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FTC is suing Amazon for alleged illegal, anti-competitive behavior to maintain its monopoly

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The Federal Trade Commission (FTC) is coming at Amazon again. Today, it sued the online retailer for allegedly monopolizing the industry. In June 2023, the commission sued him for allegedly signing people to Prime without consent.

The FTC along with 17 other attorneys believe the business is using anti-competitive and unfair strategies to maintain its monopoly. The officials also suggest that Amazon allegedly prevents competition from it and lowers the quality of products, thereby putting consumers at a disadvantage.

The basis for the lawsuit It is not the size of the company, but Amazon’s exclusionary conduct that limits new competitors from entering the industry and makes it difficult for the existing ones to survive. The lawsuit alleges that by stifling competition on price, product selection and quality, Amazon continues to protect its dominant position.

The chairman of the FTC, Lina M. Khan, further mentioned:

“Our complaint details how Amazon has used a system of punitive and coercive tactics to unlawfully maintain its monopolies. The complaint presents detailed allegations indicating how Amazon is now using its monopoly power to enrich itself while raising prices and degrading service to tens of millions of American families who shop on its platform and hundreds of thousands businesses that rely on Amazon to reach them. Today’s lawsuit seeks to hold Amazon accountable for these monopolistic practices and restore the lost promise of free and fair competition.”

According to the FTC, anticompetitive conduct occurs in two markets—the online supermarket market serving buyers and the market for online marketplace services purchased by sellers. This includes tactics such as anti-discount measures that penalize sellers and discourage other online retailers from offering lower prices than Amazon, and maintaining higher prices for products across the Internet.

Second, conditioning sellers’ ability to receive Prime eligibility for their products on sellers using Amazon’s expensive fulfillment service made it substantially more expensive for Amazon sellers to offer their products on other platforms as well.

The FTC adds that Amazon profits from monopoly rents by harming the customer experience by replacing relevant and organic search results with paid ads, biasing Amazon’s search results to favor Amazon products over better quality products, and charging expensive fees to the hundreds of thousands of sellers who currently must rely on Amazon to stay in business.

Sellers on the platform have to pay fees such as a monthly fee for each item sold and advertising fees which have now become a necessity for sellers. This means that the total commissions that sellers pay close to 50% of their revenue to Amazon.

So to prevent Amazon from continuing its alleged misconduct and loosening its monopoly, the FTC and state partners are targeting a permanent injunction in federal court.

Connecticut, Delaware, New Mexico, Nevada, New York, Maine, Maryland, Minnesota, New Jersey, New Hampshire, Massachusetts, Michigan, Pennsylvania, Rhode Island, Oklahoma, Oregon and Wisconsin joined the Commission’s lawsuit. The commission’s vote to authorize the staff to file for a permanent injunction and other equitable relief in the U.S. District Court for the Western District of Washington was 3-0.

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