Amazon is being sued by US regulators, who claim that the internet behemoth is illegally holding onto a monopoly position.
According to the Federal Trade Commission (FTC), Amazon uses “a set of interlocking anticompetitive and unfair strategies” to raise prices and discourage competition.
The action was “wrong on the facts and the law,” according to Amazon, and they were eager to present that argument in court.
It is the latest technological behemoth to be sued by US regulators.
Amazon has long been a target for Lina Khan, the head of the FTC.
Ms Khan, then 29, released a key research paper in 2017 suggesting that the online store had dodged anti-competition scrutiny.
“With its missionary zeal for consumers, Amazon has marched toward monopoly,” she said at the time.
This case has been anticipated since her unexpected election as FTC Chair in 2021 and is seen as a vital test of her leadership.
Some US politicians have called for legislation that would encourage more competition in internet search, shopping, and social media as a result of the dominance of a small number of significant IT companies.
But despite its outspoken rhetoric against Big Tech under Ms. Khan, the FTC hasn’t accomplished much.
It failed in its attempt to prevent Meta from purchasing VR firm Within in February.
Additionally, it failed in its bid to stop Microsoft from closing the acquisition of the Call of Duty developer in July.
The FTC has great hopes for this case, and there is pressure on Ms. Khan to make at least one high-profile allegation stick.
The government contends that Amazon is a “monopolist” that prevents competitors and sellers from cutting prices, along with 17 state prosecutors.
Additionally, the regulator claimed that Amazon’s practices “degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon.”
Amazon, meanwhile, claims that if the “misguided” FTC action is successful, consumers would have less options, higher costs, and slower deliveries.
The key component of the lawsuit concerns consumers losing money – obtaining worse bargains – as a result of the purported monopoly.
Despite the complexity of US anti-competition law, prosecutors typically need to demonstrate that businesses acted in a way that cost consumers money.
When it comes to Big Tech, where many of their services are free, such as Google’s search engine or Meta’s Instagram, that isn’t always an easy thing to show.
The US government has accused Google of possessing a monopoly in the field of advertising technology, and a legal dispute between the two parties started earlier this month.
The US government has accused Google of possessing a monopoly in the field of advertising technology, and a legal dispute between the two parties started earlier this month.