This article was last updated on September 27, 2023
The American regulator, the Federal Trade Commission (FTC), along with seventeen American states, has filed a lawsuit against Amazon for abusing its monopoly position. This case marks one of the largest legal actions ever taken against the company.
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Alleged Punishment of Sellers
The FTC accuses Amazon of punishing sellers on its platform if they offer their goods at lower prices on other platforms. These sellers allegedly receive less prominent placement on Amazon as a result.
Forcing Retailers to Use Amazon’s Delivery Services
Additionally, Amazon is accused of pressuring retailers who sell through its platform to use the company’s delivery services. Furthermore, it is alleged that Amazon gives its own products preferential placement on the website over competitor products.
The FTC claims that companies selling through Amazon have to relinquish an excessive amount of their profits. In 2020, Amazon reportedly received 35 percent of these companies’ profits.
Lawsuit Filed in Washington State
The lawsuit has been filed in Washington state, where Amazon’s headquarters are located. The company has expressed concerns that if the FTC prevails, it could result in higher prices and slower deliveries.
According to the FTC, the lawsuit primarily aims to hold Amazon accountable. However, if the FTC wins the case, there is a possibility that Amazon may be required to divide the company, reducing its dominant position in the online sales market.
Stock Market Reaction
Following the announcement of the lawsuit, Amazon’s shares dropped by 3.7 percent on the American stock exchange. This is not the first time the FTC has targeted the company, as it previously accused Amazon in June of misleading consumers regarding its Prime subscription service and making it difficult to cancel subscriptions. Amazon denies any wrongdoing in that case.
This lawsuit against Amazon’s alleged monopoly follows a similar case against Facebook in 2020, where the FTC aimed to divest two of its subsidiaries, WhatsApp and Instagram, to address the social media giant’s monopoly in the market. That case is still ongoing.
It is worth noting that Google is also facing a significant lawsuit in the US due to alleged abuse of its monopoly position.