On August 7, sources informed media outlets that Amazon is set to individually meet with each member of the Federal Trade Commission (FTC) next week. The discussions will revolve around a potential antitrust lawsuit the FTC might launch against Amazon. This move is widely seen as a last ceremonial gathering before either heading to court or reaching a settlement.
Should the FTC decide to sue Amazon, it will mark a defining moment during the tenure of FTC Chair Lina Khan. Khan previously authored a well-circulated academic paper in which she argued that Amazon had amassed excessive market resources and power, rendering U.S. antitrust laws ineffective against the tech giant.
By the end of June, insiders stated that the FTC is likely to unveil a far-reaching antitrust lawsuit targeting Amazon's core e-commerce business, particularly its third-party marketplace.
Those in the know suggest that the FTC will allege that Amazon has leveraged its dominant market position to favor online merchants using its logistics services, penalizing those who don't.
Two sources disclosed that over the past few months, FTC investigators have been diligently preparing for this lawsuit, finalizing key details, including where to file the lawsuit. As for the filing date, while Khan and her colleagues intend to submit the lawsuit before staffing changes occur at the agency in August, there might be delays.
Given Khan's previous public statements, it's unlikely she would be open to a compromise with Amazon. Instead, she seems to lean towards a restructuring of the company. For Amazon, this stance is presumably unacceptable, and the e-commerce behemoth is expected to appeal.
At present, it's unclear what aspects of Amazon's e-commerce operations the FTC will focus on in any potential litigation.
Amazon's vast online marketplace sits at the heart of its e-commerce business. Currently, third-party sellers contribute to more than half of Amazon's online sales. These sellers not only pay Amazon commissions per transaction but also a range of fees for services ranging from warehousing and shipping to advertising.
While these fees are optional, most merchants consider them a necessary cost of doing business on Amazon's platform. In recent years, Amazon's cut from each transaction on its online marketplace has been steadily rising. In 2022, this percentage exceeded 50%, up from 35% in 2016.
Sources claim that the FTC has amassed evidence indicating Amazon's favoritism toward online merchants using its logistics services in its "Buy Box" listing, at the expense of those who don't. The Buy Box allows customers to directly add products from specific retailers to their shopping carts, translating to higher sales for merchants who secure it. The European Union had previously conducted an antitrust investigation into Amazon's Buy Box, but the two parties reached a settlement last December.
The FTC's investigation into this case has been ongoing for several years. As early as June 2019, Amazon received an initial investigative notice. Two months later, the FTC first requested related materials from Amazon, including questions about how using Amazon's warehousing and delivery services "impacts the product placements of third-party sellers", including issues concerning the Buy Box.
