Amazon's Antitrust Paradox

Khan's paper didn't come from nowhere. It's the latest move in a 130-year argument about what antitrust law is for. Two traditions have competed since the Sherman Act: one says concentrated private power is inherently dangerous to democracy and competition. The other says it doesn't matter how big you get — as long as prices stay low.

The title is a deliberate inversion. Robert Bork's The Antitrust Paradox (1978) argued antitrust law was being misused to protect competitors rather than competition, and that "consumer welfare" should be the sole standard. For forty years, his framework won. Khan says: the paradox now is that Bork's framework creates the monopolies it claims to prevent.

Khan builds her case in layers. Each move depends on the one before it: the consumer welfare critique creates the opening; predatory pricing and vertical integration provide the evidence; capital markets explain the mechanism; and the structural remedies close the loop. The architecture is the argument.

Bork's framework reduces antitrust to a single question: did the consumer pay more? If prices fell or stayed flat, there's no harm — regardless of how many competitors disappeared, how much market structure deteriorated, or how much structural power the surviving firm accumulated. For traditional markets, this sometimes works. For platforms, Khan argues it is structurally blind.

Amazon can offer below-cost prices indefinitely, funded by AWS profits and patient capital markets. It can use its marketplace position to collect data on competitors, then undercut them with private-label alternatives. Under Bork's framework, every one of these moves looks pro-competitive — because prices fell. Khan's central insight: the metric designed to protect consumers has become the mechanism that prevents anyone from seeing the monopoly being built.

Khan's centerpiece case study. Quidsi, the parent company of Diapers.com, was the leading online diaper retailer. Amazon launched Amazon Mom in 2010 with aggressive below-cost diaper discounts. Quidsi's margins collapsed. After failed acquisition talks with Walmart, Quidsi sold to Amazon for $545 million in November 2010.^[1]

After the acquisition, Amazon rolled back the discounts. By 2017, Quidsi was shut down entirely. Under Brooke Group (1993), this was not predatory pricing — because Amazon could not demonstrate "recoupment" through subsequent price increases in the narrow diaper market. Khan's argument: recoupment came through ecosystem dominance, data advantages, and cross-subsidization —not by raising prices where predation occurred.

Amazon describes itself as "the everything store." Khan sees something more specific: a company that simultaneously operates as marketplace infrastructure and a direct competitor on that infrastructure. Third-party sellers who use Amazon's marketplace generate data that Amazon uses to decide which products to clone as private-label alternatives.^[2]

This is the structural conflict at the heart of the paper. Traditional antitrust focuses on horizontal competition. Khan argues the real danger is vertical: the platform owner using its infrastructure position to disadvantage the businesses that depend on it. The essential facility doctrine — historically applied to railroads, ports, and telephone networks — should apply to Amazon's marketplace.

Serious people disagree with Khan, and the strongest critiques deserve full voice. Three patterns emerge: (1) the consumer welfare standard already has tools for platform harms; (2) Khan's evidence of actual consumer harm is weak because Amazon mostly lowered prices; (3) her structural remedies would reduce innovation and harm the consumers she claims to protect.

The trajectory from student Note to federal prosecution in under seven years is historically unusual. Khan served as counsel to the House Judiciary Subcommittee's digital markets investigation, which produced a 449-page report concluding Amazon, Apple, Google, and Facebook hold monopoly power. Biden nominated her to the FTC in March 2021; the Senate confirmed her 69–28.^[3]

In September 2023, the FTC and 17 state attorneys general filed suit against Amazon. The case —which Khan's critics call "Khan v. Khan" — goes to trial in March 2027. Khan stepped down as FTC Chair in January 2025, but the case she built outlives her tenure.^[4]

Before 2017, Barry Lynn was nearly alone carrying the banner of neo-Brandeisianism. Khan's paper provided the intellectual framework that connected Brandeis-era concerns about concentrated power to concrete, contemporary platform economics. It gave the movement a target (Amazon), a doctrinal critique (consumer welfare fails for platforms), and specific remedies (structural separation, common carrier duties).

The paper's viral success proved there was an audience beyond a small circle of academics. By 2021, the movement had placed its people at the FTC (Khan), the DOJ Antitrust Division (Kanter), and the White House (Wu). Whether the enforcement actions survive judicial scrutiny is the open question. FTC v. Amazon is the test.