Amazon Faces Antitrust Case

The Federal Trade Commission (FTC) has filed an antitrust lawsuit accusing Amazon of "illegally maintaining monopoly power." Critics argue the lawsuit is too vague, while redacted sections make it hard to assess in full.

The FTC has filed the complaint alongside 17 state attorneys. It says Amazon "violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging."

It also alleges that Amazon acts illegally to "wield monopoly power to inflate prices, degrade quality, and stifle innovation for consumers and businesses." (Source: ftc.gov)

Buyers And Sellers Both Affected

According to the complaint, Amazon acts competitively in two separate markets: the one for consumers buying products and the one for third-party sellers buying marketplace services. Some of the specific allegations include that Amazon: (a) buries third-party sellers in its search results if they sell products cheaper on other sites; (b) unfairly requires sellers to use Amazon's fulfillment service (increasing their costs) to be eligible for the Prime program, and (c) charges fees to sellers that can mean almost half the price the consumer pays goes to Amazon.

Amazon replied with a statement concluding that "If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses - the opposite of what antitrust law is designed to do. The lawsuit filed by the FTC today is wrong on the facts and the law, and we look forward to making that case in court." (Source: aboutamazon.com)

Outcome Uncertain

It's not easy to draw firm conclusions about the strength of the case. Martin Peers of The Information noted that "so much of the complaint is redacted that it's like a novel that has every third page torn out." He goes on to note that although what is readable makes a strong case that Amazon has a dominant position, but it's unclear if consumers are unhappy with the result.

Like many antitrust cases it may boil down to the fact that dominating a market isn't illegal, using specific anticompetitive tactics and policies isn't necessarily illegal, but at some point the combination of the two is illegal.

The lawsuit simply asks a court to force Amazon to stop acting illegally but doesn't suggest any specific penalties or measures. Peers believes the real aim of the lawsuit may be to establish a precedent for what big tech firms can and can't do.

What's Your Opinion?

Is Amazon too dominant in online shopping? What, if any, restrictions should be placed on the way it handles third-party sellers? Does antitrust law matter if consumers are broadly happy?