The U.S. Federal Trade Commission (FTC) has filed an anticipated antitrust lawsuit against Amazon.com (AMZN.O), urging the court to consider compelling the online retailer to sell assets. The government accuses Big Tech of monopolizing the most profitable aspects of the internet.
According to the FTC, Amazon, which began in a garage in 1994 and is now valued at $1.3 trillion, has been obstructing sellers on its online marketplace from offering products at lower prices on other platforms. The FTC claims that Amazon’s requirement for sellers to use its warehouses and delivery services inflates costs for both consumers and sellers.
The FTC asserts that Amazon is a monopoly and abuses its power. The FTC quotes a seller who states, “We have nowhere else to go and Amazon knows it.”
The lawsuit against Amazon.com and other tech giants, such as Alphabet’s Google (GOOGL.O) and Meta Platforms’ Facebook (META.O), follows a four-year investigation and federal lawsuits.
Taking action against Big Tech has been a rare point of agreement between Democrats and Republicans. The FTC chief has expressed particular concern about Amazon’s power.
The FTC, joined by 17 state attorneys general, is seeking a permanent injunction to halt Amazon’s unlawful conduct. The lawsuit was filed in federal court in Seattle, where Amazon is headquartered.
The FTC complaint requests the court to consider “any preliminary or permanent equitable relief, including but not limited to structural relief, necessary to restore fair competition.” In antitrust terms, structural relief typically involves a company selling off a part of its business.
During a press briefing, FTC Chair Lina Khan declined to discuss the idea of breaking up Amazon, stating that the focus at this stage is on liability. In other antitrust trials, the court first establishes that the company violated the law before discussing potential remedies.
Amazon has criticized the FTC lawsuit, arguing that it is misguided and will harm consumers by leading to higher prices and slower deliveries. The company claims that the practices challenged by the FTC have fostered competition and innovation in the retail industry, benefiting customers and businesses.
Following the announcement of the lawsuit, Amazon shares initially dropped 3.2% and later fell 4% in late afternoon trade. Some investors see potential upside from the lawsuit.
The FTC alleges that Amazon penalizes sellers who attempt to offer lower prices than Amazon’s own prices by making it difficult for consumers to find those sellers on Amazon’s platform. Other allegations include Amazon favoring its own products over competitors on its platforms.
The case was filed in the U.S. District Court for the District of Columbia and assigned to Judge John Coughenour, who was nominated by Republican President Ronald Reagan in 1981.
FTC Chair Lina Khan claims that Amazon has used illegal tactics to fend off potential competitors and is now exploiting its monopoly power to harm customers and sellers.
Khan, who previously wrote about Amazon’s dominance in online retailing, has been critical of Amazon’s power. She was part of the House committee that issued a report in 2020 advocating for reining in four tech giants: Amazon, Apple (AAPL.O), Google, and Facebook.
Critics of Amazon have welcomed the lawsuit, expressing concerns about the company’s centralized power and its impact on open, democratically governed markets.
During the Trump administration, the Justice Department and FTC initiated investigations into Google, Facebook, Apple, and Amazon. The Justice Department has sued Google twice, and the FTC sued Facebook. The Biden administration has continued with the lawsuits.
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