The Federal Trade Commission (FTC) and 17 US states filed a lawsuit on Tuesday accusing Amazon of exercising a monopoly to inflate prices, degrade the quality of products for buyers and illegally exclude sectors of the online retail business by putting pressure on merchants and favoring their own services. This lawsuit, if successful, could transform the way Americans shop online for everything from toilet paper to household appliances.
The accusation, a real challenge against the large online supermarket, focuses on the fact that the company prevented merchants from offering lower prices elsewhere on its platform and forced them to send products with its logistics services if they wanted to be part of the package. ‘Prime’ subscription. These practices led to higher prices and a worse shopping experience for consumers.
The FCT takes direct aim at the so-called anti-discounting measures that Amazon applies to punish sellers and discourage other retailers from offering better and more competitive deals than the platform’s prices. This led to maintaining higher prices for all types of products over the internet.
Furthermore, the company founded by Jeff Bezos in 1994 effectively required sellers to use its expensive fulfillment services to obtain the vaunted ‘Prime’ label for their products, making it much more expensive to do business in its platform.
This has not only degraded the shopping experience on Amazon, the commission and the states insist, but it has forced sellers to pay expensive fees to market their products on that site, so that they had no choice but to “trust on Amazon to stay in business.”
This lawsuit is an important milestone for FTC Chair Lina Khan, who rose to prominence in 2017 for a paper prepared at Yale University titled “Amazon’s Antitrust Paradox.” In that article she argued that the current antitrust framework failed to capture the true extent of Amazon’s dominance and potential harm to competition. Khan proposed in that exercise to erase that framework and expand the limits of antitrust law through risky legal battles.
Amazon urged Khan’s recusal in these investigations into his business, arguing that in that previous writing he showed prejudice against the platform and vitiated the evidence.
“The lawsuit filed today seeks to hold Amazon accountable for its monopolistic practices and restore the lost promise of free and fair competition,” Khan stressed after the announcement of this initiative.
The accusation is the culmination of seven years of pressure from the federal authority in the face of complaints of anti-competitive practices made by rivals, sellers and legislators. Amazon is one of the Big Four technology companies that was investigated by the House Antitrust Committee of the United States Congress and which concluded that it had maintained monopoly power over most sellers and many suppliers.
On that occasion, a spokesperson for the platform replied that “large companies are not dominant by definition and the presumption that their success is only the result of their anti-competitive behavior is simply incorrect.”
Since its emergence as an online book company, Amazon’s evolution has led to its conversion into a giant that controls the retail market, advertising and cloud computing, with a market value of 1.4 trillion dollars. It has also tried to extend its dominance in the field of health, streaming service and edibles. For this it has purchased the health provider One Medical, the legendary MGM studios and the Whole Foods supermarket chain.
