"US Authorities Accuse Amazon of Engaging in Monopolistic Practices"

27 Sep, 2023

US Authorities Accuse Amazon of Engaging in Monopolistic Practices

US regulators have initiated legal action against Amazon, alleging that the tech giant is unlawfully maintaining a monopoly grip on the market. The Federal Trade Commission (FTC) asserts that Amazon employs a series of intertwined anticompetitive and unfair tactics to drive prices higher and quash competition.

In response, Amazon has countered the lawsuit, asserting that it is incorrect both in terms of facts and legal interpretation. The company is determined to present its defense in court.

This move marks the latest in a series of legal actions against major tech companies by US regulators. Lina Khan, the head of the FTC, has long focused on Amazon's practices. As far back as 2017, when Khan was just 29 years old, she authored a significant academic paper contending that the online retail giant had managed to elude scrutiny regarding anticompetitive behavior.

Khan's appointment as FTC Chair in 2021 heightened expectations for a case of this nature, seen as a pivotal test of her leadership. In a landscape dominated by a handful of powerful tech firms, there have been calls from some US politicians for measures to promote greater competition in online search, retail, and social media.

However, despite strong rhetoric against Big Tech, the FTC under Khan's leadership has encountered challenges in making its cases stick. In February, it failed in its attempt to halt Meta's acquisition of the VR company Within, and in July, it was unsuccessful in blocking Microsoft's purchase of the maker of Call of Duty.

There is considerable pressure on Khan to secure at least one high-profile victory, and this Amazon case is viewed with optimism within the FTC. The agency, along with 17 state attorneys, contends that Amazon is a "monopolist" that prevents rivals and sellers from reducing prices, ultimately harming consumers.

The regulator further alleges that Amazon's actions lead to reduced product quality for shoppers, overcharging of sellers, stifling of innovation, and hinder competitors from fair competition against Amazon.

Amazon counters that if the FTC's lawsuit succeeds, it will result in fewer product choices, higher prices, and slower deliveries for consumers.

Central to the case is the question of whether consumers suffer financial harm due to the alleged monopoly. US antitrust laws are complex, but generally, prosecutors must demonstrate that a company's actions financially harm consumers. This can be challenging in the context of Big Tech, as many of their services, like Google's search engine or Meta's Instagram, are offered for free.

In recent developments, a court battle has begun between Google and the US government, which has accused Google of holding a monopoly in the advertising technology sector.