This is a mess!
Amazon is facing a MAJOR anti-trust lawsuit from the Federal Trade Commission and 17 states. The lawsuit alleges that Amazon is inflating prices, overcharging sellers, and squashing the competition right out of the market.
They are asking the court to issue a permanent injunction that they say would prohibit Amazon from engaging in its unlawful conduct and loosen its "monopolistic control to restore competition."
They want to break up Amazon.
The allegations are being brought after multiple years of research.
According to the lawsuit, Amazon is charging sellers higher fees in order to force sellers to artificially raise the costs of products both on Amazon and through other sellers.
The lawsuit also alleges that Amazon buries lower-cost items in the search results, leading people to spend more money.
Amazon has a response:
No, it's not actually just Bezos laughing.
Amazon claims that the lawsuit has gotten the facts wrong and is misapplying antitrust laws in order to target the online giant.
"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," Amazon General Counsel David Zapolsky said in a prepared statement.
The lawsuit is filled with other accusations, like how Amazon shows sponsored results before relevant results when you're searching for products.
It also claims that Amazon wants to force their sellers to use Amazon fulfillment for delivery, even restricting "prime" access to those who don't use Amazon fulfillment.
There are lots of accusations and lots of work for Amazon's lawyers, but if recent precedent means anything it looks more like it's the FTC that has their work cut out for them.
Under Khan's watch, the FTC has aggressively attempted to blunt Big Tech's influence but has been unsuccessful recently in some of the most high-profile cases, including its bid to block Microsoft's takeover of the video game maker Activision Blizzard and Meta's acquisition of the virtual reality startup Within Unlimited. The agency is now in the middle of a protracted lawsuit against Facebook parent Meta, which it alleges to have engaged in monopolistic behavior. The Justice Department is also challenging Google's market power in court.
Axios also notes that this isn't going to be an easy win for the feds and states.
- It has to prove that Amazon is a monopoly in specific markets. The FTC's lawsuit defines two markets in which Amazon has a "durable monopoly": the "online superstore market" and the "online marketplace services market."
- Then it has to prove that Amazon used its monopoly powers to harm consumers and competitors. The FTC lays out detailed claims that, for instance, Amazon's "exclusionary anti-discounting conduct" artificially boosts prices and its rules for sellers to "coerce" them into using its fulfillment services.
We'll keep you updated on how this turns out for Amazon but in the meantime I need to go order something on Prime!
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