In a pivotal move, the U.S. Federal Trade Commission (FTC) has filed a highly anticipated antitrust lawsuit against Amazon.com, aiming to challenge the internet giant’s alleged monopolistic practices.
The lawsuit, accompanied by requests for potential asset sales, is a significant step in the government’s ongoing battle to curb the dominance of Big Tech corporations in various aspects of the online realm.
Amazon.com recently said its sales increased 11 percent to $134.4 billion in the second quarter of 2023 with a net income of $6.7 billion, compared with sales of $121.2 billion and net loss of $2 billion in the second quarter of 2022. AWS segment sales increased 12 percent to $22.1 billion in April-June 2023.
The FTC asserts that Amazon engages in anti-competitive actions, particularly by restricting retailers on its marketplace from offering discounts, stifling competition. Additionally, the FTC raises concerns about Amazon’s practice of compelling sellers to utilize its fulfillment service, encompassing a vast network of delivery vans and warehouses, which critics argue should be segregated from Amazon’s web business.
FTC Chair Lina M. Khan said: “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.”
“Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”
This legal action follows years of complaints regarding Amazon.com and other tech giants exploiting their dominance in search engines, social media, and online retail to establish a stranglehold on lucrative facets of the internet, Reuters news report said.
The lawsuit, joined by 17 state attorneys general, has emerged after a comprehensive four-year investigation and federal lawsuits filed against Google’s parent company Alphabet and Meta Platforms, the parent company of Facebook.
The FTC’s complaint seeks a permanent injunction to halt Amazon’s alleged unlawful conduct. The lawsuit was filed in federal court in Seattle, Washington, where Amazon is headquartered. The FTC emphasized the necessity to intervene and prevent Amazon from perpetuating its monopoly power, ultimately fostering a competitive marketplace.
Amazon responded by asserting that the FTC lawsuit was misguided and would ultimately harm consumers, potentially leading to higher prices and delayed deliveries. David Zapolsky, Amazon’s General Counsel, defended the company’s practices, stating that they promote competition, innovation, broader selection, lower prices, and faster delivery speeds for customers and businesses within Amazon’s ecosystem.
Following the news of the lawsuit, Amazon’s shares experienced a 3.3 percent decline. However, some investors viewed potential upside, suggesting that regardless of the outcome, shareholders could benefit. Analysts foresee a potential high valuation for Amazon’s AWS (cloud) business in the event of a breakup.
FTC Chair Lina Khan emphasized Amazon’s alleged exploitation of its monopoly power to the detriment of both customers and sellers, highlighting the urgent need to address these concerns. The lawsuit has been welcomed by critics of Amazon, who argue that the corporation’s significant influence across multiple sectors necessitates regulatory intervention to maintain open and democratically governed markets.
The action against Big Tech has found bipartisan support, with both Democrats and Republicans advocating for measures to restrain these technology behemoths. During the Trump administration and into President Joe Biden’s tenure, the Justice Department and FTC initiated investigations and lawsuits against major tech companies, including Google, Facebook, Apple, and now Amazon.