Today, the Federal Trade Commission and 17 states filed suit against Amazon. They accuse the company of illegally undermining competition and warping prices. The allegations are something the Chair of the FTC, Lina Khan, has accused the company of for years.
The 172-page filing is the start of a landmark and long-awaited case, said former FTC employee and antitrust professor, John Kirkwood.
“I’m not surprised at all,” said Kirkwood. “It alleges that Amazon engaged in conduct to cement that power.”
Tuesday’s federal lawsuit accuses Amazon of using its monopoly power to raise prices, lower service quality, and eliminate competition.
“On the surface, they look concerning. They look suspicious,” said Kirkwood.
Some of the biggest takeaways from the filing include:
- Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet.
- Degrading the customer experience by replacing relevant, organic search results with paid advertisements—and deliberately increasing junk ads that worsen search quality and frustrate both shoppers seeking products and sellers who are promised a return on their advertising purchase.
- Biasing Amazon’s search results to preference Amazon’s own products over ones that Amazon knows are of better quality.
- Charging costly fees on the hundreds of thousands of sellers that currently have no choice but to rely on Amazon to stay in business.
We asked Kirkwood what’s next for the FTC and Amazon.
“It’s very unlikely that Amazon will be broken up. That rarely happens in anti-trust law,” said Kirkwood. “The FTC doesn’t have the authority to impose fines. So, the most likely result here is an order by the court to Amazon to stop the challenged practices. That may have some impact on Amazon’s business but it’s unlikely to be dramatic”
Amazon said otherwise, writing in a statement:
If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses—the opposite of what antitrust law is designed to do. The lawsuit filed by the FTC today is wrong on the facts and the law, and we look forward to making that case in court. -Amazon
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