FTC, 17 AGs Allege Amazon Monopoly, in Antitrust Lawsuit

Amazon engages in anticompetitive practices to block rivals from competing fairly, and places unfair constraints on sellers to the detriment of consumers, the FTC and 17 state attorneys general alleged Tuesday in a lawsuit against the platform.

The platform engages in illegal conduct that protects its dominance as an online market for consumers and sellers, they alleged. Amazon charges costly fees for hundreds of thousands of sellers who have no other option but to do business with Amazon, raising consumer prices across the internet, they said.

Oklahoma AG Gentner Drummond (R) and New Hampshire AG John Formella (R) were the only Republicans to sign onto the lawsuit. The complaint included AGs from Maryland, New York, Nevada and Wisconsin. AGs from Amazon’s home state of Washington, California and Colorado didn’t sign on. California AG Rob Bonta (D) issued a statement in support, noting California brought a similar lawsuit against the company in 2022.

Washington is reviewing the complaint and will monitor litigation, AG Bob Ferguson (D) said in a statement: “While Washington is not joining the lawsuit at this time, we are keeping all options open, including future litigation.” He noted his office has filed three successful lawsuits against Amazon in the past five years involving price fixing, illegal pesticide sales and toxic school supplies.

Amazon’s anticompetitive conduct includes “anti-discounting” measures that “punish sellers and deter other online retailers from offering prices lower” than Amazon, the FTC said. The complaint alleges Amazon buried sellers in search results when they have been found selling products for lower prices on other websites. Amazon is also illegally conditioning sellers’ ability to become Prime eligible, a “virtual necessity for doing business on Amazon,” on sellers “using Amazon’s costly fulfillment service,” the FTC said.

The complaint details how Amazon is “exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them,” said FTC Chair Lina Khan.

The lawsuit is “wrong on the facts and the law,” Amazon General Counsel David Zapolsky said in a statement. If the FTC succeeds, it will result in fewer products for consumers, higher prices, slower deliveries and fewer options for small businesses, the “opposite of what antitrust law is designed to do,” he said. Amazon claimed the practices cited in the complaint “helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store.”

The FTC is frustrated that data and quotes from company executives are redacted in the complaint, agency spokesperson Douglas Farrar said. Redactions include percentages of how many U.S. households subscribe to Amazon Prime, including specific percentages for ZIP codes, and how many items sold on the platform are prime eligible. Farrar noted Amazon has two weeks from the entry of a temporary sealing order to provide “legitimate justification” for the redactions. The FTC doesn’t “believe that there are compelling reasons to keep much of this information secret,” said Farrar.

A successful lawsuit will “entirely restore the promise of free competition,” FTC Chair Lina Khan said during a livestream appearance with Bloomberg on Tuesday. When a company is hiking prices and worsening product quality, that should create an opening for rivals to enter the market, but Amazon’s exclusionary conduct is preventing that, she said.

“Seldom in the history of U.S. antitrust law has one case had the potential to do so much good for so many people,” said FTC Competition Bureau Deputy Director John Newman. The commission voted 3-0 to authorize the filing for a permanent injunction and equitable relief in the U.S. District Court for the Western District of Washington.

The Computer & Communications Industry Association, NetChoice and TechNet spoke against the lawsuit. CCIA President Matt Schruers said the complaint is “out of touch with the concerns of everyday consumers.” Keeping the antitrust focus on the welfare of consumers, not potential industry competitors, “has helped to foster a highly competitive, connected economy that benefits consumers and lowers prices,” he said. The lawsuit is the latest example of Khan’s “ideological crusade,” said NetChoice. The Biden administration “no longer cares about consumers as it complains that Amazon’s prices are too low and people like it too much,” said Vice President Carl Szabo. The lawsuit targets U.S. businesses “while doing nothing to address competitors from other countries, including China,” said TechNet CEO Lina Moore said.

The FTC is using its antitrust authority to improve competition and e-commerce openness, Public Knowledge Vice President Charlotte Slaiman said. She urged Congress to pass new laws to strengthen enforcers’ efforts against dominant companies like Amazon.