A historic case against Amazon has been launched by the Federal Trade Commission (FTC) and 17 state attorneys general, accusing the e-commerce giant of monopolistic practices that harm fair competition.
This lawsuit represents a significant challenge to Amazon, a company that has grown from an online bookseller into a global retail powerhouse and technology giant.
The 172-page complaint alleges that Amazon unfairly promotes its platform and services, which is disadvantageous to third-party sellers who depend on Amazon’s e-commerce marketplace for distribution.
The FTC explicitly points to Amazon’s requirements for sellers to use its in-house logistics services to access ‘Prime’ eligibility and its practice of compelling sellers to list their products on Amazon at the lowest online prices.
These allegations echo a separate lawsuit filed against Amazon by California’s attorney general last year.
The FTC argues that due to Amazon’s dominance in e-commerce, sellers have little choice but to accept its terms, ultimately leading to higher prices for consumers and a less favorable shopping experience.
The complaint also claims that Amazon prioritizes its products in search results over those of third-party sellers.
FTC Chair Lina Khan emphasized Amazon’s focus on preventing rivals from achieving the same level of customer reach, describing the lawsuit as reflecting the most cutting-edge understanding of competition dynamics in digital markets and Amazon’s tactics to stifle competition.
Major Amazon Antitrust Suit in 17 States Join FTC
The lawsuit involves 17 states, including Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin.
The complaint, filed in the U.S. District Court for the Western District of Washington, seeks a court order to prohibit Amazon from engaging in anticompetitive behavior.
While the FTC has not ruled out the possibility of breaking up Amazon, Khan explained that the complaint’s primary focus is establishing liability.
However, the FTC complaint does mention the potential for ‘structural relief,’ which could entail a breakup of Amazon, indicating that it remains an option.
Khan also left the possibility of holding Amazon executives personally liable if sufficient evidence of their involvement in the alleged illegal conduct emerges.
The lawsuit against Amazon is the US government’s third significant antitrust action against tech giants, following cases against Google and Meta.
This legal battle comes amidst growing global scrutiny of Big Tech companies, with policymakers increasingly concerned about their dominance.
The lawsuit’s outcome could take years to resolve, and its significance has drawn comparisons to the antitrust crackdown of the early 20th century.
The legal action is seen as a significant moment in Khan’s career, who is known for her work on antitrust issues.
Under her leadership, the FTC has taken a more aggressive stance toward the tech industry.
Amazon’s critics have long accused the company of anticompetitive practices, including using sellers’ data against them and competing with third-party sellers on its platform.
The current lawsuit focuses on Amazon’s actions in the “online superstore” and “online marketplace services” markets.
This lawsuit represents one of the most substantial challenges Amazon has faced, targeting the core of its e-commerce business and addressing persistent criticisms.
A portion of the FTC complaint references ‘Project Nessie,’ an algorithm and pricing system allegedly extracting value from households, suggesting Amazon’s practices contradict its customer-centric claims.