US sues Amazon for allegedly breaking antitrust laws and harming consumers

Federal Trade Commission and 17 states file lawsuit after four-year investigation into tech company's practices

A lawsuit against Amazon alleges the e-commerce behemoth uses its market position to inflate prices on other platforms, overcharge sellers and stifle competition. AP
Powered by automated translation

The US Federal Trade Commission (FTC) filed a long-awaited antitrust lawsuit against on Tuesday, charging the online retailer with harming consumers through higher prices in the latest US government legal action aimed at breaking Big Tech's dominance of the internet.

The lawsuit was expected after years of complaints that Amazon and other tech giants have abused their dominance of search, social media and online retailing to become gatekeepers on the most lucrative aspects of the internet.

The lawsuit, which was joined by 17 state attorneys general, follows a four-year investigation and federal lawsuits filed against Alphabet's Google and Meta Platforms' Facebook.

“The FTC and its state partners say Amazon’s actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation and prevent rivals from fairly competing against Amazon,” the agency said in a statement.

The FTC said it was asking the court to issue a permanent injunction ordering Amazon to stop its unlawful conduct. The lawsuit was filed in federal court in Seattle, where Amazon is based.

Amazon said the FTC lawsuit was wrong-headed and would hurt consumers by leading to higher prices and slower deliveries.

“The practices the FTC is challenging have helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store,” said David Zapolsky, Amazon's general counsel.

Amazon shares were down 3 per cent after the lawsuit was filed on Tuesday.

The FTC claimed the company, founded in 1994 and worth more than $1 trillion, punished sellers that sought to offer prices lower than Amazon's by making it difficult for consumers to find the seller on Amazon's platform.

FTC chairwoman Lina Khan said Amazon had used illegal tactics to fend off companies that would have risen to challenge its monopoly.

“Amazon is now exploiting that monopoly power to harm its customers, both the tens of millions of families that shop on Amazon's platform and the hundreds of thousands of sellers that use Amazon to reach them,” she said.

Other allegations include that Amazon gave preference to its own products on its platforms over competitors also on the platform.

“No corporation has ever centralised this much power across so many crucial sectors,” said Stacy Mitchell of the Institute for Local Self-Reliance, which has pushed for the government to act against Amazon. "Left unchecked, Amazon’s power to dictate and control threatens the rule of law and our ability to maintain open, democratically governed markets.

The need to take action against Big Tech has been one of the few ideas on which Democrats and Republicans have agreed. During the Trump administration, which ended in 2021, the Justice Department and FTC opened inquiries into Google, Facebook, Apple and Amazon.

Updated: September 26, 2023, 7:45 PM