Today, the Federal Trade Commission (FTC) filed an antitrust lawsuit against Amazon in the Western Washington district court, joined by 17 states. While the lawsuit wasn’t entirely unexpected (there were reports of the FTC preparing to file it in late August), its specific details were previously undisclosed.
The FTC’s lawsuit alleges that Amazon has engaged in monopolistic practices, such as prohibiting merchants from offering lower prices on other platforms and compelling them to use Amazon’s logistics service to participate in Prime shipping benefits. These anti-competitive actions are believed to have resulted in higher prices for consumers and a subpar shopping experience.
The complaint highlights how Amazon’s combination of punitive measures against sellers and high seller fees coerces vendors to maintain elevated prices not just on Amazon but across other platforms as well. The result is a distortion of essential market signals, where sellers respond to Amazon’s fee increases by raising their prices outside of the Amazon marketplace.
FTC Chair Lina Khan stated, “Today’s lawsuit seeks to hold Amazon accountable for these monopolistic practices and restore the promise of free and fair competition,” as reported by The New York Times.
1. Today @FTC and 17 state AGs filed a lawsuit detailing how Amazon uses punitive & coercive tactics to unlawfully maintain its monopolies. Amazon is exploiting its monopoly power to enrich itself while raising prices & degrading service for its customers.https://t.co/7NiPGxx2CU
— Lina Khan (@linakhanFTC) September 26, 2023
The lawsuit against Amazon firmly states, “Amazon is a monopolist.” It alleges that Amazon leverages its monopolistic position to benefit itself at the expense of both its customers—comprising millions of American households who frequently shop on its online superstore—and the countless businesses that rely on Amazon to reach their customers.
Joining the FTC in this legal action are 17 states, including New York, Connecticut, Pennsylvania, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, Oklahoma, Oregon, Rhode Island, and Wisconsin.
The FTC’s scrutiny of Amazon has been ongoing for several years, and this marks the fourth action taken against the company this year. In May, Amazon settled a previous lawsuit for $30.8 million, which had been filed over concerns regarding children’s privacy with Alexa and Ring cameras. In June, the FTC sued Amazon again, alleging that the company misled customers into signing up for Prime subscriptions and made it difficult to cancel them.
Amazon has strongly objected to the FTC’s actions, asserting that the agency has strayed from its mission of safeguarding consumers and competition. David Zapolsky, Amazon’s Senior Vice President of Global Public Policy and General Counsel, stated, “Today’s suit makes clear the FTC’s focus has radically departed from its mission of protecting consumers and competition. The lawsuit filed by the FTC today is wrong on the facts and the law, and we look forward to making that case in court.”
Beyond the narrative of a showdown between FTC Chair Lina Khan and Amazon, this legal battle will serve as a significant test for both Washington regulators and Amazon itself. It will test the FTC’s authority and put Amazon in its most substantial political fight to date, with implications for how modern tech giants are governed under existing antitrust laws.
