Amazon's Acquisition Strategy Under Scrutiny: New Antitrust Rules and Their Impact on Tech Industry

Amazon may have avoided stricter antitrust rules due to its internal build capacity, allowing it to acquire 280 firms between 1998 and 2022. A new study examines the counterfactual of stricter antitrust rules over the last 25 years and finds that the guidelines are capacious but may lead to inconsistent enforcement, potentially limiting innovation and start-ups.

Amazon's acquisition spree over the past two decades has been a subject of significant scrutiny, with critics arguing that stricter antitrust rules could have significantly altered the company's trajectory. A new study by Prof. Edward Snyder, along with leading antitrust lawyers Ian Simmons and Sergei Zaslavsky, examines the counterfactual scenario of enforcing stricter antitrust rules over the last 25 years. The study, published in the journal Review of Industrial Organization, finds that the new guidelines issued in 2023 by the U.S. Federal Trade Commission (FTC) and Department of Justice (DOJ) would have allowed for more challenges to Amazon's acquisitions, potentially altering the company's growth.

The study evaluates how the expanded 2023 guidelines could have been applied to Amazon's acquisitions. Prof. Snyder notes that the guidelines are "capacious," providing multiple ways to challenge acquisitions. However, the study also highlights a significant weakness: the guidelines do not clearly delineate which mergers are most likely to be challenged, which are lower priority, and which can safely proceed. This lack of clarity could lead to inconsistent enforcement, with government agencies having substantial latitude to decide whether to pursue a case.

One of the key concerns raised by the study is the potential dampening of innovation and start-ups. Snyder worries that the new rules, if applied too strictly, could shut the door on acquisitions of tech start-ups, thereby reducing the motivation for small firms to innovate. The guidelines emphasize the possibility of "vertical foreclosure," where a large company might prevent a supplier from serving its competitors, and consider acquisitions not just in isolation but as a series.

The study examines nine major acquisitions by Amazon, including Zappos, Quidsi, Twitch Interactive, Elemental Technologies, Ring, Kiva Systems, Whole Foods Market, MGM Studios, and Annapurna Labs. In many cases, the new guidelines would have allowed enforcers to challenge these mergers. For instance, the acquisition of Zappos, a niche firm that sold only shoes, could have been scrutinized more closely under the new guidelines. Similarly, the acquisition of Ring, which makes video doorbells, might have attracted attention due to potential concerns about preventing Ring products from being used by other firms working on competing systems.

However, Snyder also raises concerns about the potential impact on innovation. The guidelines, he argues, are "really one-sided" in focusing on the possibility of pre-empting competitors but do not acknowledge the benefits of acquisitions for start-ups. Many start-ups view acquisition as an attractive way to bring their technology to market quickly and make a lot of money, and stricter enforcement could potentially reduce this motivation.

The study concludes that while the new rules could have slowed Amazon's growth, it is unlikely that they would have stopped the company's rise. Snyder suspects that Amazon would have still developed into one of the five largest U.S. companies, although the development burden would have been shifted onto the company. The guidelines, while stricter, lack clear boundaries, opening the door to more politicization and inconsistency in enforcement.

In conclusion, the study provides a valuable counterfactual analysis of how stricter antitrust rules could have impacted Amazon's acquisitions. While the new guidelines would have allowed for more challenges, the lack of clear boundaries and potential dampening of innovation and start-ups are significant concerns. The study highlights the need for more clarity and consistency in antitrust enforcement to ensure that the guidelines are applied effectively and fairly.

References:
[1] https://techxplore.com/news/2025-09-amazon-withstood-stricter-antitrust-internal.html
[2] https://economictimes.indiatimes.com/tech/technology/how-big-tech-is-faring-against-us-antitrust-lawsuits/articleshow/123668388.cms