The FTC filed an antitrust lawsuit in the U.S. District Court for the Western District of Washington, backed by the attorneys general of 17 states, including two Republicans.
The Federal Trade Commission, the U.S. government’s primary business regulator, sued Amazon on Tuesday, alleging that the company has used its market power to warp ecommerce across the internet.
The allegations focus on the company’s primary marketplace, Amazon.com, and paint a picture of a company able to use its size and power to pressure sellers to agree to its terms and warp the prices of goods.
“There is immediate harm that is ongoing here,” FTC Chair Lina Khan said at a news conference ahead of the lawsuit announcement. “Sellers are paying one of every $2 to Amazon. Shoppers are paying higher prices as a result, not just on Amazon but across the internet. And the public as a whole has been deprived of the benefits of open and fair and free competition. And so that’s what this case is really about, and those are the harms that we’re looking to fix.”
The FTC made the allegations in an antitrust lawsuit in the U.S. District Court for the Western District of Washington state, backed by the attorneys general of 17 states, including two Republicans. Amazon is based in Washington state.
The lawsuit is the most aggressive action yet by Khan, a longtime critic of Amazon who was brought in to the FTC by President Joe Biden to reinvigorate the government’s enforcement of competition laws particularly around technology companies.
The FTC alleges that Amazon deters sellers from discounting goods and lowering prices below what is available on Amazon, pushing prices higher across the internet. It also argues that Amazon pushes sellers into its fulfillment services, making it more expensive for sellers to offer their goods elsewhere.
California lodged similar complaints in a lawsuit filed just more than a year ago.
Kahn declined to directly address whether she hoped the suit would lead to a breakup of Amazon into smaller companies, but stressed that it showed Amazon had established an unfair advantage.
“Each element of Amazon’s monopolistic strategy here is working in tandem, and so the cumulative impact of Amazon’s unlawful conduct is greater than the harm caused by any particular element,” she said. “So you have a feedback loop between these different practices in a way that amplifies the overall exclusionary effects.”
In a statement posted to Amazon’s website, David Zapolsky, Amazon’s senior vice president for global public policy, said: “The practices the FTC is challenging have helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store.”
Under Khan’s leadership, the FTC has already taken several actions to counter Amazon this year. It sued the company in June for how it automatically renewed customers’ Prime subscriptions. It has proposed that Amazon pay $25 million for alleged improper storage of children’s data obtained through Alexa devices. And Amazon settled with the agency for $5.8 million in May after the FTC accused it of allowing employees to view data obtained via Ring cameras.
The lawsuit is the latest aggressive action taken by the FTC in recent decades, extending Khan’s efforts to take on giants like Microsoft and Google — with mixed results. Federal judges in both cases swatted down the FTC’s actions.
William Kovacic, a former FTC chairman who is now a professor at George Washington University, said the case will come down to whether the FTC can prove that Amazon’s actions hurt consumers.
“The heart and soul of the case will be the debate over whether or not the technicques used by Amazon improved consumer experience or degraded it,” he said.
Kovacic noted that antitrust trials like these usually take at least three years just for an initial decision, after which come appeals that can drag on for more years.
He called the case “an enormously ambitious undertaking” especially when considered in the context of the FTC’s other ongoing cases.
Amazon’s share price ticked up slightly after the FTC announcement, though its shares were down about 2.6% on the day as of early Tuesday afternoon. Amazon shares are up almost 50% in 2023, outpacing the S&P 500, which is up about 12%.
