US FTC and 17 States Sue Amazon... "Abusing Monopoly Power for Oppression"

The U.S. competition authority, the Federal Trade Commission (FTC), filed an antitrust lawsuit against Amazon, the world's largest e-commerce company, on the 26th (local time). Seventeen states, including New York, Michigan, and Massachusetts, also joined the lawsuit. Currently, Amazon's stock price on the New York Stock Exchange is showing a decline of over 4%.

FTC Chair Lina Khan announced that she, along with the attorneys general of 17 states, filed the lawsuit at the U.S. District Court in Seattle, Washington. The publicly released complaint includes allegations that "Amazon forced sellers to use its logistics and delivery services instead of placing products in prominent locations, and penalized sellers who offered products at lower prices on competing sites other than Amazon." They claim this constitutes violations of federal and state antitrust laws.

Chair Khan stated in a briefing that Amazon is engaging in unfair business practices by exploiting its market monopoly position, saying, "Amazon takes $1 for every $2 sellers earn." She also emphasized that "(Amazon) is abusing its market monopoly by raising prices and degrading services, enriching itself alone," and that a victory in this lawsuit would lead to the restoration of market competition.

The lawsuit saw significant participation from so-called blue states controlled by the Democratic Party, including New York, Connecticut, Michigan, and Massachusetts. States with Republican attorneys general, such as Oklahoma and New Hampshire, were also listed.

Currently, the FTC and the 17 states are requesting the court to issue orders to prohibit Amazon's illegal activities and to relax monopoly control to restore competition. Whether the court will order a breakup of the company was not specified in the complaint. Chair Khan avoided a direct answer to related questions on the day.

Amazon immediately pushed back. David Zapolsky, Amazon’s Head of Public Policy and Legal Counsel, rebutted in court, saying, "The lawsuit filed today by the FTC is wrong in fact and law." He argued, "The practices the FTC has taken issue with have helped promote competition and innovation across the industry. They have provided Amazon customers with more choices, lower prices, and faster delivery, and offered greater opportunities to selling businesses."

This lawsuit was a long-anticipated move. The FTC has been investigating Amazon for such unfair business practices for several years. The Wall Street Journal noted, "FTC Chair Lina Khan has been a figure who has consistently expressed concerns about large corporations like Amazon through journal articles since her time as a Yale Law School professor."

Under the Joe Biden administration, antitrust lawsuits targeting big tech companies have been increasing. Earlier, the U.S. Department of Justice filed a lawsuit against Alphabet, alleging illegal contracts to monopolize the search market. The trial, which began in earnest on the 12th, is the largest antitrust lawsuit in 25 years since Microsoft (MS) and is expected to conclude around mid-November. However, regardless of the outcome, both sides are expected to appeal, leading to years of legal battles.

Meanwhile, on the New York Stock Exchange this afternoon, Amazon's stock price is trading more than 4% lower than the previous close. Other big tech stocks such as Google Alphabet, MS, and Apple are also experiencing declines of around 2%.