The FTC Slaps Amazon With a Lawsuit For “Illegally Maintaining Monopoly Power”

Ready for the legal battle of the year? It’s Amazon’s legal team of 700+ vs. the US Federal Trade Commission’s 1.1K+ employees. Who you got? Yesterday, the FTC and attorney generals from 17 states sued Amazon in a highly-anticipated lawsuit that follows a years-long investigation into Big Tech dominance.

Take aim: The suit alleges that Amazon’s actions “prevents current competitors from growing and new competitors from emerging” — with a focus on their online marketplace, alleging it:

• Charges expensive fees to sellers who “have no choice but to rely on Amazon to stay in business” — and pay nearly 50% of their total sales to Amazon.
• Forces sellers to use their expensive fulfillment services to be eligible for the Prime badge — punishing them for charging lower prices elsewhere.

According to the Institute for Local Self-Reliance, Amazon’s share of revenue from US sellers has grown from 19% in 2014 to 45% in 2023. The suit also alleges that Amazon is prioritizing search results for its own products instead of better-quality ones.

Too big predatory to ignore

According to PYMNTS, Amazon controlled 47.9% of the US e-commerce market share in the first quarter of 2023, up from 43.7% a year ago — and JPMorgan expects it to take over Walmart as the nation’s largest retailer in 2024.

But the FTC says Amazon doesn’t violate laws because it’s too big, but due to their “exclusionary conduct that prevents current competitors from growing and new competitors from emerging.” And the attacks against Amazon keep stacking up…

• Earlier this year, the FTC sued Amazon, alleging it knowingly tricked users into signing up for Prime without consent.
• European authorities have launched an investigation to decide whether to block Amazon’s $1.7B iRobot acquisition — worried it’ll “strengthen its position as [an] online marketplace provider.”

Forward-looking: The FTC wants US courts to order a permanent injunction to get Amazon to stop its unlawful conduct or sell its assets. While $AMZN fell 4% yesterday, US authorities have been slow to regulate tech giants and the lawsuit is expected to take years to play out. And by then, expect Amazon to be much larger.