The Federal Trade Commission (FTC) and 17 state attorneys general sued Amazon on Tuesday for allegedly using “interlocking and anticompetitive and unfair” strategies to maintain its monopolistic power over current and future rivals.
“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,” the agency and its state partners said in a news release.
The complaint alleges that Amazon’s “far-reaching schemes” impact hundreds of billion dollars in retail sales yearly for businesses by stifling competition on price, product selection, and quality while simultaneously preventing rival companies from gaining shoppers and sellers on a massive scale. According to the agency, Amazon’s “anticompetitive” conduct occurs in two markets — the online superstore market that serves shoppers and the market for online marketplace services purchased by sellers.
John Newman, deputy director of the FTC’s bureau of competition, said the case could potentially “do so much good for so many people.”
Federal officials announced the major federal lawsuit — led by FTC Chair Lina Khan — after the agency voted 3-0 to move forward with the charges in the U.S. District Court for the Western District of Washington.
Khan, a Democrat appointed by President Joe Biden, reportedly garnered attention as a law student at Yale University when she published an influential antitrust and competition law essay targeting Amazon’s business practices. But rumors of the FTC going after the online retail giant have been circulating since the Trump administration.
“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,” Khan said in a news release.
If successful, the American multinational technology company faces restructuring fundamental business operations that would “pry loose its monopolistic control to restore competition,” according to the FTC.
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David Zapolsky, senior vice president of Amazon’s global public policy and general counsel, responded to the suit on Tuesday, saying the federal agency “is wrong on the facts and the law” and has “radically departed” from its original purpose to enforce federal consumer protection laws and antitrust laws.
“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,” Zapolsky said. “If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses—the opposite of what antitrust law is designed to do.”