Amazon in Antitrust Struggle with FTC
Amazon faces an antitrust lawsuit from the Federal Trade Commission (FTC) and co-plaintiffs for strangling competition of small businesses. Credit: Bryan Angelo on Unsplash
The e-commerce giant, Amazon, is embroiled in an antitrust lawsuit brought against them by the Federal Trade Commission (FTC) and 17 state attorneys.
On Sept. 26, a joint suit and complaint was released, which brought forth the allegations that Amazon.com has been illegally maintaining monopoly power, through ongoing pattern of illegal conduct blocking competition. The co-plaintiffs of the FTC and New York for this complaint include the state attorney generals of states like New Jersey, Connecticut and Pennsylvania.
As stated by the FTC in a press release given last week, “...a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power.” Among the plaintiffs jointly bringing this case against the online retailer is the state of New York, home to what seems to be the largest global trading center in the world: New York City.
Leading the coalition of state attorney generals, New York’s own Attorney General Letitia James commented on Sept. 26 in a press release from the state attorney general’s office that, “Amazon illegally raised prices for consumers and took advantage of online sellers in its storefront and they should be held accountable.”
“Amazon’s monopolistic behavior is hurting consumers, online sellers, competition, and the overall economy. Today my office is leading a multi-state coalition in joining the FTC to put an end to Amazon’s abusive and manipulative practices to protect consumers and small businesses nationwide. Every company, big or small, must abide by the law and my office is not afraid to hold those that don’t to account,” said Attorney General James.
As noted in the formal complaint and press release from the FTC, the main focuses within the complaint include the online retailer’s anticompetitive conduct in two markets. “Exclusionary conduct” allows them to utilize their power in both the online superstore market and the market of online marketplace services. It’s to procure “enormous monopoly rents from everyone within its reach.”
The FTC can bring forward complaints such as this due to the organization’s mission and mandate — “Protecting the public from deceptive or unfair business practices and from unfair methods of competition through law enforcement, advocacy, research, and education” —as well as through the enforcement of Antitrust Laws and precedents set by the Sherman Antitrust Act.
Antitrust laws encompass both antitrust and competition laws. As stated by the Department of Justice (DOJ), “These laws prohibit anti-competitive conduct and mergers that deprive American consumers, taxpayers, and workers of the benefits of competition.”
As an act passed to buttress the Antitrust Laws, as described by the DOJ, the Sherman Act effectively makes “agreements among competitors to fix prices or wages, rig bids, or allocate customers, workers, or markets, are criminal violations.” For context, The Sherman Act essentially makes monopolization illegal across the board, whether attempted or successful.
Surmised by Dr. Lynn Eckert, an Associate Professor of Political Science at Marist College, Amazon has the capability of ensnaring businesses that are on the smaller side into wanting to sell their products through them due to the platform’s global reach.
“But once [small businesses] get there, then Amazon places all these rules and encourages them to buy their own software, etc.”
Dr. Eckert makes the case that the argument involved in the suit is not that there is not a competitive market, “...but that there are all sorts of…challenges in mounting this case…and that it’s a specific pool,” likening its consumer and economic pool to that of the specific market of the European Union.
David Zapolsky, Senior Vice President and General Counsel at Amazon.com, also published a press release on Sept. 26, 2023, on behalf of the company in response to the FTC and co-plaintiffs’ complaint.
“We respect the role the FTC has historically played in protecting consumers and promoting competition. Unfortunately, it appears the current FTC is radically departing from that approach, filing a misguided lawsuit against Amazon that would, if successful, force Amazon to engage in practices that actually harm consumers and the many businesses that sell in our store,” wrote Zapolsky.
Zapolsky further takes a jab at the commission by stating that they have a “fundamental misunderstanding of retail.”
The case is bound to be long and tedious, and the ruling may have future implications for giants in other sectors, like Google — who currently faces an antitrust lawsuit — and the tech industry.