The US government and 17 states are suing Amazon in a landmark monopoly case, alleging that the company has abused its economic dominance, kept prices artificially high, and undermined fair competition.
The 172-page complaint accuses Amazon of unfairly promoting its own platform and services at the expense of third-party sellers who rely on the
Amazon marketplace for distribution, my colleague Brian Fung writes.
What exactly does that mean?
Say you run a business that sells chairs. Naturally, you want your chairs to show up on Amazon's website because that's where people shop for, well, just about everything.
To do that, Amazon is going to make you buy its in-house logistics service to secure certain benefits, referred to as "Prime" eligibility. The company may even force you to list your chairs on Amazon at the lowest prices on the internet — in other words, you can't give customers a discount for buying on your own website or on, say, Walmart.com. (That anti-discounting practice is already the subject of a separate lawsuit against Amazon filed by California's attorney general last year.)
The FTC's lawsuit is basically saying that Amazon is so dominant, chair sellers like you have little choice but to accept Amazon's terms, which ultimately keeps prices high and is not ideal for consumers. On top of all that, Amazon ranks its own products higher in marketplace search results.
Amazon's critics have made similar accusations of anticompetitive behavior for years. Regulators, lawmakers, consumer goods makers and consumer advocacy groups have accused the company of all manner of monopolistic behaviors, including mistreating its workers, forcing businesses to accept anticompetitive terms, and using sellers' own commercial data against them.
At minimum, Amazon competes with sellers on the very same marketplace it controls, and that looks a lot like a conflict of interest.
What Amazon says
"Today's suit makes clear the FTC's focus has radically departed from its mission of protecting consumers and competition," said David Zapolsky, Amazon's senior vice president of global public policy and general counsel.
He said Amazon's practices have helped spur competition, innovation and selection across the retail industry. He argued that Amazon has fostered lower prices, faster delivery and helped small businesses sell their goods.
If the FTC succeeds, he wrote in a blog post, it could force Amazon to engage in "practices that actually harm consumers" by having to feature higher prices and make Prime "more expensive and less convenient."
What does the FTC want?
The complaint filed Tuesday in Seattle seeks a court order blocking Amazon from engaging in the allegedly anticompetitive behavior.
Lina Khan, the FTC chair who has long had Amazon in the crosshairs, declined to comment on whether the agency would seek a breakup of the company, saying the case is currently focused on proving Amazon's liability under federal antitrust law.
Khan is widely credited with kickstarting antitrust scrutiny of Amazon in the United States with a Yale Law Review paper she authored in 2017. She later helped lead a congressional investigation into the tech industry's alleged competition abuses, detailing in a 450-page report how Amazon — as well as Apple, Google and Meta — enjoy "monopoly power."
In 2021, President Biden stunned many in Washington when he tapped Khan not only to serve on the FTC but to lead the agency, sending a signal that he supported tough antitrust oversight.
Tuesday's lawsuit is perhaps the strongest case yet against Amazon because it drives at the heart of its e-commerce business and focuses on some of the most persistent criticisms of the company.
Big picture
The Biden administration has made no secret of its mission to rein in Big Tech. The FTC has already gone after Google and Meta with accusations of violating federal antitrust laws.
Under Khan's watch, the FTC has sued to block numerous tech acquisitions, most notably Microsoft's $69 billion deal to acquire video game publisher Activision Blizzard. It has also moved to restrict how companies may collect and use consumers' personal information, and warned them of the risks of generative artificial intelligence.
The litigation could take years to play out. But just as Amazon founder Jeff Bezos and his spectacular wealth have inspired critics to draw comparisons to America's Gilded Age, so may the FTC lawsuit come to symbolize a modern repeat of the antitrust crackdown of the early 20th century, Brian writes.
Comments
Post a Comment