Amazon Confronts Landmark Monopoly Lawsuit Filed by FTC, According to Reuters

FTC Files Antitrust Lawsuit Against Amazon

By Diane Bartz

WASHINGTON – On Tuesday, the U.S. Federal Trade Commission (FTC) initiated a long-anticipated antitrust lawsuit against Amazon, urging the court to compel the online giant to divest certain assets amid growing concerns over its market dominance.

The FTC alleges that Amazon, which began as a small startup in 1994 and has grown into a company valued at $1.3 trillion, is obstructing sellers from offering lower prices on competing platforms. According to the commission, Amazon’s requirements that sellers utilize its warehouses and delivery services elevate costs for both consumers and merchants.

The complaint describes Amazon as a monopoly that exploits its position in the market, citing a seller’s remark: "We have nowhere else to go and Amazon knows it."

This lawsuit follows years of accusations against Amazon and other tech giants regarding their monopolistic practices in search engines, social media, and online retail, effectively acting as gatekeepers to the most lucrative segments of the internet.

The urgency to regulate Big Tech has garnered bipartisan support, with the FTC Chair particularly concerned about Amazon’s influence. The legal action, which is backed by 17 state attorneys general, comes after a four-year investigation and previous lawsuits against Google and Facebook.

In its filing, the FTC seeks a permanent injunction against Amazon to halt its alleged illegal practices, stating that if unregulated, Amazon would continue to maintain and abuse its monopoly power. The commission’s request encompasses both preliminary and permanent equitable relief, which may include structural remedies to restore fair competition within the marketplace.

During a press conference, FTC Chair Lina Khan refrained from discussing the possibility of breaking up Amazon, emphasizing that the current focus is on determining liability. In antitrust cases, the court usually first assesses whether the company violated laws before exploring possible remedies.

Amazon responded to the lawsuit, asserting that it would ultimately harm consumers by resulting in higher prices and slower deliveries. The company’s general counsel, David Zapolsky, argued that the practices being challenged have fostered competition and innovation, benefiting both consumers and the numerous independent sellers on the platform.

Following the announcement of the lawsuit, Amazon’s shares dipped, although some investors expressed optimism, believing that either outcome could be favorable for shareholders.

The FTC’s complaint states that Amazon has harmed sellers attempting to offer better prices by making it difficult for consumers to find these sellers on its platform. It also alleges that Amazon has favored its own products over those of competitors.

The case is being heard in the federal court in Seattle, where Amazon is headquartered, and has been assigned to Judge John Coughenour, who was appointed to the bench by President Ronald Reagan in 1981.

Khan remarked that Amazon has engaged in unlawful practices to eliminate potential challengers to its monopoly, stating, "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."

While studying law, Khan published work on Amazon’s dominance in online retailing, contributing to a 2020 report advocating for regulatory measures against major tech firms including Amazon, Apple, Google, and Facebook.

Critics of Amazon welcomed the FTC’s actions, expressing that no other corporation has centralized as much influence across vital sectors. They argue that unchecked, Amazon’s power undermines the rule of law and the integrity of democratic markets.

During the Trump administration, investigations into major tech companies including Google, Facebook, Apple, and Amazon were launched by the Justice Department and the FTC. Legal actions against Google have occurred under both the Trump and Biden administrations, with the FTC’s suit against Facebook still progressing under the current FTC leadership.