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Photo: Smith Collection/Gado/Getty Images

Washington, D.C. Attorney General Karl Racine on Tuesday filed an antitrust lawsuit against Amazon, alleging the e-commerce giant's anticompetitive pricing practices result in higher costs for consumers and less choice in the online retail market.

Why it matters: The lawsuit concerns how Amazon negotiates with more than 2 million third-party sellers on the platform, which are crucial to the company's business and end up absorbing fees that Amazon charges to list their merchandise.

  • This results in artificially high prices for third-party sellers' goods, and allow Amazon to maintain monopoly power in violation of D.C.'s Antitrust Act, per the lawsuit.

Details: The lawsuit alleges that provisions known as "most favored nation" agreements bar third-party sellers from offering their merchandise on other platforms for lower prices, including the third-parties' own websites.

  • "These agreements effectively require third-party sellers to incorporate the high fees charged by Amazon — as much as 40% of the total product price — not only into the price charged to customers on Amazon's platform, but also on any other online retail platform," Racine alleges.

Flashback: In 2019, Amazon said it would end the "most favored nation" pricing provisions after criticism from Democratic Sens. Richard Blumenthal and Elizabeth Warren, who was then a presidential candidate.

  • Yes, but: The lawsuit alleges that Amazon quietly replaced that policy with a similar one that effectively holds third-party sellers to the same restrictions.

Between the lines: Racine's name has been in the mix as a contender for the Biden administration's pick to be chairman of the Federal Trade Commission. Suing Amazon — without other state or federal partners — could be an attempt to show his anti-monopolist chops.

  • As attorney general, Racine also sued Facebook over the Cambridge Analytica data leak controversy and other anticompetitive conduct, and joined a multi-state suit against Google in December.

The other side: “The DC Attorney General has it exactly backwards – sellers set their own prices for the products they offer in our store," said an Amazon spokesperson in a statement.

  • "Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively."
  • "The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law."

Go deeper

Sep 1, 2021 - Podcasts

Federal intervention in the school masking debate

The ongoing battle among local, state and federal officials over COVID precautions in schools continues. The U.S. Department of Education has now launched a civil rights investigation into five GOP-led states that have banned mask mandates in schools.

  • Plus, the return of evictions in America.
  • And, Amazon steps into the live audio business.

Guests: Axios' Ben Montgomery, Linh Ta, Felix Salmon and Sara Fischer.

Credits: Axios Today is produced in partnership with Pushkin Industries. The team includes Hope King, Sara Kehaulani Goo, Dan Bobkoff, Alexandra Botti, Nuria Marquez Martinez, Sabeena Singhani, and Ben O'Brien. Music is composed by Evan Viola. You can reach us at podcasts@axios.com. You can text questions, comments and story ideas to Niala as a text or voice memo to 202-918-4893.

Go deeper:

Updated 2 hours ago - Politics & Policy

Omicron dashboard

Illustration: Brendan Lynch/Axios

  1. Health: Pfizer and Moderna boosters overwhelmingly prevent Omicron hospitalizations, CDC finds — Omicron pushes COVID deaths toward 2,000 per day — The pandemic-proof health care giant.
  2. Vaccines: The case for Operation Warp Speed 2.0 — Starbucks drops worker vaccine or test requirement after SCOTUS ruling — Kids' COVID vaccination rates are particularly low in rural America.
  3. Politics: Biden concedes U.S. should have done more testing — Arizona says it "will not be intimidated" by Biden on anti-mask school policies — Federal judge blocks Biden's vaccine mandate for federal workers.
  4. World: American Airlines flight to London forced to turn around over mask dispute — WHO: COVID health emergency could end this year — Greece imposes vaccine mandate for people 60 and older — Austria approves COVID vaccine mandate for adults.
  5. Variant tracker

Arizona governor sues Biden administration over COVID funds tied to mandates

A teacher prepares a hallway barrier to help students maintain social distancing at John B. Wright Elementary School in Tucson, Arizona, on Aug. 14, 2020. Photo: Cheney Orr/Bloomberg via Getty Images

Arizona Gov. Doug Ducey (R) filed a lawsuit Friday against the Biden administration for ordering the state to stop allocating federal COVID relief funds to schools that don't comply with public health recommendations such as masking, the Arizona Republic reports.

Why it matters: The Treasury Department said last week that the state would have to pay back the money if Ducey does not redesignate the $173 million programs to ensure they don't "undermine efforts to stop the spread of COVID-19."