Amazon sued in the U.S. on charges of harming merchants and competitors
The U.S. Federal Trade Commission (FTC) and prosecutors from 17 states in the country filed a lawsuit against Amazon on Tuesday (26). They accuse Amazon of using “monopoly power” to inflate prices, worsen conditions for consumers and illegally exclude rivals.
Lina Khan, chair of the FTC, said Amazon uses “punitive and coercive tactics” to maintain its monopolies. The lawsuit explores a long-standing criticism of Amazon. The company offers a platform for sellers, but also markets its products on the same platform, as well as encouraging both merchants and consumers to use its delivery services.
For the FTC, the retailer stifles competition in pricing, product selection and quality. The commission highlights two tactics allegedly used:
Punish sellers who offer lower prices on other platforms, making all online retail more expensive as a consequence.
Condition sellers to use their logistics service, which is expensive, to get the Prime seal.
In addition, the lawsuit accuses Amazon of derailing searches by placing advertisements for bad products in the results, directing searches to items sold by itself, and charging fees and commissions that can reach 50 percent of what sellers receive.
FTC chairman is in the glue of Amazon and other giants
The lawsuit had been expected for years, and gained traction with Khan’s arrival at the FTC in 2021. She was a professor at Columbia University and specializes in antitrust law.
Amazon and Meta (then Facebook) filed motions against Khan when she took office, saying trials with her participation would not be fair. The president has published articles against the retailer since her student days.
Under her leadership, the FTC filed a lawsuit against Microsoft to stop the purchase of Activision Blizzard. The U.S. court approved the acquisition. The authority also tried unsuccessfully to prevent Meta from buying virtual reality company Within Unlimited.
In addition to Tuesday’s lawsuit, the agency sued Amazon on charges of hindering the cancellation of Prime’s subscription in the U.S. and privacy concerns involving the Ring cameras and the Alexa virtual assistant.
What Amazon says
Amazon has countered the Federal Trade Commission’s accusations. “The FTC’s lawsuit is wrong on the facts and the law, and we look forward to showing it in court,” reads the statement, signed by David Zapolsky, the company’s senior vice president of global public policy.
“The practices fought by the FTC have helped spur competition and innovation across the retail industry and led to better selection, lower prices and faster deliveries to Amazon customers, as well as greater opportunities for the many businesses that sell on Amazon.”
