The US Federal Trade Commission (FTC), along with 17 states, has filed a lawsuit against Amazon, accusing the company of illegally building an e-commerce monopoly. The lawsuit could have serious implications for the company’s business model and impact pricing and product options for consumers.
The FTC alleges that the US online retailer’s practices stifle competition, increase prices and limit choice for end consumers. According to the FTC’s observations, Amazon prevents sellers from charging lower prices on other marketplaces: “For example, if Amazon discovers that a seller is offering items at cheaper prices elsewhere, Amazon can push the discount sellers so far down in Amazon search results that they become virtually invisible“
Other anti-competitive practices by Amazon also affect the product search system on the company’s website. Search results can be flooded with third-party paid advertising, with search results favoring products offered by Amazon itself. The result is that consumers are left with fewer choices and inflated prices, and third-party sellers have little choice but to comply with company policies or lose business.
According to the FTC, these practices result in potential competitors being unable to attract the required number of buyers and sellers, thereby strengthening Amazon’s dominance in the e-commerce industry. The commission insists that the US federal court order Amazon to stop its illegal behavior.
FTC Chairwoman Lina Khan expressed her position this way: “Amazon uses its monopoly power to enrich itself while simultaneously raising prices and degrading the quality of the customer experience.“Amazon, in turn, has denied all allegations and argued that with this lawsuit the FTC radically deviated from its core mission of protecting consumers and competition.
Amazon’s situation underscores the critical importance of antitrust compliance and raises questions about how big tech companies can build their market dominance.