The bipartisan consensus on the need for action against Big Tech has grown, with particular concern from the FTC chief about Amazon’s influence. The U.S. Federal Trade Commission has finally filed a long-awaited antitrust lawsuit against Amazon.com, urging the court to consider potential asset sales as part of the government’s allegations of Big Tech’s monopolization of the most lucrative aspects of the internet.
In its lawsuit, the FTC accuses Amazon, originally founded in a garage in 1994 and now valued at $1.3 trillion, of obstructing sellers on its online marketplace from offering products at lower prices on other platforms. The FTC contends that Amazon compels sellers to use its warehousing and delivery services, thereby inflating costs for both consumers and sellers.
The FTC asserts that Amazon wields its power as a monopoly and abuses it. One seller is quoted as saying, “We have nowhere else to go, and Amazon knows it.” This lawsuit was long anticipated after years of complaints about Amazon.com and other tech giants exploiting their dominance in search, social media, and online retail to become gatekeepers of the most profitable aspects of the internet.
This legal action, supported by 17 state attorneys general, follows a four-year investigation and previous federal lawsuits against Google (Alphabet) and Facebook (Meta Platforms). The FTC seeks a permanent injunction to compel Amazon to cease its alleged illegal practices, filing the lawsuit in federal court in Seattle, Amazon’s home base.
The FTC’s complaint also requests the court to consider “any preliminary or permanent equitable relief, including but not limited to structural relief, necessary to restore fair competition.” Structural relief typically involves a company divesting a portion of its business. In response to questions about the possibility of breaking up Amazon, FTC Chair Lina Khan declined to comment, emphasizing that the current focus is on establishing liability.
Amazon strongly opposes the FTC’s lawsuit, arguing that it would negatively impact consumers by increasing prices and slowing down deliveries. The company asserts that the practices in question have fostered competition and innovation in the retail industry, resulting in greater product selection, lower prices, and faster delivery for customers, as well as increased opportunities for the numerous businesses operating on Amazon’s platform.
Following the announcement of the lawsuit, Amazon’s shares dropped by 4% in late afternoon trading, reflecting mixed reactions from investors. Some believe that regardless of the outcome, shareholders could benefit, with the potential for a higher valuation for Amazon Web Services (AWS) if the company were to be broken up.
The FTC’s lawsuit alleges that Amazon penalized sellers attempting to offer lower prices than Amazon’s own listings, making it challenging for consumers to locate such sellers on the platform. Additionally, the lawsuit accuses Amazon of favoring its own products over those of competitors on its platforms.
This case has been filed in the U.S. District Court for the District of Columbia and has been assigned to Judge John Coughenour, who was appointed to the bench by Republican President Ronald Reagan in 1981.
