WASHINGTON, Sept 26 (Portal) – The U.S. Federal Trade Commission filed a long-awaited antitrust lawsuit against Amazon.com (AMZN.O) on Tuesday, asking the court to consider ordering the online retailer to sell assets as the government accuses Big Tech of monopolizing the most lucrative parts of the internet.
The FTC accused Amazon, a company founded in a garage in 1994 and now worth $1.3 trillion, of fighting efforts by sellers on its online marketplace to offer products cheaper on other platforms. According to the FTC, Amazon forces sellers to use its warehouses and delivery services, driving up costs for consumers and sellers.
Amazon is a monopolist and is abusing its powers, according to the FTC, which quotes one seller as saying, “We have nowhere else to go and Amazon knows it.”
The lawsuit was expected after years of complaints that Amazon.com and other tech giants were abusing their dominance in search, social media and online retail to become gatekeepers in the most profitable areas of the Internet.
The need to crack down on Big Tech was one of the few ideas that Democrats and Republicans agreed on, and the FTC chief was particularly concerned about Amazon’s power.
The lawsuit, joined by 17 state attorneys general, follows a four-year investigation and federal lawsuits filed against Alphabet’s (GOOGL.O) Google and Meta Platforms’ (META.O) Facebook.
The FTC said it is asking the court to issue a permanent injunction ordering Amazon to stop its unlawful conduct. The lawsuit was filed in federal court in Seattle, where Amazon is based.
“Amazon will continue its illegal conduct unchecked to maintain its monopoly power,” the FTC said in its complaint, asking the court to “stop Amazon’s illegal conduct, break away from Amazon’s monopolistic control, and deny Amazon.” “To eliminate the fruits of its unlawful practices and restore the lost promise of competition.”
The FTC complaint asked the court to consider “any interim or permanent equitable relief, including but not limited to structural relief, necessary to restore fair competition.”
Structural relief, in antitrust jargon, generally means that a company sells an asset, such as part of its business.
In a press conference, FTC Chairwoman Lina Khan was asked about the idea of breaking up Amazon but declined to discuss it. “At this point the focus is really on liability,” she said.
In other antitrust cases, the court first finds that the company violated the law and then discusses how to remedy the situation, if necessary.
Amazon said the FTC lawsuit is false and would harm consumers by leading to higher prices and slower deliveries.
“The practices challenged by the FTC have helped spur competition and innovation across the retail industry, resulting in greater selection, lower prices, and faster delivery speeds for Amazon customers, as well as greater opportunities for the many companies that sell in the Amazon store “sell,” he said David Zapolsky, Amazon’s general counsel. In a blog post, the company said it had 500,000 independent sellers on the platform.
Amazon shares, which were down 3.2% before the lawsuit was announced, were down 4% in late afternoon trading. Some investors saw advantages in the lawsuit.
“Either way, the shareholders win. If FTC loses its status quo if the company falls apart, the sum of the parts will be greater than the whole as the AWS (Cloud) business will be at a very high multiple. Analysts will find out soon, but for now it’s shoot first, ask questions later,” said Thomas Hayes, chairman of Great Hill Capital.
The FTC explained that Amazon penalized sellers who sought to offer lower prices than Amazon by making it more difficult for consumers to find the seller on Amazon’s platform.
Other allegations include that Amazon favored its own products over competitors on its platforms.
The case, filed in the U.S. District Court for the District of Columbia, was assigned to John Coughenour, who was nominated for the judgeship in 1981 by Republican President Ronald Reagan.
‘MONOPOLY FORCE’
Khan said Amazon used illegal tactics to fend off companies that challenged its monopoly.
“Amazon is now using this monopoly power to harm its customers, both the tens of millions of families who shop on Amazon’s platform and the hundreds of thousands of sellers who use Amazon to reach them,” she said.
While in law school, Khan wrote about Amazon’s online retail dominance for The Yale Law Journal and was on the staff of the House committee that produced a 2020 report that advocated reining in four tech giants: Amazon, Apple (AAPL .O), Google and Facebook.
Amazon critics welcomed the lawsuit.
“No company has ever centralized so much power across so many critical sectors. If Amazon’s power to dictate and control goes unchecked, it threatens the rule of law and our ability to maintain open, democratically governed markets,” said Stacy Mitchell of the Institute for Local Self-Reliance, which is urging the government to take action against Amazon.
During the Trump administration, which ended in 2021, the Justice Department and FTC launched investigations into Google, Facebook, Apple and Amazon.
The Justice Department has sued Google twice – once under Republican Donald Trump over its search business and a second time over advertising technology since Democratic President Joe Biden took office. The FTC sued Facebook during the Trump administration and Biden’s FTC moved forward with the lawsuit.
Reporting by Diane Bartz, additional reporting by David Shepardson and Samrhitha A; Editing by Chris Sanders, Matthew Lewis, Nick Zieminski
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