Amazon CEO Andy Jassy speaks at the New York Times Dealbook Summit held in the Appellate Room at Jazz at Lincoln Center in New York City on November 30, 2022.
Michael M. Santiago | Getty Images
The Federal Trade Commission has filed a long-awaited antitrust lawsuit. Amazon.
In a wide-ranging complaint released Tuesday, the FTC and 17 state attorneys general allege that Amazon uses its “monopoly power” to drive up prices, reduce quality for shoppers and illegally exclude rivals. They accused it of hurting competition.
The agency laid out two strategies for Amazon to “illegally maintain” its monopoly power. The FTC points to so-called anti-discount measures the company uses to punish sellers and prevent other online retailers from offering lower and more competitive prices than Amazon. This will keep product prices high across the internet, the FTC said.
Amazon also “effectively requires” sellers to use “expensive” fulfillment services in order to earn the vaunted Prime badge for its products, resulting in lower costs for doing business on the platform. higher, the FTC said.
These tactics stifle innovation and degrade the shopping experience on Amazon, forcing sellers to pay high fees to sell their products on the site, while forcing sellers to pay high fees to sell their products on the site, while also forcing sellers to pay high fees to sell their products on the site, while also forcing sellers to pay high fees to sell their products on the site. The FTC added that they have no choice but to “rely on it.”
David Zapolsky, Amazon’s general counsel and senior vice president of global public policy, said in a statement that the FTC’s allegations are “false on the facts and the law.”
“The practices the FTC is challenging will help foster competition and innovation across the retail industry, creating greater selection, lower prices, and faster delivery speeds for Amazon customers, and will help increase competition and innovation in Amazon’s stores. It created a bigger opportunity for a lot of the companies that sell,” Zapolsky said. said in his statement. “If the FTC has its way, the result would be fewer products to choose from, higher prices, slower deliveries to consumers, and fewer choices for small businesses, which is the opposite of the purpose of antitrust law.” Thing.”
The case marks a major milestone for FTC Chair Lina Khan, who shot to fame with a 2017 memo to the Yale Law Journal.Amazon’s antitrust paradoxIn his article, Khan argued that the prevailing antitrust framework at the time failed to grasp the true scope of Amazon’s dominance and potential damage to competition. Through his work at the FTC, Mr. Khan has sought to reset the framework and push the boundaries of antitrust law. Establish the law through risky legal battles.
Lina Khan, Chairman of the Federal Trade Commission
Provided by: FTC
Amazon asked Mr. Khan to recuse himself from an antitrust investigation into its business, arguing that Mr. Khan’s past writings and criticism showed he had prejudged the outcome of such an investigation.
The charges are the culmination of years of pressure on federal enforcement officials by some competitors, distributors and lawmakers to address what they see as anticompetitive conduct. Amazon was one of four Big Tech companies investigated by the House Judiciary Subcommittee on Antitrust Law, which found that the company had committed to most of its third-party sellers and many of its suppliers. It was determined that the government had exclusive power. Most Democratic staffers at the time argued that Amazon strengthened its “competitive moat” by acquiring rival sites such as Diapers.com and Zappos.
At the time, an Amazon spokesperson said in a statement: “The assumption that large companies are by definition not dominant and that success is only the result of anti-competitive conduct is simply wrong.”
Founded by Jeff Bezos in 1994, Amazon has transformed from an online bookseller to a retail, advertising, and cloud computing giant with a staggering market valuation of approximately $1.4 trillion. The company expanded its dominance by expanding into areas such as healthcare, streaming and groceries, and acquiring primary care provider One Medical, legendary film and television studio MGM, and upscale supermarket chain Whole Foods. I’ve been aiming for it.
These moves have come under intense scrutiny from regulators. The House subcommittee’s report also accuses Amazon of abusing its position in online retail to the detriment of third-party sellers who rely on the platform to sell their products. He claimed he was using “coercive tactics” to bully his partner. FTC also considering Amazon’s $1.7 billion acquisition plan for Roomba maker i robot For antitrust law reasons. Amazon recently paid about $30 million to settle two privacy lawsuits brought by the FTC regarding its Ring doorbell and Alexa units. The agency filed a lawsuit in June accusing Amazon of tricking users into signing up for Prime and making it too difficult to cancel.
Amazon’s Marketplace has transformed into a cornerstone of the company’s e-commerce business since its launch in 2000. The company had already expanded beyond its beginnings as a bookstore to offer products such as CDs and videos. However, once it opened its doors to third-party sellers, the number and variety of products it sold on its website increased significantly, earning it the nickname “Jack of All Trades.”
Third-party marketplaces have given Amazon access to more profitable businesses than just selling books. It also increased the fees it charges merchants for transactions, advertising, and fulfillment and delivery services on the site. The company collected 45% of all sales made by sellers in the U.S. in the first half of 2023, up from 19% in 2014, according to the nonprofit Institute for Local Self-Reliance.According to the company, sales from third-party sellers currently account for 60% of total sales. recently published.
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