Is Amazon an illegal monopoly? The FTC says it is.


The U.S. government has filed an antitrust lawsuit against the retail giant

In a highly telegraphed move, the Federal Trade Commission (FTC) and 17 states have sued Amazon, claiming that the online retail and technology company has become a monopoly.

In their complaint, the FTC and its state partners say 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 makes clear the objection is not Amazon’s size. Instead, it alleges that Amazon is outside the law because it “engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging.”

The plaintiffs claim that Amazon stifles competition on price, product selection and quality, putting itself far beyond the reach of current or future competitors.

“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies,” said FTC Chair Lina Khan. 

“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.”

Amazon responds

Amazon quickly denied the government’s allegations. David Zapolsky, Amazon senior vice president of Global Public Policy and General Counsel, said the FTC has “radically departed” from its mission of protecting consumers.

“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,” Zapolsky said. “If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses—the opposite of what antitrust law is designed to do.”

The lawsuit claims Amazon’s alleged anticompetitive conduct occurs in two markets – the online superstore market that serves shoppers and the market for online marketplace services purchased by sellers. 

The complaint says Amazon takes measures that punish sellers and deter other online retailers from offering prices lower than Amazon. As a result, the FTC and states say prices are kept high for products all across the internet.

The FTC, along with its state partners, are seeking a permanent injunction in federal court that would prohibit Amazon from engaging in its unlawful conduct and pry loose Amazon’s monopolistic control to restore competition. What form that would take was not immediately clear.

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