NEW YORK (AP) — Amazon is headed toward one of its biggest sales events of the year — Prime Day — with a lawsuit hanging over its head that seeks to prevent sellers from selling their merchandise at lower prices on other sites. Has been accused of.Thank you for reading this post, don't forget to subscribe!
The Federal Trade Commission’s long-awaited antitrust case is the agency’s most aggressive move yet to rein in the market power of Amazon, a company that has become synonymous with online shopping and fast delivery.
Under the leadership of Chairwoman Lina Khan, the agency has not been hesitant in taking big steps against some of America’s biggest companies and testing the limits of competition law, countering what many of her supporters see as decades of weak antitrust enforcement. But that approach has also led to some high-profile setbacks, notably the FTC’s bid to block Microsoft’s acquisition of Activision Blizzard and Meta’s acquisition of virtual reality startup Within Unlimited. The FTC is appealing the judge’s ruling in the Microsoft case.
The Amazon case, which was supported by 17 states, is a full-circle moment for Khan, who is finally confronting the company he investigated in an influential scholarly paper he wrote as a Yale Law student. I wrote. In the paper, which was called “Amazon’s Antitrust Paradox” and was released in 2017, Khan argued that the prevailing way of looking at the impact anti-competitive conduct had on prices was inadequate in a modern economy. Instead, he emphasized a more progressive approach that examines how corporate concentration affects the broader market.
Two years ago, Khan was picked to lead the FTC by President Joe Biden, whose administration has taken a tough stance on antitrust enforcement. That same year, Amazon tried unsuccessfully to recuse her from an agency investigation against the company, arguing that she was too biased.
Now, his agency must prove in court that Amazon is a monopoly and is using its dominance to prevent competition from thriving in the market.
“If we are successful, competition will be restored and people will benefit from lower prices, better quality, better selection,” Khan said during a recent interaction with reporters.
A final decision in the Amazon case is likely several years away, assuming the lawsuit is not dropped under a new administration, dismissed by a judge or ends up similar to Amazon’s settlement with European regulators last year. Is. A similar lawsuit filed last year by the state of California is set to go to trial in 2026. The District of Columbia had previously tried to sue Amazon on antitrust grounds, but its suit was dismissed by a federal judge last year.
Experts say the FTC faces some hurdles in its case, including convincing the court what portion of the market Amazon is allegedly monopolizing.
In the 172-page complaint filed in federal court, the government paints a picture of an organization that strong-arms sellers and exercises monopoly power in “online superstore markets” and “online marketplace services.” This is not the entire US e-commerce sector, of which Amazon is estimated to control about 40%. Rather, the agency is describing the types of single-destination online stores that offer a large range of products, and allow sellers to reach a large number of buyers.
In a blog post responding to the lawsuit, Amazon General Counsel David Zapolsky accused the FTC of attempting to “suppose market manipulation” to portray Amazon as something it is not. He said consumers buy more than 80% of all retail products in physical stores and Amazon was “just one piece of a huge and robust retail market” that provides choices to consumers and sellers. Brick-and-mortar retailers, online stores and new buy-online-pick-up-in-store options are all competing vigorously with each other, he says.
Online, Amazon faces increasing competition from traditional retailers including Walmart and Chinese shopping sites Shein and Teemu, which have become popular by offering extremely cheap goods. There are also platforms like Etsy and Shopify that are enabling small businesses to sell directly to consumers, and specialist retailers like Wayfair.
“Any way you look at it, there are companies competing with Amazon,” said Neil Saunders, managing director of GlobalData Retail.
Aside from the jargon about marketplace definitions, the substance of the agency’s complaint focuses on Amazon’s rising fees on third-party sellers and its impact on consumers. It accuses the e-commerce company of suppressing sellers through various charges and employing a massive web-crawling tool that penalizes them for offering lower prices on other sites. The FTC also alleges that Amazon keeps sellers dependent on services that have allowed it to collect billions in revenue each year.
Zapolsky countered that Amazon – like any store owner who doesn’t want to promote bad deals – doesn’t highlight listings that aren’t competitively priced. He also said that the services the company provides to sellers are optional.
Amazon’s case comes as federal prosecutors and state attorneys general are in the midst of a 10-week trial trying to prove that Google acted unfairly by locking its search engine as the default option in many locations and devices. Have turned the market in your favor. The case was brought by the Justice Department and marks the largest US antitrust trial conducted by regulators since the dominance of Microsoft and its personal computer software a quarter century ago.
Maurice Stookey, a former senior adviser at the agency during Khan’s tenure, said that while there have been some notable antitrust cases, there has not been as much case law around monopolies over the past few decades, which may limit the precedents for the FTC. This is the Amazon lawsuit. And even if the FTC wins its case years later, he said changes in the market could make it possible for Amazon to maintain its dominance without engaging in the activities the agency is accusing.
“Once you get relief, it will be too late,” said Stuckey, who currently teaches law at the University of Tennessee.
For his part, Khan dodged the question of whether the agency would try to break up Amazon. He said that right now the focus is on establishing liability. However, the lawsuit calls for “structural relief,” meaning the agency could – down the road – ask the court to change the way Amazon works in small or big ways.
Overall, there have not been many antitrust cases that have ended with a court ordering a company to divest itself, said Shawn Sullivan, a professor at the University of Iowa College of Law who teaches antitrust law. .
“Judges are working really hard to do the right thing,” he said.