The lawsuit accuses the tech giant of illegally maintaining its monopoly through anti-competitive and abusive strategies
After years of investigations, and tensions between political powers and Amazon, the US federal competition authority, the FTC, and 17 states, filed a lawsuit xagainst the tech giant, accusing it of “for illegally maintaining its monopoly’ thanks to ‘anti-competitive and abusive strategies’.
“What counts is not Amazon’s size,” the FTC clarifies in its announcement, but “illegal methods aimed at excluding competitors, hindering their development and the emergence of alternatives”.
According to the federal authority, Amazon discourages, for example, retailers from offering lower prices than its own on products where the Seattle group is in competition with retail suppliers.
The authority also accuses the American giant that makes it a condition of merchants’ eligibility for Prime (a service that allows consumers to have expedited delivery) that they use Amazon’s expensive supply chain services.
“Amazon exploits the power it derives from its monopoly to enrich itself while driving up prices and worsening services for tens of millions of American families who shop on its platform and hundreds of thousands of businesses that depend on Amazon” to market their products, FTC Chair Lina Kahn said in the statement.
“The lawsuit filed today clearly shows that the FTC has drastically departed from its mission of protecting consumers and competition,” Amazon vice president David Zapolsky said in a statement posted online.
The Amazon executive assures that the practices for which the group is complained about by the federal authority have on the contrary “contributed to the stimulation of competition and innovation across the retail sector and enabled Amazon customers to be offered more choice, lower prices and faster delivery times.”
The American Group, with revenue of $134.4 billion and profits of $6.7 billion in the second quarter of 2023systematically showcases the increase in sales achieved by merchants through the platform.
In 2022, “over 60% of sales through Amazon came from independent sellersthe majority of which are small and medium-sized enterprises,” the group argued last month.
If the FTC wins this battle, “will force Amazon to implement measures that harm consumers and small and medium-sized businesses”David Zapolski threatened in his announcement.
But according to non-governmental organizations, small and medium-sized enterprises suffer on the contrary due to the unfavorable balance of power.
“SMEs have been waiting for this moment for a long time,” he commented Stacey Mitchell, director of the Institute for Local Self-Reliance which promotes local consumption with respect for the environment.
“By controlling market access, Amazon has the ability to prioritize its own products, to spy on businesses by stealing their best ideas and data. It has the ability to impose its law and rule with astonishing disdain. In one day, it grants a retailer the “ship within 24 hours” perk. The next day he cancels his account, wiping out his sales.”
The platform represents37.6% of online sales in the USaccording to Insider intelligence, compared to Walmart (6.8%), Apple (3.5%) and eBay (3.1%).
Congressmen, state actors and members of Joe Biden’s administration have been struggling for years with the fight against the monopolies of the tech giants, without much success.
Over the summer, the FTC was forced to drop legal proceedings to block Microsoft’s acquisition of Activision Blizzard (video games) after a series of court defeats.
Lina Kahn, chair of the FTC since 2021, rose to prominence while still a student with the article titled “Amazon’s Antitrust Paradox” published in 2017 in the Yale University Law Review.
In her article she argued that the US legal arsenal is insufficient to deal with the monopolistic practices of conglomerates like Amazon.
In June 2021, the company filed a complaint with the FTC accusing its director of “bias”.
But this did not stop the federal authority from advancing on several fronts.
In June, the FTC filed a lawsuit against Amazon for “trapping consumers” with Prime membershipwhich renews automatically, while at the same time the process of canceling it is complicated.
The federal authority also attacked the group for respecting data confidentiality. Last May, Amazon agreed to pay $30 million to end litigation against Ring and Alexa (smart doorbells, speakers and security cameras), two product lines that collect information about their users.
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