The Federal Trade Commission and 17 state attorneys general filed an antitrust lawsuit against Amazon on Tuesday, accusing the e-commerce giant of operating an illegal monopoly, thereby overcharging for goods and locking merchants into predatory agreements.
The lawsuit says that Amazon crossed the line by punishing sellers with anti-discounting measures if they sold their products for less on other platforms. The FTC also said sellers have had no option but to pay for the company’s logistics service if they want their products to show up in Amazon Prime, the subscription service that boasts expedited shipping and video streaming.
Merchants have felt forced into purchasing more services from Amazon than necessary, including advertising packages, the suit alleges.
Compelling merchants to enroll in logistics and advertising programs, “Amazon now takes one of every $2 that a seller makes,” Lina Khan, the FTC chair, said Tuesday in a news briefing.
Amazon has denied the accusations.
“Today’s suit makes clear the FTC’s focus has radically departed from its mission of protecting consumers and competition,” Amazon’s general counsel, David Zapolsky, said in a statement.
“The practices the FTC is challenging have helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store,” he said.
Zapolsky went on to say the suit is wrong on the facts and the law.
Amazon tries to get Khan recused
When Khan was in law school in 2017, she wrote a paper for the Yale Law Journal on Amazon’s dominance in e-commerce. The Associated Press reports that in 2021, Amazon sought to have Khan recused from agency investigations of the company because of her earlier criticism.
The sprawling lawsuit represents one of the most significant legal challenges Amazon has come up against in its 30-year history. According to CBS News, Khan dodged questions over whether the FTC will try to force the site’s breakup.
“At this stage, the focus is more on liability,” she said.
Most sellers independent
More than 60% of sales in Amazon’s store come from independent sellers — most of which are small and medium-sized businesses, according to the retail giant’s official data. Founded by Jeff Bezos in 1994, the company is worth $1.3 trillion.