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FTC files long-awaited antitrust case against Amazon

Sep 26, 2023
Illustration of a giant Amazon logo surrounded by orange cones.

Illustration: Lindsey Bailey/Axios

The Federal Trade Commission is suing Amazon over alleged anticompetitive business practices in a long-awaited case against the massive online retailer and platform.

Driving the news: The FTC voted 3-0 to proceed with the Amazon suit, per an announcement Tuesday.

  • Rumors of a big Amazon FTC case have been flying for years, starting under the Trump administration, and the agency started working on its complaint in earnest earlier this year.
  • 17 state attorneys general also signed onto the complaint.
  • Amazon "is a monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power," the FTC's Tuesday press release reads.

Why it matters: If the FTC, led by Democrat Lina Khan, is successful in this suit, it could fundamentally alter the way Amazon's business operates and notch a major win for Khan and the other commissioners.

  • Khan has been eyeing Amazon since she was a law student, garnering attention for a paper on how antitrust law should be applied to it.

The big picture: Under Khan, the FTC has suffered a string of losses in court attempting to bring down Big Tech companies, including a bid to block Microsoft's acquisition of Activision Blizzard and an attempt to keep Meta from buying virtual reality fitness startup Within.

What they're saying: "Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies," said Khan in a press release on Tuesday.

  • The suit alleges "Amazon's actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon," per the FTC release.
  • "While we go through a variety of tactics in the complaint, the goal is the same — to deprive rivals of the scale to compete against Amazon," Khan told reporters in a call on Tuesday.
  • Khan declined to say whether she seeks a breakup of Amazon, saying this suit is about finding liability for anti-competitive conduct.

The other side: "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," Amazon general counsel David Zapolsky said in a statement.

  • "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."

Meanwhile, the FTC sued Amazon in June for allegedly tricking people into Prime memberships and making it difficult to cancel, Axios previously reported, and added names of executives to the suit last week. Amazon said the suit was wrong on "both the facts and the law."

  • The FTC also settled with Amazon earlier this year over privacy violations connected to its Alexa smart devices and Ring cameras.
  • Republican FTC nominees Melissa Holyoak and Andrew Ferguson are expected to receive votes in the Senate Commerce Committee soon after a smooth hearing last week, but the looming government shutdown could delay them joining the agency even longer.
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