The Federal Trade Commission (FTC) and 17 state attorneys general have filed a lawsuit against Amazon.com, Inc., accusing the online giant of using illegal and unfair tactics to maintain its monopoly power in two markets: the online superstore market that serves shoppers and the market for online marketplace services purchased by sellers.
The lawsuit, filed on Tuesday in the U.S. District Court for the District of Columbia, alleges that Amazon has engaged in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging. The complaint claims that Amazon’s actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon.
“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies,” said FTC Chair Lina M. Khan in a press release. “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.”
The FTC and states allege that some of Amazon’s anticompetitive conduct includes:
- Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet.
- Conditioning sellers’ ability to obtain “Prime” eligibility for their products—a virtual necessity for doing business on Amazon—on sellers using Amazon’s costly fulfillment service, which has made it substantially more expensive for sellers on Amazon to also offer their products on other platforms.
- Degrading the customer experience by replacing relevant, organic search results with paid advertisements—and deliberately increasing junk ads that worsen search quality and frustrate both shoppers seeking products and sellers who are promised a return on their advertising purchase.
- Biasing Amazon’s search results to preference Amazon’s own products over ones that Amazon knows are of better quality.
The lawsuit seeks to end Amazon’s illegal monopoly practices and restore competition in the affected markets. The FTC and states are also seeking monetary relief for consumers and sellers harmed by Amazon’s conduct.
The lawsuit is the latest in a series of antitrust actions taken against Big Tech companies by federal and state authorities. In October 2020, the Department of Justice sued Google for allegedly abusing its dominance in online search and advertising. In December 2020, the FTC and 46 states sued Facebook for allegedly maintaining its social media monopoly through illegal acquisitions. Both cases are still pending in court.
Amazon has previously denied that it has a dominant position in any market and argued that it faces intense competition from other online and offline retailers.
Amazon’s Response
Amazon has issued a formal response to the FTC’s antitrust lawsuit, denying the allegations and claiming that the FTC’s focus has radically departed from its mission of protecting consumers and competition. Amazon said that its practices have helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices, faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store. Amazon also said that the lawsuit is wrong on the facts and the law, and that it looks forward to making its case in court. You can read Amazon’s full statement here.
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