats and Republicans are split. And if a deal doesn’t get done in time, everything except essential government operations will grind to a halt. Here to explain is the FT’s Lauren Fedor. Hey, Lauren. How is Capitol Hill treating you? 

Lauren Fedor
Hi, Marc. It’s pretty chaotic. 

Marc Filippino
Yeah, I can imagine. So, Lauren, passing legislation to fund the government is one of the main responsibilities of Congress. Where are lawmakers at in the process? 

Lauren Fedor
Well, they’re in the middle of a pretty big mess right about now. On the House side, they are churning through all sorts of smaller funding bills. And on the Senate side, they’re rushing to try to reach some sort of compromise agreement. But ultimately, we need a funding agreement that can pass through both houses. And we’re looking pretty far away from a compromise. 

Marc Filippino
And if lawmakers aren’t able to come to some sort of compromise before Saturday, who or what will be impacted? 

Lauren Fedor
Well, huge parts of the federal government. What tends to happen is certain parts of the federal government are classified as essential. Some are classified as non-essential. And those non-essential departments, they do shut down, as the name implies. Millions of workers will be furloughed. They won’t receive their pay cheques. And in terms of markets, so far, we haven’t seen much market reaction. Earlier in the week, we had Moody’s issuing a report warning that this could ultimately affect the credit rating for the US government. The kind of impact will get greater the longer the shutdown goes on. 

Marc Filippino
OK, this all sounds bad. Just so, you know, my personal take. So explain to me why this is happening. What are the politics behind the gridlock? 

Lauren Fedor
Yeah, I think most people agree it’s bad, Marc. So, you know, you’re safe assuming that. 

Marc Filippino
Not the minority. All right, great. 

Lauren Fedor
But there is a vocal minority on Capitol Hill who are holding all of this up. And that vocal minority largely comes from the House Freedom Caucus, which is this powerful group of House Republicans who are kind of on the rightwing of the party and have long been beating the drum for less government spending. There are also concerns among several lawmakers about funding for Ukraine. So that’s another kind of piece of the very messy puzzle here. And that could potentially hold up some sort of deal as well. 

Marc Filippino
So then what are lawmakers doing this week to try and avoid a shutdown? Anything? 

Lauren Fedor
Oh, they’re definitely trying. So, on the Senate side, they have agreed a compromise, something called a continuing resolution. In DC, a lot of people call it just a CR. That’s a stop-gap measure that will kick the can down the road by a period of months so that we can have this whole debate about whether to shut down the government at a later date. But it averts a crisis in the short term. The problem is any funding deal needs to get through the House and the Senate. So that deal now is gonna get sent over to the House where the Republican speaker of the House, Kevin McCarthy, is gonna find himself in a pretty sticky situation, trying to convince these holdouts to sign on to something that, at least up until now, they have suggested they have no interest in signing on to. 

Marc Filippino
Lauren Fedor is our deputy Washington bureau chief. Thanks, Lauren. 

Lauren Fedor
Thanks, Marc. 

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Marc Filippino
Before we go, a quick markets round-up. US equities dropped yesterday. The S&P 500 and the Nasdaq Composite both fell about 1.5 per cent. Investors are worried about higher for longer interest rates. But sterling got the strongest punch to the gut. It had a six-month low against the dollar on Tuesday and is on track to have its worst month since this time last year when, if you remember, former UK prime minister Liz Truss unleashed her so-called “mini” budget. For more on sterling and the dollar, tune into the FT’s Unhedged podcast. Ethan Wu and Katie Martin do a really great job unpacking this whole thing. We’ll have a link to that episode in the show notes.

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You can read more on all of these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news. 

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