FTC and 17 states sue Amazon over claims of monopolistic conduct with online retail

Washington is not among the states backing the lawsuit.

By: - September 26, 2023 11:37 am

(Photo by Michael M. Santiago/Getty Images)

The Federal Trade Commission and 17 state attorneys general are suing Amazon, claiming that the Seattle-headquartered tech and retail giant is engaging in monopolistic and uncompetitive practices.

Washington is not among the states joining the lawsuit, which the FTC announced on Tuesday.

Amazon’s actions violate the law not because it is a massive enterprise, according to the claims in the suit, but because of the company’s “exclusionary conduct” that prevents competitors from growing and emerging. The suit alleges Amazon has engaged in anticompetitive conduct with its online retail business and with marketplace services that sellers purchase.

For instance, the suit says that Amazon’s search results are biased toward the company’s own products over ones that it knows are of higher quality. Among the other claims is that the company charges steep fees to hundreds of thousands of sellers who have no choice but to rely on the company’s online marketplace to reach consumers and stay in business.

The suit also says that Amazon punishes sellers for offering prices lower than its own, burying them in search results. And it says that customers’ experience suffers when relevant search results for goods are overrun by paid advertisements and “junk” ads.

“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies,” FTC Chair Lina M. Khan said in a statement.

“The complaint sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them,” Khan added.

Amazon swung back against the claims.

“Today’s suit makes clear the FTC’s focus has radically departed from its mission of protecting consumers and competition,” said David Zapolsky, the company’s senior vice president for global public policy and general counsel.

The practices the FTC is assailing, Zapolsky said, have helped spur retail competition and innovation, while yielding a greater selection of goods, lower prices and faster delivery times for shoppers.

“If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers and reduced options for small businesses—the opposite of what antitrust law is designed to do,” he added. “The lawsuit filed by the FTC today is wrong on the facts and the law, and we look forward to making that case in court.”

Amazon employed about 90,000 full- and part-time employees in Washington as of January. Nationwide, the $1.3 trillion company has around a million workers. Its 2022 revenues totaled over $500 billion.

Attorney General Bob Ferguson said in a statement that his office was reviewing the FTC’s complaint and would monitor the litigation. “While Washington is not joining the lawsuit at this time, we are keeping all options open, including future litigation,” Ferguson said.

Ferguson also noted that his office filed three successful lawsuits against the company in the past five years. These included a case involving price-fixing claims that resulted in Amazon ending its “Sold by Amazon” program.

Another case dealt with blocking the sale of illegal pesticides on the company’s marketplace and the third with preventing the sale of toxic school supplies.

States that did sign on to the suit include Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island and Wisconsin.

“Amazon illegally raised prices for consumers and took advantage of online sellers in its storefront and they should be held accountable,” said New York Attorney General Letitia James, who is leading the bipartisan coalition of states.

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Bill Lucia
Bill Lucia

Bill Lucia is the Standard’s editor-in-chief. He’s covered state and local policy and politics for a decade, nationwide for Government Executive’s Route Fifty and in Seattle for Crosscut.