The U.S. Federal Trade Commission (FTC) and 17 states filed a lawsuit against Amazon last Tuesday, citing anticompetitive conduct that they allege has allowed Amazon to maintain its “monopoly power” within the online superstore and marketplace service sectors. The lawsuit requests that the U.S. District Court for the Western District of Washington restrain Amazon from its ostensibly monopolistic behaviour, proposing a restructure of their business model to avert such issues in the future.
Within the filed complaint, it is contended that Amazon’s monopoly power has been protected through a series of anticompetitive and exclusionary activities, contravening both federal and state law. These activities include anti-discounting practices, and forcing online sellers aiming to become “Prime eligible” into adopting the “Fulfillment by Amazon” scheme. The lawsuit proposes this arrangement makes Prime – being Amazon’s premium delivery service – practically essential for sellers needing access to the company’s wide customer base. It is also alleged that these practices violate the Federal Trade Commission Act and the Sherman Act. In addition, the complaint contains numerous state anticompetitive law violations for the majority of the states taking part in the lawsuit.
The complaint also highlights “Project Nessie” as part of Amazon’s tactic to sustain its monopoly standing. While most details regarding this project are redacted from the public view, what remains visible suggests this project concerns an algorithm used by Amazon to devise its pricing methodology. The lawsuit asks the court to declare that Amazon has contravened the above-mentioned laws, and that it be permanently restricted from practicing the alleged unlawful conduct.
In response to the complaint, FTC Chair Lina Khan confirmed:
“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies. 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 lawsuit arrives in tandem with another major antitrust lawsuit led by the U.S. government against Google. Similar monopolistic claims have been filed against Google by the U.S. Department of Justice, speculating that Google monopolized “multiple digital advertising technology products” in violation of Sections 1 and 2 of the Sherman Act. Proceedings against Google kicked off with opening arguments heard on September 12.