The U.S. Federal Trade Commission (FTC) and attorneys general from 17 states filed an antitrust lawsuit against Amazon on Tuesday.
As detailed by CNBC, the lawsuit accuses Amazon of wielding “monopoly power” to inflate prices, reduce quality for shoppers, and unlawfully exclude rivals to undermine the company’s competition. In the complaint, the FTC outlined Amazon’s two-pronged strategy for maintaining monopoly power, which includes anti-discounting measures, and advertising and fulfillment services.
The FTC alleges that Amazon uses anti-discounting practices to punish sellers and to deter other online retailers from offering lower prices than Amazon. The agency says this means consumers pay higher prices regardless of where they shop online.
As for fulfillment services, the FTC claims Amazon “effectively requires” that sellers use them to get Amazon’s highly-sought Prime badge for their products. The agency alleges that these services make it more expensive to do business on Amazon’s platform, with FTC chair Lina Khan telling reporters that sellers pay $1 of every $2 to Amazon.
Amazon’s general counsel and senior vice president of global public policy, David Zapolsky, denied the allegations in a statement and blog post. Zapolsky called the FTC’s complaint “wrong on the facts and the law” and claimed that the Amazon practices challenged by the FTC “helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers.”
In the blog post, Zapolsky said that Amazon’s advertising and fulfillment services are optional for sellers and claimed ‘Fulfillment by Amazon’ is marketed at competitive prices.