FTC sues Amazon accusing the online retailer of wielding monopoly power to jack up prices by punishing sellers who offer discounts on other sites

The U.S. Federal Trade Commission has filed a long-awaited antitrust lawsuit against Amazon, accusing the online retail giant of stifling competition and harming consumers with higher prices.

The lawsuit filed Tuesday in federal court in Seattle, where Amazon is headquartered, is the government’s latest legal shot in the arm to break Big Tech’s dominance of the internet.

The lawsuit, which included 17 attorneys general, follows a four-year investigation into Amazon and federal lawsuits filed against Alphabet’s Google and Facebook owner Meta.

The FTC accuses the Silicon Valley giant of anticompetitive practices, including punishing sellers who offer lower prices on various websites by burying their listings on Amazon and making them harder to find.

The complaint also alleges that the company worsens the customer experience by replacing relevant search results with paid advertisements, favoring its own brands over other products it knows are of better quality, and charging high fees that force sellers almost half of their total revenue to Amazon.

In a briefing with reporters, FTC Chair Lina Khan (above) dodged whether the agency will push for a breakup of Amazon

Amazon fired back, arguing that the FTC lawsuit was wrong and would harm consumers by leading to higher prices and slower deliveries.

“The practices the FTC is challenging have helped drive competition and innovation in the retail industry, leading to greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunities for the many businesses that serve in-store Sell ​​Amazon. said David Zapolsky, Amazon’s general counsel.

The FTC said it was asking the court to issue a permanent injunction ordering Amazon to stop its unlawful conduct.

The filing also asked the court to consider forcing the online retailer to sell assets, hinting at a possible attempt to break up the online retail giant.

Many had wondered whether the agency would seek a forced breakup of the retail giant, which is also dominant in cloud computing and has a growing presence in other sectors such as groceries and healthcare.

In a briefing with reporters, FTC Chair Lina Khan dodged questions about whether the agency will push for a breakup.

“At this stage the focus is more on accountability,” she said.

However, the FTC complaint asked the court to “consider any interim or permanent equitable relief, including but not limited to structural relief, necessary to restore fair competition.”

Structural relief, in antitrust jargon, generally means a company selling an asset, such as part of its business.

Some estimates show that Amazon has about 40 percent of the e-commerce market

Some estimates show that Amazon has about 40 percent of the e-commerce market.

The majority of sales on the platform are facilitated by independent sellers, consisting of small and medium-sized businesses and individuals.

In exchange for the access it provides to its platform, Amazon rakes in billions through referral fees and other services like advertising, which make products sold by sellers more visible on the platform.

The vast majority of third-party sellers also use the company’s fulfillment service to stock inventory and ship items to customers. Amazon has consistently raised fees for those who rely on the program and more recently imposed and then eliminated fees on those who don’t, a move rejected by the company’s critics.

Last quarter, Amazon reported $32.3 billion in revenue from third-party services. According to the anti-monopoly organization Institute for Local Self-Reliance, fees cost U.S. sellers 45 percent of their sales in the first half of this year — up from 35 percent in 2020 and 19 percent in 2014.

Amazon has also long faced accusations of undercutting companies that sell on its platform by reviewing seller data and creating its own competing product that it then promotes on the site.

In August, the company said it would eliminate some internal brands that weren’t resonating with customers and relaunch some items under existing brands such as Amazon Basics and Amazon Essentials.

Booksellers and authors have also urged the Justice Department to investigate what they call Amazon’s “monopoly power in the marketplace for books and ideas.”

Khan said Amazon had used illegal tactics to fend off companies that would have risen to challenge its monopoly.

“Amazon is now exploiting that monopoly power to harm its customers, both the tens of millions of families who shop on Amazon’s platform and the hundreds of thousands of sellers who use Amazon to reach them,” she said.

While in law school, Khan wrote about Amazon’s dominance in online retail for “The Yale Law Journal” and was part of the staff of the House committee that authored a 2020 report advocating reining in four tech giants : Amazon, Apple, Google and Facebook.

In 2021, Amazon had tried to have her cleared from agency investigations against the company over her past criticism.

Under Khan’s watch, the FTC has aggressively sought to blunt Big Tech’s influence.

Some of those bids have been unsuccessful, such as the attempt to block Microsoft’s acquisition of video game maker Activision Blizzard and Meta’s acquisition of virtual reality startup Within Unlimited.

Amazon’s critics welcomed the new lawsuit.

‘No company has ever centralized so much power over so many crucial sectors. Left unchecked, Amazon’s power to dictate and control threatens the rule of law and our ability to maintain open, democratically governed markets,” said Stacy Mitchell of the Institute for Local Self-Reliance, which has urged on government action against Amazon.

The need to take action against Big Tech is one of the few ideas that Democrats and Republicans agree on.

During the Trump administration, which ended in 2021, the Justice Department and the FTC opened investigations into Google, Facebook, Apple and Amazon.

The Justice Department has sued Google twice: once under Republican Donald Trump over its search activities and a second time over ad technology since Democratic President Joe Biden took office.

The FTC sued Facebook during the Trump administration, and Biden’s FTC continued the lawsuit.