FTC sues Amazon over alleged anti-competitive practice

The Federal Trade Commission (FTC), the US consumer agency responsible for enforcing federal antitrust law, has teamed up with 17 US state attorneys general in filing a lawsuit against Amazon in the US District Court for the Western District of Washington. The complaint alleges that Amazon engages in anti-competitive practices to maintain its monopoly power, which hinders the growth of competitors and stifles the emergence of new ones. The complaint further argues that through tactics that suppress competition in pricing, product selection, and quality, Amazon holds its dominant position in the retail industry, impacting billions of dollars in sales, a wide range of products, and millions of shoppers.

The FTC also claims that Amazon’s illicit practices include penalizing sellers who offer lower prices on other platforms, suppressing their visibility in search results, and tying seller eligibility for “Prime” to using Amazon’s expensive fulfillment service, thereby limiting competition.

In response, David Zapolsky, Senior Vice President of Global Public Policy and General Counsel at Amazon, stated in a blog post that the lawsuit is misguided and complying with the FTC’s demands would lead to a decrease in product variety, higher prices, slower deliveries for consumers, as well as limited options for small businesses. As such, Zapolsky claims that this goes against the purpose of antitrust law.
It is worth noting that even before becoming FTC chair, Lina Khan argued in her paper “Amazon’s Antitrust Paradox” that relying solely on price as a measure in antitrust cases is insufficient for identifying the antitrust issues arising from Amazon’s activities.

Why does it matter?

The lawsuit comes after a four-year investigation by the FTC into big tech companies, including Google, Meta, Apple, and Amazon. The outcome of this case could have significant ramifications for testing the scope of US competition and antitrust regulation. For Amazon, this case adds to a series of legal challenges that could result in potential damages amounting to billions of dollars.