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The Federal Trade Commission and 17 states sued Amazon, accusing the online retailer of illegally using its monopoly power to overcharge consumers, hobble competitors and exploit sellers on its marketplace.
The landmark lawsuit, filed on Tuesday, accuses the $1.3 trillion e-commerce giant of raising fees for sellers on its marketplace to extract nearly $1 of every $2 sellers make.
The FTC also claims that Amazon penalizes sellers who discount heavily, making them “effectively invisible” in search results and forcing merchants to use its “costly” fulfillment network.
“Most sellers must now pay advertising fees to reach Amazon’s vast base of online shoppers, who are consequently faced with less relevant search results and diverted to more expensive products,” the complaint, filed in federal court in Seattle, said.
The lawsuit is one of the biggest tests of Federal Trade Commission Chairwoman Lina Khan’s push to take a more aggressive enforcement stance against Big Tech, which she says has evaded regulatory scrutiny for decades.
Before being appointed chairman of the committee by President Joe Biden, Khan rose to prominence for an academic paper he published in 2017 calling for Amazon to be broken up.
“Our complaint lays out how Amazon uses a range of punitive and coercive tactics to unlawfully maintain its monopoly,” Khan said in a statement.
David Zapolsky, Amazon’s senior vice president of global public policy and general counsel, said the lawsuit “demonstrates that the FTC’s focus has fundamentally shifted away from its mission to protect consumers and competition.” “.
“The lawsuit filed by the FTC today is wrong on both facts and law, and we look forward to hearing this case in court,” he said.
Regulators are seeking an order to permanently prevent Amazon from participating in the allegedly illegal conduct.
The Federal Trade Commission (FTC) separately sued Amazon in June this year for allegedly tricking customers into signing up for its Prime service without their consent. Amazon said at the time that the claims were “inconsistent with the facts and the law.”
In May, Amazon agreed to pay $25 million to settle a lawsuit filed by the Federal Trade Commission and the U.S. Department of Justice accusing it of violating children’s privacy laws through its Alexa voice assistant.
Amazon’s efforts to ask Khan to recuse herself from matters involving the company were unsuccessful, citing her longstanding criticism. Asked about potential impartiality in a 2021 congressional hearing, Khan said she would not need to recuse herself under federal ethics rules.
Under the Biden administration, top antitrust officials such as Khan and Jonathan Kanter, the head of the Justice Department’s antitrust division, have stepped up enforcement efforts to crack down on the power of American companies.
Kanter sued Google over its dominance of digital advertising, and a separate U.S. Department of Justice case is pending accusing the company of monopolizing Internet searches.
The FTC is working to force Meta to abandon its acquisitions of Instagram and WhatsApp. It also tried to block Meta’s acquisition of virtual reality business Within, but ultimately withdrew the challenge. The Federal Trade Commission is still trying to block Microsoft from acquiring Activision Blizzard after initial losses in court.
