FTC and 17 U.S. States Accuse Amazon of Monopoly Practices in Landmark Lawsuit
After years of investigations and escalating tensions between Amazon and political authorities, the Federal Trade Commission (FTC) along with 17 U.S. states filed a complaint against the tech giant on Tuesday. They accused Amazon of “illegally maintaining its monopoly” through “anti-competitive and unfair practices.”
The FTC clarified that the issue at hand is not Amazon’s size but its “unlawful tactics aimed at excluding competitors, hindering their growth, and preventing alternatives from emerging.”
One of the key allegations against Amazon is its practice of discouraging third-party sellers from offering lower prices than Amazon’s own prices on products where Amazon competes with these sellers.
The FTC also criticized Amazon for linking merchants’ eligibility for the “Prime” subscription service, which offers fast delivery to consumers, to the use of Amazon’s “expensive” logistics services.
Lina Khan, President of the FTC, stated that “Amazon is leveraging its monopoly power to enrich itself, while raising prices and degrading service for millions of American families who shop on its platform and the hundreds of thousands of companies that rely on Amazon to market their products.”
In response, David Zapolsky, a vice president at Amazon, contended that the FTC has strayed from its mission to protect consumers and competition. He asserted that Amazon’s practices have encouraged competition and innovation in the retail sector, providing greater choice, lower prices, and shorter delivery times to Amazon customers.
Amazon, a company with $134.4 billion in revenue and $6.7 billion in net profit in the second quarter of this year, highlights the growth in sales by third-party sellers on its platform. In 2022, more than 60% of sales on Amazon came from independent sellers, many of whom are small and medium-sized businesses, according to the company.
However, many NGOs argue that small businesses suffer from an imbalanced power dynamic with Amazon. Stacy Mitchell, co-director of the Institute for Local Self-Reliance, stated that SMEs have been waiting for this moment for a long time. She highlighted how Amazon, by controlling market access, can favor its own products, gather data from other companies, and make arbitrary decisions that can severely impact sellers.
Amazon holds a dominant position in the U.S. e-commerce market, representing 37.6% of online sales, far ahead of competitors like Walmart (6.8%), Apple (3.5%), and eBay (3.1%).
U.S. officials and the Biden administration have been striving to address the perceived “monopoly” power of tech giants like Amazon, with limited success. In June, the FTC filed a complaint against Amazon for its Prime subscription practices, and it has previously taken legal action regarding data privacy concerns.
This case is part of ongoing efforts to regulate and curb the influence of major technology companies in the United States.