On September 26, 2023, the Federal Trade Commission (FTC), in conjunction with 17 state attorneys general, filed a lawsuit against Amazon.com, Inc. The central contention of the lawsuit is that Amazon, a prominent online retail and technology company, has engaged in a series of anticompetitive and unfair strategies, which have allowed it to unlawfully maintain its monopoly power in the market.
Key Allegations:
- Monopolistic Behavior: The FTC alleges that Amazon’s actions have prevented competitors and sellers from offering competitive prices, leading to a degradation in quality for consumers, overcharging of sellers, stifling of innovation, and an unfair competitive environment.
- Exclusionary Conduct: The complaint emphasizes that the issue is not Amazon’s size but its engagement in exclusionary conduct. Such conduct has allegedly hindered current competitors from expanding and has acted as a barrier for new competitors entering the market.
- Impact on Market: Amazon’s strategies are believed to influence hundreds of billions of dollars in retail sales annually, affecting a vast range of products and over a hundred million shoppers.
- Specific Tactics: The FTC has highlighted specific tactics employed by Amazon:
- Anti-discounting Measures: Amazon allegedly penalizes sellers who offer lower prices on other platforms. Such sellers are buried deep in Amazon’s search results, rendering them virtually invisible to consumers.
- Prime Eligibility Conditioning: Sellers’ ability to obtain “Prime” eligibility, a significant advantage on Amazon, is allegedly conditioned on using Amazon’s fulfillment service. This has purportedly made it more costly for sellers to offer their products on other platforms.
- Exclusionary Conduct: Amazon’s strategies have allegedly made it challenging for competitors to establish themselves in the market.
- Customer Experience: The FTC claims that Amazon has degraded the customer experience by prioritizing paid advertisements over organic search results and by biasing search results in favor of its products.
- Fee Structure: Amazon is alleged to charge exorbitant fees from sellers, with some paying close to 50% of their total revenues to Amazon. This not only affects sellers but also leads to increased prices for consumers.
Legal Action: The FTC, along with its state partners, seeks a permanent injunction in federal court. The objective is to prohibit Amazon from continuing its alleged unlawful practices and to dismantle its monopolistic control to reinstate a competitive market environment.
Participating States: The states that have joined the FTC’s lawsuit include Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin.
FTC’s Stance: FTC Chair Lina M. Khan stated that the complaint details how Amazon has allegedly exploited its monopoly power, leading to increased prices and degraded services for American consumers and businesses. The lawsuit aims to hold Amazon accountable for these practices and restore free and fair competition.
John Newman, Deputy Director of the FTC’s Bureau of Competition, emphasized the significance of the case, suggesting that it has the potential to bring about substantial benefits for a vast number of people.
