Seventeen states and U.S. regulators are suing Amazon on the grounds that it utilizes its dominant position in the market to raise prices on rival platforms, overcharge vendors, and hinder competition.
The claim was made on Tuesday in a U.S. The outcome of a years-long probe of Amazon’s operations is one of the most major legal challenges launched against the corporation in its almost 30-year history.
District Court for the Western District of Washington. The Federal Trade Commission and the states that joined the lawsuit, according to a news release from the organization, are requesting that the court issue a permanent injunction that would stop Amazon from engaging in its illegal behavior and loosen its “monopolistic control to restore competition.”
They make claims similar to those made in a different case filed by the state of California last year, alleging that the corporation participates in anti-competitive actions through anti-discounting policies that discourage merchants from offering lower pricing for goods on websites other than Amazon.
According to the complaint, Amazon has the power to obscure products that are available elsewhere for less money.
The complaint further alleges that the company degrades the customer experience by substituting relevant search results with paid advertisements, favoring its own brands over other goods it knows to be of higher quality, and charging exorbitant fees that require sellers to give Amazon nearly half of their total sales.
“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,” FTC Chairman Lina Khan said in a prepared statement.
Many people have questioned whether the agency would attempt to forcibly split up the retail behemoth, which also dominates cloud computing and is expanding its position in other industries like food and healthcare.
In a press conference, Khan sidestepped inquiries about whether or not that would occur. “At this point, liability is more important,” she said.
According to some estimations, Amazon has a 40% market share in e-commerce. Small and medium-sized organizations and individuals that are independent sellers facilitate the majority of the transactions on its platform.
Amazon earns billions of dollars through referral fees and other services like advertising, which increase the visibility of the goods sold by merchants on the platform in exchange for granting access to its platform.
Most third-party merchants also utilize the company’s fulfillment service for inventory storage and client delivery. In addition to recently imposing—and then abandoning—another price on people who don’t, a move that was criticized by the company’s detractors, Amazon has been steadily hiking rates for those who depend on the program.
Amazon recorded $32.3 billion in revenue from third-party services during the most recent quarter.
The fees cost U.S. merchants 45% of their sales in the first half of this year, up from 35% in 2020 and 19% in 2014, claims anti-monopoly group Institute for Local Self-Reliance.
Additionally, Amazon has long been accused of undercutting companies that sell on its platform by analyzing merchant data and developing its own competitive product, which it then promotes on the website.
The business announced in August that it was discontinuing some internal brands that weren’t popular with consumers and would relaunch some products under already popular names like Amazon Basics and Amazon Essentials.
The Department of Justice has also been urged by booksellers and authors to look into what they have referred to as Amazon’s “monopoly power over the market for books and ideas.”
Tuesday’s request for a comment from Amazon did not receive a prompt response.