An Amazon delivery worker loads his vehicle with groceries from Whole Foods in Miami, March 31, 2020. (AP/Lynne Sladky)
The federal government and a bipartisan group of 17 state attorneys general went after Amazon Tuesday in a sweeping lawsuit, accusing the online retail giant of being a monopoly that has stifled competition and abused its position in the marketplace to inflate prices for buyers and sellers.
Amazon has long been criticized for simultaneously owning the online platform sellers use to reach shoppers, selling products on the same platform, and owning the shipping and delivery network that users on the platform are incentivized to use.
The Federal Trade Commission, whose job it is to protect U.S. consumers and market competition, argued that Amazon punishes sellers for selling their products at lower prices elsewhere online and pressures them to pay for Amazon’s delivery service.
The lawsuit details how Amazon uses “punitive & coercive tactics to unlawfully maintain its monopolies,” wrote Lina Khan, chairwoman of the Federal Trade Commission since 2021, in a Twitter thread. “Amazon is exploiting its monopoly power to enrich itself while raising prices & degrading service for its customers.”
“In a competitive world,” Kahn continued, “a monopoly hiking prices and degrading service would create an opening for rivals and potential rivals to … grow and compete. But Amazon’s unlawful monopolistic strategy has closed off that possibility, and the public is paying dearly as a result.”
In response, Amazon described the FTC’s actions as “radical,” its lawsuit as “misguided,” and warned that, if successful, the lawsuit would force businesses that list on Amazon to raise prices, “offer slower or less reliable Prime shipping, and make Prime more expensive and less convenient.”
The lawsuit filed by the FTC is factually and legally wrong, Amazon General Counsel David Zapolsky wrote in a post.
“If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses—the opposite of what antitrust law is designed to do,” he wrote, “and we look forward to making that case in court.”
Amazon has raised fees for sellers so high that it “now reportedly takes around half of every dollar from a typical seller that uses (its fulfillment service) FBA,” Kahn tweeted. “Amazon now also litters its storefront with pay-to-play ads that steer shoppers to less relevant and more costly products.”
Kahn accused Amazon of entrenching its monopolies and further widening the gulf between it and everyone else. “Each tactic amplifies the force of the rest, in a self-reinforcing cycle of dominance and harm,” she wrote.
In early 2017, Khan, then an unknown law student, famously wrote a Yale Law Journal article that said Amazon exemplified how U.S. antitrust law was broken. A critic of tech giants and corporate concentration, she was credited at the time as becoming a leading figure in a growing movement calling for more aggressive policing of Google, Facebook, Apple and Amazon. Her research is credited with reframing decades of monopoly law in a single scholarly article.
President Joe Biden tapped Khan in 2021 to lead the FTC and rein in Big Tech. She quickly refiled a lawsuit aimed at breaking up Facebook parent company Meta and sued to block acquisitions by Meta and Microsoft. The FTC lost that lawsuit. An antitrust suit against Apple by Epic Games “that drew on similar ideas ended up going mostly Apple’s way,” Washington Post reported.
Responses to Kahn’s thread on the Amazon lawsuit got a mixed response. Some congratulated her and called her a hero, others booed her.
“’I HATE AMAZON’ – said no customer ever” @CuiBonoCapital tweeted.
Shibetoshi Nakamoto tweeted, “have you won a single lawsuit yet”.
“Smh. You’re gonna lose this one too.” wrote @JaywanIncBeats
“watch you get another L” wrote EraOfBliss.
Others on social media thanked Kahn for her service, for “excellent work,” and suggested other monopolies or new targets she go after, such as “grocery stores”, “loud commercials from @cnbc they come on at 10x the volume”, and “ok Elon next“.
Winning the lawsuit will be no slam dunk, wrote Scott Rosenberg, managing editor of tech at Axios who oversees coverage in Silicon Valley and D.C.
“These charges can sound persuasive in the pages of the FTC’s 172-page lawsuit filing,” he wrote. “But Amazon is about to unleash all the lawyerly energy that a trillion-dollar corporation can afford to buy.”
