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In a nutshell: After a four-year investigation, the FTC has decided to file an antitrust lawsuit against Amazon. The US regulator claims the company has harmed the public and businesses through anticompetitive policies and conduct, including favoring itself in search results and charging sellers more unless they agree to sell exclusively with Amazon. These practices led to higher prices for consumers, the Commission contends.
On Tuesday, the FTC filed an antitrust lawsuit against Amazon, alleging that the online retail platform exerts monopolistic power to create unfair methods of competition. It claims the company uses policies and procedures to prevent “rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing.”
The FTC insists the lawsuit has nothing to do with Amazon being too big. It claims the company has broken the law by engaging in “exclusionary conduct,” preventing existing competition from growing and blocking new competitors from entering the market.
“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 [sic],” the FTC said in a press release.
Specifically, the FTC claims that Amazon punishes sellers for discounting products outside the Amazon marketplace. It claims the retail giant does this by burying a seller’s search results. It also alleges that the company uses its Prime program to “coerce” retailers from competing with Amazon by making Prime status on products more expensive if the seller has an external store.
FTC v. Amazon Antitrust Lawsuit via Scribd
Amazon believes the lawsuit is “wrong on the facts and the law.” David Zapolsky, Amazon’s senior vice president of global public policy and general counsel, said the lawsuit would hurt consumers rather than protect them.
“Today’s suit makes clear the FTC’s focus has radically departed from its mission of protecting consumers and competition,” Zapolsky told The Washington Post. “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.”
Others see the suit as a witchhunt initiated by FTC Chair Lina Khan. Although the FTC started investigating Amazon in 2019, its scrutiny was expanded when Khan took the lead in 2021. Khan has a perceived long-standing beef with Amazon, having written a paper during law school titled Amazon’s Antitrust Paradox, which delved into the idea that Amazon constituted a monopoly.
“FTC Chair Lina Khan has engaged in a long-standing and highly-public reputational smear campaign against one of America’s most popular companies, and this latest case is no different,” Chandler Smith Costello, a spokeswoman for the Don’t Break What Works campaign, said of the lawsuit. “From jeopardizing guaranteed two-day delivery to breaking a service that Americans love because it provides goods quickly and at a low cost, the FTC is attempting to bring harm to and raise prices for American consumers, which runs counter to the foundational principles on which the FTC is built.”
Costello and others view the lawsuit as part of Khan’s personal vendetta against Amazon based on her ideology rather than facts. The company petitioned that Khan recuse herself from the then-ongoing investigation, citing her bias against the company. Khan and the FTC rejected the motion.
The FTC seeks an injunction against all anticompetitive practices as outlined in the dispute.
Image credit: Quote Catalog
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