The long-awaited lawsuit from the FTC and 17 states comes after the commission’s years-long investigation into Amazon’s business practices, alleging that it is using interlocking anticompetitive and unfair strategies.
The US Federal Trade Commission (FTC) and attorney generals from 17 states have filed an antitrust lawsuit against Amazon, alleging that the e-commerce giant is illegally maintaining monopoly power to inflate online prices and overcharge sellers.
The landmark lawsuit was filed on Tuesday in the US District Court for the Western District of Washington, which encompasses the Seattle area, where Amazon is headquartered. Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin were listed alongside the commission in the lawsuit.
I’ve been following this case closely in Tech Talk, detailing the FTC’s concerns that Amazon is using interlocking anticompetitive and unfair strategies. The long-awaited lawsuit comes after the Big Tech company allegedly failed to offer concessions to settle claims in closed meetings last month, and a few years after the FTC started to investigate the e-commerce company during the Trump Administration.
“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies,” FTC Chair Lina M. Khan said in an official statement from the FTC. “The complaint sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them. Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”
In Amazon’s response to the lawsuit, SVP of Amazon Global Public Policy and General Counsel David Zapolsky said the e-commerce giant has been cooperating with the commission’s investigation. Zapolsky said the commission’s case could negatively impact consumers and businesses who buy and sell items through Amazon’s platforms.
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The lawsuit states that Amazon violates the law by leveraging exclusionary business practices that prevent new competitors and emerging businesses from excelling in the market. John Newman, deputy director of the FTC’s Bureau of Competition, said in the FTC’s news release that Amazon’s business practices stifle competition across the entire online economy.
Most notably, the lawsuit accuses Amazon of burying lower-priced listings on competing sites for products that can be found on its marketplace. It also says Amazon is distorting the customers’ experience when users get search results because they are often replaced with paid advertisements that promote its brands over others. In addition, Amazon has raised prices for its fulfillment service, which third-party merchants use to store inventory and ship items.
Amazon’s response, of course, combats all of these allegations and says the FTC’s filing mischaracterizes the retail industry and the competition in the online shopping market. While Amazon has risen to the ranks of a Big Tech company, Zapolsky detailed how the firm is still working overtime to attract online consumers like other worthy competitors on the market.
“The FTC pretends that this everyday retail competition doesn’t exist. But its attempt to gerrymander alleged markets into narrow subsets of retailers (who, in reality, compete with other retailers on the same products) can’t make Amazon into something it is not,” Zapolsky said in a news release. “Amazon may not be the small business it once was, but we’re still just a piece of a massive and robust retail market with numerous options for consumers and sellers.”
This lawsuit comes after the Big Tech firm agreed to pay $25 million in May to settle claims that Alexa devices illegally collected children’s data. The FTC also sued Amazon in June over the company’s alleged deceptive practices surrounding enrollment in its Amazon Prime program. Amazon disputed the allegations, but there hasn’t been much movement on that case. The FTC’s most recent antitrust lawsuit is the most significant suit of this bunch since it specifically targets Amazon’s e-commerce business practices.
If the lawsuit sways in the commission’s favor, it will force Amazon to break up some of its business practices. The FTC and 17 states are asking a court to issue a permanent injunction to prohibit Amazon from engaging in anti-competitive practices.
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