FTC, 17 States Sue Amazon on Antitrust Charges
The Federal Trade Commission (FTC) and 17 state attorneys general filed a sweeping antitrust lawsuit against Amazon.com Tuesday seeking to bar the company from allegedly abusing its powers to raise prices for shoppers and levy high fees against businesses that sell on its platform. The lawsuit, filed in Western Washington district court, marks a historic political test of one of the world’s most influential companies — as well as the regulators who have promised for years to rein in its allegedly monopolistic practices. The FTC alleges that Amazon engages in illegal behavior in both its online shopping marketplace and in the many services it offers to third-party sellers.
Total Retail's Take: While the lawsuit doesn't come as a surprise, it's still a historic day for the retail and e-commerce industry. It's important to note the lawsuit doesn't seek the breakup of Amazon's business, unlike other FTC cases against Google and Facebook, yet it could significantly harm the online giant's business model going forward. Specifically, the FTC’s case focuses heavily on Amazon’s treatment of third-party sellers on its platform, arguing “anti-discounting measures” prevent third-party sellers from offering cheaper goods than Amazon — keeping prices high for shoppers across the entire internet. Amazon has also allegedly forced sellers to use its costly fulfillment service to make their products “Prime” eligible, according to the FTC. The regulator says this prevents Amazon’s potential rivals from gaining the scale they need to compete. It's unlikely we will see a quick resolution to this case — analysts expect it could take years for a court decision. It's safe to say a lot of consumers and brands will be interested observers. In the meantime, Amazon will continue to operate business as usual while prepping its defense for court.