FTC Sues Amazon, Claiming E-Commerce Giant Maintains a Monopoly
The FTC and 17 states are suing Amazon for “illegally maintaining monopoly power” in the e-commerce market, claiming the company’s business practices are blocking competition, resulting in higher prices and less selection for consumers.
The lawsuit threatens to disrupt the company’s business. The FTC is demanding a US federal court force the e-commerce giant to cease its “unlawful conduct” in an effort to “pry loose Amazon’s monopolistic control.”
“By stifling competition on price, product selection, quality, and by preventing its current or future rivals from attracting a critical mass of shoppers and sellers, Amazon ensures that no current or future rival can threaten its dominance,” the US regulator said in an announcement.
The FTC alleges Amazon’s tactics include punishing third-party merchants when they offer lower prices on competing platforms—an accusation California’s attorney general also sued Amazon over last year.
“For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible,” the FTC claims.
Other tactics have involved Amazon’s product search. The results can be flooded with paid sponsored ads while offering preference to Amazon’s first-party products. The results saddle consumers with less choice and inflated prices while burdening third-party merchants with little choice but to abide to the company’s policies or risk losing business, the FTC says.
“Amazon is exploiting its monopoly power to enrich itself while raising prices and degrading service for its customers,” adds FTC Chairwoman Lina Khan.
In a statement, Amazon denied the allegations while claiming the
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