The U.S. Federal Trade Commission (FTC) has initiated a long-anticipated antitrust lawsuit against Amazon.com, aiming to potentially compel the online retail giant to divest assets as part of the government’s broader efforts to combat the monopolization of critical aspects of the internet by major tech companies. According to the FTC, Amazon, a company that began in a garage in 1994 and is now valued at $1.3 trillion, is accused of actively impeding the efforts of sellers on its online marketplace to offer their products at lower prices on other platforms. The FTC alleges that Amazon compels sellers to utilize its warehouses and delivery services, which leads to increased costs for both consumers and sellers.
The FTC asserts that Amazon’s conduct constitutes monopolistic practices and an abuse of its market power. The agency cites a seller who stated, “We have nowhere else to go, and Amazon knows it.” This lawsuit had been widely anticipated, given the numerous complaints and concerns regarding the dominance of Amazon.com and other tech giants in sectors like search, social media, and online retail, where they have effectively become gatekeepers over highly profitable segments of the internet. Addressing Big Tech’s power has been a rare point of bipartisan consensus between Democrats and Republicans, and the head of the FTC has expressed particular apprehension about Amazon’s market influence.
This lawsuit, which has garnered support from 17 state attorneys general, follows a four-year investigation and is in line with similar federal legal actions taken against Google (Alphabet) and Facebook (Meta Platforms). The FTC is seeking a permanent injunction from the court to cease Amazon’s alleged unlawful practices. The lawsuit has been filed in federal court in Seattle, Amazon’s headquarters.
The FTC, in its complaint against Amazon, cautioned that if not addressed, the company would persist in its unlawful conduct to maintain its monopoly power. The FTC urged the court to intervene, cease Amazon’s illegal activities, dismantle its monopolistic control, prevent Amazon from benefiting from its unlawful practices, and restore the integrity of fair competition that has been compromised. The FTC’s complaint requested the court to consider various forms of equitable relief, including structural remedies, to reinstate fair competition. In antitrust terminology, structural relief often entails a company divesting or selling a portion of its business. During a press briefing, FTC Chair Lina Khan was questioned about the possibility of breaking up Amazon but declined to comment, emphasizing that the current focus is on establishing liability. Typically, in antitrust trials, the initial step involves determining whether the company violated the law, with discussions about potential remedies coming afterward.
Amazon responded to the FTC lawsuit, arguing that it was misguided and would ultimately harm consumers by potentially resulting in higher prices and slower deliveries. The company contended that the practices challenged by the FTC have actually encouraged competition and innovation in the retail industry, leading to a broader selection, lower prices, and quicker delivery for Amazon customers. Furthermore, these practices have created opportunities for numerous businesses operating on Amazon’s platform. Amazon underscored that it hosts 500,000 independent sellers on its platform. Following the announcement of the lawsuit, Amazon’s stock, which had been down 3.2% before the news, fell by 4% in late afternoon trading. Nevertheless, some investors saw potential upside from the lawsuit.