The Federal Trade Commission launched its major action against online shopping giant Amazon on Tuesday, accusing the company of illegally suppressing competition on its way to becoming a ubiquitous presence in retail and one of the most valuable companies in the world.
Attorneys general from 17 states joined the FTC’s lawsuit, claiming that Amazon is using a “series of interconnected anticompetitive and unfair strategies” to maintain a monopoly. The states that have signed the action of the FTC are Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island and Wisconsin.
“The complaint contains detailed accusations and notes how Amazon is now using its monopoly power to get rich while raising prices and worsening the service for the tens of millions of American families who shop on its platform and for the hundreds of thousands of businesses that depend on Amazon to reach them,” said Lina M. Khan, FTC chairwoman. “Today’s lawsuit is aimed at holding Amazon accountable for these monopolistic practices and restoring the lost promise of free and fair competition.”
As expected, Amazon resisted the FTC’s claims that could pose an existential threat to the company’s market dominance.
“If the FTC were to enforce its will, the result would be fewer products to choose from, higher prices, slower deliveries for consumers and limited options for small businesses – the opposite of what antitrust law is supposed to do,” said David Zapolsky, general counsel of Amazon. . “The lawsuit filed by the FTC today is false in terms of the facts and the law, and we look forward to bringing this case to court.”
The FTC and its state partners claim that Amazon has violated antitrust law in two separate areas: in its huge online store for buyers and in its seller-side marketplace. Amazon’s practice of punishing sellers who offer lower prices outside of Amazon and its strategy of aggressively pushing sellers to get prime status for their products are among the anti-competitive tactics the FTC cited in the lawsuit.
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“Amazon is a monopolist using its power to raise prices for American shoppers and to charge sky-high fees from hundreds of thousands of online sellers,” said John Newman, deputy director of the FTC’s competition bureau. “Rarely in the history of US antitrust law has a case had the potential to do so much good for so many people.”