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FTC and 17 states sue Amazon for antitrust, accuse it of being a monopoly

Top hat man stands in an Amazon fulfillment center.

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The U.S. Federal Trade Commission (FTC) and the attorneys’ general of 17 states today filed an antitrust lawsuit against Amazon over its e-commerce business, accusing the company of being a “monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power.”

The FTC was joined by attorneys’ general of New York, Connecticut, Pennsylvania, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, Oklahoma, Oregon, Rhode Island, and Wisconsin. The case was filed in the United States District Court for the Western District of Washington.

What Amazon is accused of doing

“Amazon is a monopolist that uses its power to hike prices on American shoppers and charge sky-high fees on hundreds of thousands of online sellers,” said John Newman, Deputy Director of the FTC’s Bureau of Competition, in the agency’s press release.

One of the complaints filed by the governments targets Amazon’s “sponsored products” on its e-commerce store website, which users know well appear on the top of search results and often push down the actual results, similar to what is seen on Google, but with often many more entries.

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Amazon is accused of “replacing relevant, organic search results with paid advertisements—and deliberately increasing junk ads that worsen search quality and frustrate both shoppers seeking products and sellers who are promised a return on their advertising purchase.”

Amazon Basics, the e-commerce giants own line of products, is also cited as an example of monopolistic power, as Amazon is said to “preference Amazon’s own products over ones that Amazon knows are of better quality,” in its search results.

The governments allege that the fees Amazon charges third-party sellers are another example of anticompetitive practices, as they “force many sellers to pay close to 50% of their total revenues to Amazon. These fees harm not only sellers but also shoppers, who pay increased prices for thousands of products sold on or off Amazon. ”

Amazon has also reportedly increased the number of sponsored products it surfaces in search results, resulting in more income for the company but a degraded user experience.

FTC Chairwoman Linda Khan posted a thread on X (formerly Twitter) describing some of the substance of the complaint, including that Amazon allegedly seeks to prevent third-party sellers from offering discounts to customers.

6. One is a set of anti-discounting tactics that Amazon deploys to punish sellers or retailers that dare to discount. Amazon’s sanctions prevent rivals from being able to grow by competing on price. Sellers then face fewer options & higher fees, and shoppers face higher prices.

— Lina Khan (@linakhanFTC) September 26, 2023

Amazon’s decisive moment

The news comes on the heels of big moves by Amazon in the last week, including a $4 billion investment commitment into AI startup Anthropic, and the announcement of Amazon’s new LLM-powered Alexa voice assistant. Read the full complaint here:

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