FTC’s big swing at Amazon expected as soon as this month, reports say
Federal Trade Commission (FTC) Chair Lina Khan testifies before a House Judiciary Committee hearing on “Oversight of the Federal Trade Commission,” on Capitol Hill in Washington, July 13, 2023.
Kevin Wurm | Reuters
In Lina Khan’s two years helming the Federal Trade Commission, her name has been most associated with one company: Amazon.
So far, that’s largely been because of her viral Yale Law Journal article from 2017, titled “Amazon’s Antitrust Paradox.” The paper made waves in the antitrust community because it argued that the modern application of antitrust laws has failed to capture the ways tech giants like Amazon are able to dominate in a digital world.
The article made Khan’s name ubiquitous in antitrust circles and helped launch her on a path to becoming the youngest-ever FTC chair. Once sworn into the role, Amazon pressed for Khan to be recused from its antitrust investigations, pointing to her past criticism of its business. A similar attempt by Meta was rejected by a judge in a separate case.
While the FTC has taken swings at major tech companies under Khan — like through its challenge of Meta’s proposed acquisition of Within Unlimited, a virtual reality fitness app maker, and a consumer protection suit against Amazon’s Prime service — those who follow the agency have long anticipated a suit challenging Amazon’s alleged monopoly power.
That lawsuit is now expected to come as soon as this month, The Wall Street Journal and Bloomberg reported this week.
A challenge to Amazon’s alleged monopoly could ultimately result in a breakup of the more-than-trillion-dollar business, should the FTC file the lawsuit and win in court.
On August 15, the FTC held a so-called “last rites” meeting with Amazon, a source familiar with the matter, who was not authorized to speak publicly on the private discussions, confirmed to CNBC. Such meetings are often a last step before commissioners vote on whether to file a lawsuit, giving a company the chance to voice its side.
In this case, however, a settlement and acceptable remedies were not discussed, the source said, confirming reporting by the Journal and Bloomberg.
The suit will likely target key elements of Amazon’s retail marketplace business, including Fulfillment by Amazon, its logistics program, as well as pricing by third-party sellers on its website, according to the Journal, citing unnamed sources. Even before Khan joined the agency, FTC staff had begun interviewing Amazon sellers to learn about whether it used its dominance to hurt competition, Bloomberg reported in 2019.
The FTC declined to comment on the reports. Amazon earlier declined to comment on the Journal story.
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Cheng Xin | Getty Images
Okta on Tuesday topped Wall Street’s third-quarter estimates and issued an upbeat outlook, but shares fell as the company did not provide guidance for fiscal 2027.
Shares of the identity management provider fell more than 3% in after-hours trading on Tuesday.
Here’s how the company did versus LSEG estimates:
- Earnings per share: 82 cents adjusted vs. 76 cents expected
- Revenue: $742 million vs. $730 million expected
Compared to previous third-quarter reports, Okta refrained from offering preliminary guidance for the upcoming fiscal year. Finance chief Brett Tighe cited seasonality in the fourth quarter, and said providing guidance would require “some conservatism.”
Okta released a capability that allows businesses to build AI agents and automate tasks during the third quarter.
CEO Todd McKinnon told CNBC that upside from AI agents haven’t been fully baked into results and could exceed Okta’s core total addressable market over the next five years.
“It’s not in the results yet, but we’re investing, and we’re capitalizing on the opportunity like it will be a big part of the future,” he said in a Tuesday interview.
Revenues increased almost 12% from $665 million in the year-ago period. Net income increased 169% to $43 million, or 24 cents per share, from $16 million, or breakeven, a year ago. Subscription revenues grew 11% to $724 million, ahead of a $715 million estimate.
For the current quarter, the cybersecurity company expects revenues between $748 million and $750 million and adjusted earnings of 84 cents to 85 cents per share. Analysts forecast $738 million in revenues and EPS of 84 cents for the fourth quarter.
Returning performance obligations, or the company’s subscription backlog, rose 17% from a year ago to $4.29 billion and surpassed a $4.17 billion estimate from StreetAccount.
This year has been a blockbuster period for cybersecurity companies, with major acquisition deals from the likes of Palo Alto Networks and Google and a raft of new initial public offerings from the sector.
Okta shares have gained about 4% this year.
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