FTC Files Lawsuit Against Amazon

Updated Sept. 29, 2023, 2:52 p.m. PST

• The U.S. Federal Trade Commission filed a long-awaited antitrust lawsuit agains Amazon. The FTC is asking the court to issue a permanent injunction forcing Amazon to stop its unlawful conduct, and sell some of its assets.
• The lawsuit was filed on Tuesday in a Seattle federal court, where Amazon is based. The case was assigned to John Coughenour, a Reagan appointee.
• The FTC has accused Amazon of preventing online merchants from selling their products on other platforms at a lower price and forcing them to use Amazon's expensive warehouses and delivery services.
• The lawsuit, which was joined by 17 state attorneys general, follows a four-year investigation. The FTC said:

"Left unchecked, Amazon will continue its illegal course of conduct to maintain its monopoly power."

• FTC Chair Lina Khan said:

"Amazon is now exploiting that monopoly power to harm its customers, both the tens of millions of families that shop on Amazon's platform and the hundreds of thousands of sellers that use Amazon to reach them."

• Amazon's general counsel David Zapolsky wrote a long response, stating that the FTC had a “fundamental misunderstanding of retail."

What's the story?

• The U.S. Federal Trade Commission (FTC) is finalizing its long-awaited antitrust lawsuit against Amazon. While the exact details of the final lawsuit are not known at this time, observers think it could be filed as soon as this month.
• If the lawsuit is successful, it could lead to a court-ordered break-up and restructuring of the $1.3 trillion company. 
• FTC chairperson Lina Khan rose to prominence with the publication of a 2017 academic paper that criticized Amazon's structure and practices, arguing that they pose clear antitrust concerns. 
• Before filing the lawsuit, the FTC will have to give Amazon's executives and attorneys a final chance to plead their case before the commissioners.

What's the background?

• The probe began during former President Donald Trump's administration with an investigation into Amazon, Google, Meta Platforms, and Apple for allegedly breaking antitrust laws.
• In the course of the probe, the FTC has interviewed dozens of witnesses, including CEO Andy Jassy and former CEO and founder Jeff Bezos. The FTC has collected reams of documents over the past three years to build its case.
• In June, the regulator sued Amazon in another case, accusing the company of enrolling millions of customers into a $139-per-year paid subscription service without their consent and making it hard for them to cancel.

What will the lawsuit target?

• The lawsuit will likely suggest "structural remedies" that could break the company up. 
• The FTC is expected to argue that Amazon unfairly compels sellers to use its in-house logistics, shipping, and warehousing services, Fulfillment by Amazon, by rewarding them with site visibility and search results.
• Prime may be targeted for its bundle of diverse services it offers, as it may be an example of an unlawful monopoly and bid to dominate market share.  
• The lawsuit may also target Amazon's digital advertising business, which could be used to force merchants to buy ads in order to get better placement in customer search results. 
• The FTC complaint is similar to existing cases brought by attorney generals in California and Washington, D.C., which target Amazon's rules requiring third-party retailers to offer their lowest prices on the platform, preventing them from listing lower prices elsewhere, like on their own company website. Amazon has previously disputed these allegations.

Do you support the lawsuit?

—Emma Kansiz 

(Photo Credit: Wikimedia Commons)