US regulators have initiated legal proceedings against Amazon, accusing the e-commerce behemoth of unlawfully upholding monopoly power. The Federal Trade Commission (FTC) alleges that Amazon resorts to “anticompetitive and unfair strategies” which result in inflated prices and diminished competition.
In response, Amazon contends that the lawsuit lacks basis both factually and legally, voicing its readiness to defend its stance in court.
This litigation marks yet another instance of a tech giant coming under scrutiny by US authorities. The head of the FTC, Lina Khan, has long expressed concerns regarding Amazon’s market power. As early as 2017, Khan highlighted the company’s potential monopolistic behavior in an influential academic article. Her 2021 appointment as FTC Chair signaled increased scrutiny of Amazon, making this lawsuit somewhat anticipated.
While tech giants have been dominant in their respective sectors, prompting some US lawmakers to advocate for increased market competition, the FTC’s track record under Khan’s leadership has faced setbacks. Notably, the FTC was unsuccessful in preventing Meta’s acquisition of VR firm Within, and Microsoft’s purchase of the creator of Call of Duty.
Despite these setbacks, the FTC, backed by 17 state attorneys, holds optimism for their case against Amazon. The agency alleges that Amazon’s monopolistic practices hinder rivals, overburden sellers, curtail innovation, and adversely affect consumers. The fundamental focus of the lawsuit revolves around consumers’ potential financial losses due to Amazon’s supposed monopoly.
Navigating the intricacies of US anti-competition laws, prosecutors generally need to demonstrate that a company’s actions have negatively impacted consumers financially. This becomes a challenging proposition with Big Tech, especially when many of their services, like Google search or Meta’s Instagram, are offered for free.
