U.S. Government and 17 States Sue Amazon Over Alleged Anticompetitive Practices That Led to Higher Prices for Consumers The FTC and state attorneys general claim that Amazon has used its dominant position to favor its own products and services, which has harmed third-party sellers on its platform.
By Madeline Garfinkle •
Key Takeaways
- The lawsuit seeks to halt Amazon's alleged anticompetitive actions, with a focus on how Amazon stifles competition in pricing, product selection and quality.
- Amazon has rejected the allegations and defended its practices.
Opinions expressed by Entrepreneur contributors are their own.
The U.S. government and more than a dozen states are suing Amazon, alleging the company engaged in anticompetitive practices and monopolized various markets over the years. The Federal Trade Commission (FTC) and 17 state attorneys general assert that Amazon used its dominant position to favor its own services, harming third-party sellers on its platform and leading to higher prices for consumers.
The complaint, spanning 172 pages, was filed in the U.S. District Court for the Western District of Washington and aims to halt Amazon's alleged anticompetitive actions. The FTC asserts that Amazon harms competitors, sellers and consumers by stifling competition in pricing, product selection and quality. Furthermore, the lawsuit alleges that Amazon unfairly promotes its own products and services, disadvantaging third-party sellers that rely on its platform.
The FTC has not explicitly stated that it seeks a breakup of Amazon, FTC chair Lina Khan told reporters, per CNN, and that the complaint is more "focused on the issue of liability." However, the possibility still looms as the complaint states that any court directive aimed at addressing the issue might call for "structural relief," a legal term that alludes to the potential division or breakup of a company.
The suit also raises the prospect of holding Amazon executives personally liable if evidence of their involvement in anticompetitive behavior emerges.
Amazon has rejected the allegations and defended its practices, arguing that they benefit consumers and businesses.
"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," Amazon said in a statement to Entrepreneur. "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."
Related: The FTC Is Suing Amazon For Allegedly Signing Up Customers For Prime Without Their Consent
Among those spearheading the lawsuit is Khan, whose fight against Amazon dates back to 2017, when she published "Amazon's Antitrust Paradox" as a law student at Yale. In the paper, Khan questioned the relevance of consumer price-focused competition laws in the era of tech giants like Amazon. She argued that Amazon's low pricing strategy allowed it to amass market share and dominate essential infrastructure.
FTC chair Lina Khan is among those taking action against Amazon. Michael M. Santiago | Getty Images.
Now, the case centers on the definition of the retail market — with Amazon viewing itself as a small part of the retail sector and the FTC defining it as a conglomerate of "online superstores."
"If we succeed," Khan told reporters on Tuesday, per The Washington Post, "competition will be restored, and people will benefit from lower prices, greater quality, greater selection as a result."
The Amazon lawsuit comes in the wake of another high-profile case against Google. The Department of Justice is suing the tech giant, alleging that the company unlawfully maintained its search-engine dominance through exclusionary deals with other partners, like Apple, to ensure its monopoly and subsequently stifled competition and halted innovation.
