FTC sues Amazon, alleging it has an illegal monopoly in online marketplace
Christopher Hutton
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The Federal Trade Commission and 17 state attorneys general filed a suit on Tuesday against Amazon, alleging the company is engaging in anticompetitive practices that have pushed other companies out of the marketplace.
The suit was authorized 3-0 by the Commission and filed in the Western District of Washington. The FTC alleges that that Amazon penalized sellers for having lower prices than its products by hiding them in their search results, as well as barring them from selling on other platforms.
The suit has been long expected, as FTC Chairwoman Lina Khan made her name in 2017 by arguing that the retail giant needed to be broken up due to its market influence.
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“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 press statement. “Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”
“We’re bringing this case because Amazon’s illegal conduct has stifled competition across a huge swath of the online economy,” John Newman, Deputy Director of the FTC’s Bureau of Competition, said in a statement. “Amazon is a monopolist that uses its power to hike prices on American shoppers and charge sky-high fees on hundreds of thousands of online sellers.”
The complaint alleges that Amazon violates antitrust law by engaging in behaviors that prevent current competitors in the market from growing through its pricing, product section, and quality assurance practices. The company participates in anti-discounting measures that punish sellers for offering prices lower than Amazon by burying them in search results, the complaint claims. Further, it says that Amazon requires sellers to use its fulfillment service to have their products included in Amazon Prime, making it harder for the sellers to offer the products on other platforms.
The complaint also claims that Amazon replaces relevant search results with paid ads, biases its search results toward its products, and charges costly fees to sellers who rely on the platform.
The commission and the states seek a permanent injunction against the practices listed in the suit.
“Today’s suit makes clear the FTC’s focus has radically departed from its mission of protecting consumers and competition,” David Zapolsky, Amazon Senior Vice President of Global Public Policy, said in a statement. “The practices the FTC is challenging 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.”
“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,” Zapolsky added.
Khan has brought a more aggressive approach to the agency’s enforcement in general. Khan wrote a well-known 2017 paper, “Amazon’s Antitrust Paradox,” during her time at Yale. Khan tried to make the case for antitrust enforcement against the company over the company’s size and market presence. Amazon has asked that Khan be recused from all matters involving the retail giant due to her academic work. The executives even went as far as to accuse the agency of ‘harassing’ company executives in an August 2022 filing.
“Since her time at Yale Law School, FTC Chair Lina Khan has made Amazon her white whale, and today she got her wish,” said Scott Brown, chairman of the Competitiveness Coalition, a group that advocates for light-touch antitrust policies and that has received funding from Amazon. “Her stunt is the latest in a long series of egregious overreach and should be rejected like countless other cases brought forward by this FTC. If it isn’t, the American consumer is in for a world of pain.”
The agency has previously sued Amazon over other practices. Amazon was sued in late June for using “dark patterns,” or the presence of software designs that make unsubscribing from Amazon Prime significantly more challenging than it is to subscribe.
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The lawsuit arrives a week after Congress hosted a hearing for Andrew Ferguson and Melissa Holyoak, the two Republican nominees for the FTC. Both have a history of scrutinizing Big Tech companies and would bring a similar perspective to the agency.