Amazon accused of being a monopolist in FTC lawsuit

The FTC - and 17 state attorneys general - have come out swinging at Amazon with a lawsuit accusing the ecommerce giant of being a monopolist. 

Amazon, the FTC alleges, engages in anticompetitive conduct in two markets: online ecommerce and also the market for marketplace services used by sellers. The tactics used by Amazon to thwart competition include anti-discounting measures that punish sellers for offering prices lower than Amazons, and requiring vendors to use - and pay for - Amazon's fulfillment services to make their products eligible for free Prime shipments, the FTC claims.

"Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies," said FTC Chair and perennial Amazon opponent Lina Khan. 

Khan describes Amazon's as exploiting monopolistic power to enrich itself by raising product prices and degrading services for its customers and businesses. "Today's lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition," Khan added. 

Amazon's "monopoly rents" are extracted from "everyone within its reach," the FTC alleges. This hurts customers by replacing relevant organic search results with ads and boosting Amazon's own products in search results. In addition, excessive fees are allegedly leveled at Amazon sellers, which the FTC said can amount to close to half of a store's revenue going directly to the online souk, and which it asserts are passed on to consumers.

The FTC under Khan has been hard in its pursuit of Amazon, charging the company with several offenses over the past year. Last September, the FTC launched an investigation of Amazon's ongoing attempts to purchase Roomba maker iRobot, which digital rights groups had said would give Amazon more dominance in the "smart" home space.

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In June, the FTC charged Amazon with privacy violations over allowing Ring employees to access customer's private videos, and later that same month filed another suit alleging Amazon had used "dark patterns" to make it difficult to quit Prime.

The FTC amended its suit against Amazon for Prime dark patterns designed to dupe consumers on its website last week, adding three senior Amazon executives - Neil Lindsay, the former head of the Prime team; Lindsay's replacement Russell Grandinetti; and Prime VP Jamil Ghani - to the case as being the architects of the difficult quit process.

While documenting plenty of allegedly egregious behavior, the FTC's multiple suits haven't gone as far as calling Amazon a monopolist until now, though the move has been widely expected since this summer. 

Break me up before you go, Khan

FTC chair Khan has been gunning for Amazon since her days in Yale Law School when in 2017 she penned the widely read article Amazon's Antitrust Paradox that argued current antitrust law was insufficient to deal with 21st century monopolists like Amazon. 

In other words, no one is very surprised such an antitrust case has emerged from Khan's agency. "What was less expected is the sheer breadth of the suit, and the far-reaching remedies that are being demanded," said International Center for Law and Economics president and founder Geoffrey Manne. "These extreme demands greatly undermine the chances that the agency will prevail in court." 

Manne said the FTC's suit could undermine Amazon's entire platform if successful, causing harm to consumers "all in an attempt to shift the course of US antitrust policy against the will of Congress and the courts." 

"We can and should break up Amazon," said Athena Coalition, a self-described anti-Amazon grassroots group, in a statement. "Amazon has a long history of combining and utilizing its many businesses together as an integrated whole to leverage its power against workers, businesses, and ultimately all of us."

The group said that an FTC victory would free Amazon sellers to work with whomever they chose, rather than being forced to go to Amazon. Rather than harming consumers, Athena said that an Amazon reigned in by the FTC would also mean more choice and lower costs for Amazon customers, too. 

Neither Amazon nor the FTC responded to questions for this story. ®