Amazon sued by FTC and 17 states over antitrust and monopoly behaviors
posted Sunday Oct 1, 2023 by Scott Ertz
For years, Amazon has been accused of anti-competitive behavior. From price fixing to product duplication, nearly every aspect of the company's business practices has been investigated and scrutinized. Now, the Federal Trade Commission (FTC) and Attornies General from 17 states have filed suit against Amazon claiming that the company uses "anticompetitive and unfair strategies" to drive up prices for both buyers and sellers on the platform and off of it.
The FTC lawsuit against Amazon
The FTC filed its complaint on Tuesday, claiming among other things, that the company purposely uses its market position in order to harm its competition, including the sellers on its own platform. As a result, customers feel the pricing pressure themselves. According to the complaints,
Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging. By stifling competition on price, product selection, quality, and by preventing its current or future rivals from attracting a critical mass of shoppers and sellers, Amazon ensures that no current or future rival can threaten its dominance.
One of the biggest complaints alleged by the FTC is the way Amazon deals with its product listings. They claim that the company prioritizes paid ads over proper organic results. This leads to customers grabbing the wrong product, or something similar but not quite correct. In addition, they claim that the search results prioritize Amazon brands, including Amazon Basics, Alexa, and Echo, over non-Amazon products.
Another aspect of the company's practices that is coming under fire is the way the company interacts with sellers. The claim is that Amazon charges so many fees that it is nearly impossible for sellers to compete with Amazon themselves. For example, there is a fee charged to sellers in order for their products to be available for Prime shipping, whereas Amazon's own products are natively available for their own expedited shipping. All-in, the FTC claims that these fees can cause a seller to give Amazon as much as half of its revenue.
Amazon's response
Amazon General Counsel David Zapolsky has publicly responded, saying that they are disappointed in the way the FTC has portrayed them and their business practices, referring to it as "misguided." The company claims that a successful lawsuit against them would be damaging not just to them, but to customers. They say that the cost of Prime could go up, shipping times could suffer, and prices could rise. In addition, Zapolsky said,
Over the last several years, we've engaged cooperatively with the U.S. Federal Trade Commission (FTC) during a broad-ranging investigation of our business. It was our hope the agency would recognize that Amazon's innovations and customer-centric focus have benefited American consumers through low prices and increased competition in the already competitive retail industry.
We're proud of the low prices customers find when shopping in our store-we know customers have many options, and that competitive prices are essential if we want customers to choose us. We've also enabled third-party businesses to sell their products right alongside the products we sell ourselves, which provides opportunities for those businesses and an even better experience for customers. When setting prices for the products we sell ourselves, we try to match other retailers' low prices-online and offline. All of the other businesses that sell in our store set their prices independently, but to help them increase sales and make our store more attractive to customers, we also invest in tools and education to help them offer competitive prices. Other retailers also use similar tools and practices to highlight competitive offers and provide customers value in their stores.
The states involved in the case, in addition to the FTC, are Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island and Wisconsin.
