FILE – Amazon’s corporate logo on the facade of a building in Schönefeld, near Berlin, March 18, 2022. The Federal Trade Commission and 17 state attorneys general filed an antitrust lawsuit against Amazon on Tuesday, September 26, 2023. Commercial giants use their market positions to drive up prices on other platforms, overcharging sellers and stifling competition. (AP Photo/Michael Thorne, File)
U.S. regulators and 17 states are suing Amazon, accusing the e-commerce giant of abusing its market position to hike prices on and off its platform, overcharging sellers and stifling competition. .
The lawsuit, filed Tuesday in federal court in Amazon’s home state of Washington, is the result of a multiyear investigation into the company’s operations and is the first in a nearly 30-year history of lawsuits filed against the company. One of the most important legal challenges.
The Federal Trade Commission and the states involved in the lawsuit allege that Amazon violates federal and state antitrust laws. They are asking the court to issue a permanent injunction prohibiting Amazon’s illegal conduct and loosening its “monopoly control to restore competition.”
The complaint accuses the company of engaging in anticompetitive practices through measures that prevent sellers from offering lower prices for products on sites other than Amazon, an allegation brought last year by California. It echoes allegations in a separate lawsuit.
The complaint alleges that Amazon buries products offered at lower prices on other sites. At the same time, it imposes high fees on sellers, forcing them to raise prices on the platform and other e-commerce sites to keep their products competitive on Amazon.
“The complaint alleges that Amazon is currently abusing its monopoly power while raising prices and lowering service for tens of millions of American families who shop on its platform and hundreds of thousands of businesses that rely on Amazon. We have detailed allegations that point to ways in which they are enriching themselves. Please make sure it reaches them,” FTC Chair Lina Khan said in a prepared statement.
Seattle-based Amazon.com said the FTC is “wrong on facts and law” and has strayed from its role of protecting consumers and competition.
“If the FTC has its way, the result would be fewer products to choose from, higher prices, slower deliveries to consumers, and fewer choices for small businesses, which is the opposite of the purpose of antitrust law.” ” said Amazon General Counsel David Zapolsky. said in a prepared statement.
The lawsuit requires Amazon to replace relevant search results with paid ads, prioritize its own brands over other products it knows are of higher quality, and pay sellers nearly half of their total revenue. The company has also been accused of degrading the customer experience, such as by charging high fees. Amazon. According to the Institute for Local Independence, an antitrust group, sellers are paying Amazon 35% of their profits in cuts in 2020, up from 19% in 2014.
The lawsuit also states that Amazon forces sellers to use its logistics service, Fulfillment by Amazon, to make their products eligible for Amazon Prime, but many sellers says it wants to use alternative fulfillment services to deliver orders to customers.
Some estimates suggest that Amazon controls about 40% of the e-commerce market. The majority of sales on its platform are facilitated by independent sellers, consisting of small businesses and individuals. In exchange for providing access to its platform, Amazon collects billions of dollars through services such as advertising fees and advertising that allow sellers to make the products they sell more visible on the platform.
The majority of third-party sellers also use the company’s fulfillment services to store inventory and ship products to customers. The move comes after Amazon has consistently raised fees for users who rely on the program, and recently imposed separate fees on some users who did not rely on the program, which it later abandoned. was roundly criticized by the company’s critics. Last quarter, Amazon reported that its revenue from third-party services was $32.3 billion.
Consumer advocacy groups applauded the lawsuit, while industry groups said many major retailers mirrored Amazon’s policies.
There has been speculation that authorities may seek to force a breakup of the retail giant, which is also dominant in cloud computing and has a growing presence in other sectors such as groceries and healthcare. There is. In a briefing with reporters, Khan dodged a question about whether that would happen.
“At this stage, the emphasis is more on responsibility,” she said.
Amazon has long faced allegations that it hurts the profits of companies selling on its platform by evaluating seller data, creating its own competing products, and promoting them on its site. Ta. In August, the company announced it would discontinue some of its own brands that didn’t resonate with customers and relaunch some products under existing brands such as Amazon Basics and Amazon Essentials. Booksellers and authors are also calling on the Justice Department to investigate what they call Amazon’s “monopoly power in the market for books and ideas.”
If the lawsuit is successful, it could be a major boost for Mr. Khan at the FTC. Mr. Khan is a Big Tech critic who rose to prominence in 2017 as a Yale Law School student with his academic book “Amazon’s Antitrust Paradox.” In 2021, Amazon tried to remove her from the agency’s investigation into the company, citing her previous criticisms.
Under Khan’s watch, the FTC has actively sought to blunt Big Tech’s influence, most recently in efforts to block Microsoft’s acquisition of video game maker Activision Blizzard and Meta’s virtual reality acquisition. Some of the most high-profile lawsuits have failed. Start within unlimited. The agency is currently pursuing a long-running lawsuit against Facebook’s parent company, Meta, for engaging in monopolistic practices. The Department of Justice is also challenging Google’s market power in court.
In addition to the California lawsuit, the District of Columbia is also suing Amazon over its treatment of third-party sellers. The lawsuit was dismissed by a federal judge early last year and is currently on appeal.
This federal lawsuit follows other actions the FTC has taken against Amazon in the past few months. In June, the agency accused the company of using deceptive practices to get consumers to sign up for Amazon Prime and making it difficult for consumers to cancel their subscriptions. Amazon disputes the allegations.
In late May, the company agreed to pay a $25 million civil penalty to resolve allegations that it violated child privacy laws and misled parents about the data deletion practices of its popular voice assistant, Alexa.
