On Tuesday, the Federal Trade Commission (FTC) and state attorneys general from 17 states brought a far-reaching antitrust lawsuit against Amazon. The case argues that the e-tail giant engages in unfair monopolistic practices that chokes off competition and raises prices.
The commission accuses Amazon of taking punitive measures against sellers that offer products for lower costs on other sites and pressuring them to sign up for its paid delivery network. According to FTC chair Lina Khan, Amazon “is exploiting its monopolies in ways that leave shoppers and sellers paying more for worse service.” The case follows FTC’s June complaint that the company tricks and traps people into Prime memberships.
The stakes are hard to underestimate. Amazon’s marketplace is the top online shopping destination in the U.S., accounting for more than 40 percent of all e-commerce, and according to the company, more than half of all items purchased there come from third-party merchants.
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The FTC seeks a permanent injunction for now, but that doesn’t mean it won’t try to break up the company later, as this legal tussle is expected to go on for a number of years.
In a response, Amazon tried to poke holes in the lawsuit’s fundamental premise. Its actions are not harmful to sellers and shoppers, it said — in fact, “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,” said Amazon general counsel David Zapolsky.
This story was reported by WWD and originally appeared on WWD.com.
