Amazon is becoming too big to fail: That should scare Washington

OPINION:

A bipartisan group of lawmakers recently pressed the Justice Department to investigate Amazon for potential “criminal obstruction of Congress,” as the tech giant looks for ways to obfuscate its unfair treatment of third-party sellers. But this latest move by Congress is reflective of a much larger problem: Amazon is trying to conceal how it has become too big to fail, and hide what it means for the millions of businesses and consumers now forced to depend on one of the world’s most profitable entities.

Washington can no longer hold back and must do everything it can to break up the robber baron of our modern economy.

Amazon’s grip on our economy and its $1.5 trillion market cap is evident in numerous ways, especially as the company goes beyond e-commerce and expands into other industries. Nowadays, Amazon is engaged in everything from cloud computing to health care to movies — as well as newspaper publishing, you remember who owns The Washington Post. This rapid ascent should concern those in Washington tasked with ensuring fair and open competition.

For starters, consider Amazon Web Services (AWS). Amazon’s cloud computing arm controls over 30% of the market, with its nearest competitors, Microsoft’s Azure and Google Cloud, at just 21% and 10%, respectively. This was clear last year when an AWS outage created severe disruptions across the U.S.

When we are looking at a market prone to consolidation, and one in which barriers to entry are so high, there is potential for abuse. FTC Chair Lina Khan is reportedly advancing an ongoing investigation into AWS. Although the details are very much cloak-and-dagger, it suggests the company may be exploiting its dominance to harm others.

And who can speak better to Amazon’s “too big to fail” status better than the company’s third-party sellers? In addition to profits, Amazon collects data from its small sellers and uses these insights to launch competing products. It clearly crushes competition, as sellers affected by Amazon’s entry are often discouraged from growing their businesses.

Amazon will also look for other ways to make money off of its sellers, beyond stealing their product ideas outright. The company, for instance, does not require that its sellers use its fulfillment service, commonly known as FBA, but doing so allows them to obtain much-needed Prime status. As detailed in a recent report, the marketplace’s algorithms “heavily favor” sellers that use FBA, and it has become a necessity for brands trying to stay at the top of search results.

It wouldn’t surprise you that Amazon jacked up the price of the service, with storage fees being raised over 10% and, unlike previous years, with no fee decreases for any categories. It’s reassuring to see that Amazon’s predatory dealings with sellers haven’t gone unnoticed in our nation’s capital, but we have a long road ahead.

Unless Congress acts quickly, Amazon is going to continue growing unabated, and that’s a serious problem for most Americans. It means a less competitive economy where fewer businesses have a shot at success, and it could result in higher prices for consumers when Amazon weeds out competition.

It is time to break up Amazon. The solution is sweeping legislative action. Lawsuits and investigations are a step in the right direction, but they are time consuming, require ample resources, and may find themselves in legal purgatory.

A group of bills, now being considered by Congress, would help break up Amazon. Although they range in varying degrees — from measures that address the giant’s egregious self-preferencing to those that would require it to sell off its other business entities — they begin to chip away at the near-monopolistic power Amazon has obtained.

Lawmakers must do everything they can to address Amazon’s dominance. The company has grown into a goliath that suppresses American businesses and harms consumers in the process. Inaction will come at a steep price — and one that neither of us can afford.

• Jared Whitley is a longtime DC politico who has worked in the U.S. Senate, the White House under President George W. Bush, and the defense industry. He has an MBA from the Hult International Business School in Dubai. .