On Tuesday, September 26, 2023, the Federal Trade Commission and 17 states filed an antitrust lawsuit against Amazon, Inc. in the U.S. District Court, Western District of Washington.
The complaint alleges that Amazon is a monopolist “exploit[ing] its monopolies in ways that enrich Amazon but harm its customers.” The complaint states that “Amazon has hiked so steeply the fees it charges sellers that it now reportedly takes close to half of every dollar from the typical seller that uses Amazon’s fulfillment service.” Further, “Amazon is degrading the services it provides [customers]. . . Amazon shifted gears so that it now litters its storefront with pay-to-play advertisements [rather than prioritizing relevant, organic search results].”
The complaint states that in a competitive marketplace, these practices would allow opportunities for competitors to attract business and gain momentum, “[b]ut Amazon has engaged in an unlawful monopolistic strategy to close off that possibility. . . Amazon uses a set of anti-discounting tactics to prevent rivals from growing by offering lower prices, and it uses coercive tactics involving its order fulfillment service to prevent rivals from gaining the scale they need to meaningfully compete.” The complaint states that Amazon’s strategy blocks competition in the form of price, product selection, quality, and innovation among online superstores and online marketplace services.
In essence, “Amazon has violated the law not by being big, but by how it uses its scale and scope to stifle competition.” The complaint cites examples of how Amazon buries discounting sellers down the Amazon search results to effectively make these sellers invisible to consumers. The complaint also points to ways in which Amazon has conditioned sellers’ ability to obtain “Prime” eligibility for their products on sellers using Amazon’s fulfillment service, which makes it more expensive for sellers on Amazon to also offer products on other platforms. The FTC further highlights the manner in which Amazon degrades the customer experience by prioritizing paid advertisements, preferring Amazon’s own products over other products of better quality, and charging costly fees on sellers as a means to amass power and extract monopoly rents in the online superstore and online marketplace services markets.
In a statement, Amazon has responded that “[t]he FTC’s lawsuit against Amazon would lead to higher prices and slower deliveries for consumers – and hurt businesses. . . [t]he lawsuit reveals the Commission’s fundamental misunderstanding of retail.” Amazon states that “[t]he FTC’s allegation that we somehow force sellers to use our optional [fulfillment and advertising] services is simply not true. Sellers have choices. . . When sellers have multiple options and can choose the right fit for them, the result is increased competition for those services, better prices, and a better experience for both sellers and the customers we all serve.” With regard to the complaint’s claim that Amazon is stifling competition, the statement says that “[t]he FTC pretends that this everyday retail competition doesn’t exist. . . Amazon may not be the small business it once was, but we’re still just a piece of a massive and robust retail market with numerous options for consumers and sellers.”
Additional Reading
FTC files a massive antitrust lawsuit against Amazon, The Verge (September 26, 2023)
FTC Sues Amazon for Illegally Maintaining Monopoly Power, Federal Trade Commission (September 26, 2023)
The FTC’s lawsuit against Amazon would lead to higher prices and slower deliveries for consumers—and hurt businesses, Amazon (September 26, 2023)
Federal Trade Commission et al v. Amazon.com Inc (Case No. 2:2023cv01495)
Complaint in Federal Trade Commission et al v. Amazon.com Inc
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