Amazon Faces Antitrust Lawsuit From FTC and 17 States

The US government and 17 states have filed a landmark antitrust lawsuit against Amazon, alleging that the online retail and technology company is a monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power.

The lawsuit, which was announced on September 26, 2023, reflects years of allegations that Amazon abused its economic dominance and harmed fair competition in two markets: the online superstore market that serves shoppers and the market for online marketplace services purchased by sellers.

According to the complaint, Amazon's actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon.

The complaint also alleges that Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging.

By stifling competition on price, product selection, quality, and by preventing its current or future rivals from attracting a critical mass of shoppers and sellers, Amazon ensures that no current or future rival can threaten its dominance.

The lawsuit claims that Amazon's far-reaching schemes impact hundreds of billions of dollars in retail sales every year, touch hundreds of thousands of products sold by businesses big and small and affect over a hundred million shoppers.

"Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies," said FTC Chair Lina M. Khan in a press release[^1^]. "The complaint sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them. Today's lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition."

The states involved in the case are Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin.

Some of the specific tactics that the lawsuit accuses Amazon of using include:

Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet.
Requiring sellers on its platform to purchase Amazon's in-house logistics services in order to secure the best seller benefits, referred to as "Prime" eligibility, which gives them access to millions of loyal customers who pay a monthly fee for faster and free shipping.
Ranking its own products in marketplace search results higher than those sold by third parties, even when they are less relevant, cheaper, or better rated by customers.
Using its access to data from sellers and shoppers to copy and promote its own private-label products that compete directly with them.
Imposing excessive fees and penalties on sellers that reduce their profits and limit their ability to invest in their businesses.

The lawsuit seeks a court order blocking Amazon from engaging in the allegedly anticompetitive behavior, as well as other relief that the court may deem appropriate.

Amazon has not yet issued a formal response to the lawsuit, but in the past, the company has denied any wrongdoing and argued that it faces intense competition from other online and offline retailers.

The lawsuit marks the government's sharpest attack yet against Amazon, a company that started off selling books on the internet but has since become known as "the everything store," expanding into selling a vast range of consumer products, creating a globe-spanning logistics network and becoming a powerhouse in other technologies such as cloud computing, artificial intelligence, and digital entertainment.

The lawsuit also comes amid a broader scrutiny of the power and influence of Big Tech companies, such as Google, Facebook, Apple, and Microsoft, by regulators, lawmakers, and consumers.

The FTC and the states are not the only ones challenging Amazon's practices. The company is also facing lawsuits from other parties, such as the California attorney general, who sued Amazon last year over its price parity policy[^2^], and the District of Columbia attorney general, who sued Amazon in May over its alleged abuse of its dominant position in online retail[^3^].

The outcome of the lawsuit could have significant implications for the future of e-commerce, innovation, and consumer choice in the US and beyond.

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