Dec 22, 2021
Amazon Cloud Unit Draws Antitrust Scrutiny From Khan’s FTC
(Bloomberg) -- The U.S. Federal Trade Commission is pushing forward with antitrust scrutiny of Amazon.com Inc.’s cloud computing business, according to people familiar with the matter.
Lina Khan, the head of the agency and a vocal critic of the online retailer, is advancing a probe started several years ago by her predecessor.
FTC investigators have contacted companies in the past few months to gather information about competition issues related to Amazon Web Services, said the people, who declined to be named because they weren’t authorized to speak publicly about the outreach. At least one of the contacts was as recent as the past few weeks, said one of the people.
The focus on Amazon’s $16 billion cloud business, which brings in most of the e-commerce giant’s profit, comes as Khan has set her sights on conduct by the biggest U.S. tech companies. Khan, a former Columbia Law School professor, rose to prominence in antitrust circles warning about the threats companies like Amazon pose to competition in the digital economy.
Amazon fell almost 1% to $3,381 in New York after Bloomberg reported the news.
One issue the FTC could look at is whether Amazon has an incentive to discriminate against software companies that sell their products to clients of AWS, while at the same time competing with Amazon. The fear is that Amazon could punish the companies that work with other cloud providers and favor those that it works with exclusively.
The FTC’s investigation of Amazon began during the Trump administration under former chairman Joe Simons. The agency has pursued inquiries about Amazon’s retail business as well as the cloud division, Bloomberg has reported. The renewed outreach to companies shows the probe is active.
Amazon has provided information to the FTC in response to the agency’s requests, according to a person familiar with the matter.
Amazon and the FTC didn’t immediately respond to requests for comment.
The company filed a petition with the agency in June seeking Khan’s recusal from antitrust enforcement decisions against Amazon. The company argues that her past criticism of the company shows she is biased.
AWS dominates the market for foundational cloud-computing technology that provides the storage and computing power needed to run applications. It is several times bigger than its next largest rival, Microsoft Corp.’s Azure, according to analyst estimates.
Amazon also sells an array of products that run on top of those basic services, such as databases, machine-learning tools and data-warehousing products. It competes with hundreds of other software companies large and small that offer similar products.
Cloud computing companies like Amazon, Microsoft and Oracle Corp. are vying for lucrative government contracts to provide cloud services to agencies including the Defense Department and the National Security Agency.
(Updates with Amazon share drop in fifth paragraph)
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