Following the deadlock in the Activision Blizzard acquisition, U.S. antitrust authorities have now set their sights on Amazon.
On Tuesday, the U.S. Federal Trade Commission (FTC) and attorneys general from 17 states filed a landmark lawsuit against Amazon, accusing the e-commerce giant of using "anti-competitive tactics and unfair strategies" to maintain an illegal monopoly.
The monumental 172-page complaint, submitted to the Western District Court of Washington, has signatures from attorneys general from states including New York and Connecticut.
The lawsuit alleges that Amazon leverages its dominant position to charge exorbitant fees to sellers who rely on its platform for business. It also claims that Amazon intentionally boosts its own products in search results while suppressing potential competitors.
John Newman, Deputy Director of the FTC's Bureau of Competition, stated that Amazon's "illegal actions have stifled competition across the online economic sector." He further described Amazon as a monopolist that uses its power to inflate prices for American shoppers and charge sky-high fees to hundreds of thousands of online sellers.
The complaint details how Amazon built and maintained an online superstore attracting hundreds of millions of shoppers and an online marketplace for third-party sellers, positioning itself as an unmatched behemoth.
The lawsuit focuses on two areas: the online consumer market and the myriad online marketplace services Amazon offers to third-party sellers. It argues that both online consumers and sellers have suffered due to Amazon's actions.
For sellers, the lawsuit contends that Amazon employs a series of monopolistic practices, such as implementing anti-discount measures to prevent sellers from offering lower prices on non-Amazon markets and forcing sellers to use Amazon's fulfillment services to qualify for Prime membership. These tactics increase sellers' costs and hinder competitors from fairly competing with Amazon. Research from Insider Intelligence shows that Amazon's U.S. e-commerce market share has remained around 38% since 2021 after years of growth.
The complaint reveals that Amazon uses a "complex web crawler" to monitor whether platform sellers offer cheaper products on other websites and penalizes them accordingly.
The lawsuit discloses that an internal Amazon study acknowledged that sellers "live in fear of these strategies." It employed a secret pricing algorithm known internally as "Project Nessie" to unfairly compete in the e-commerce market, boosting Amazon's profits. However, more details about "Project Nessie" were redacted in the public version of the complaint.
Regulators also claim that Amazon made significant efforts to obstruct their investigation and concealed internal operational information.
The lawsuit seeks a permanent injunction to restrict Amazon's anti-competitive behavior.
In response to the weighty complaint, Amazon immediately countered in a public statement, vehemently denying the FTC's characterization of its business and accusing the FTC of fundamentally deviating from its mission to protect consumers.
Amazon's public response to the lawsuit. Source: Amazon Official Website David Zapolsky, Amazon's renowned Chief Legal Counsel known for handling challenging negative affairs, penned this response on the official website. In his view, the practices questioned by the FTC actually stimulate competition and innovation in the retail industry, offering Amazon customers more choices, lower prices, and faster delivery speeds. They also provide more opportunities for third-party sellers on Amazon's marketplace. He argued that if the FTC's proposals were accepted, the result would be fewer product choices, higher prices, slower delivery for consumers, and fewer options for small businesses, which goes against the spirit of antitrust laws.
"The lawsuit filed by the FTC today is wrong both factually and legally, and we look forward to proving this in court," Zapolsky responded assertively.
