Fintech & Ecommerce

US Government and 17 States Sue Amazon

The US government and 17 states are suing Amazon.

US Government and 17 States Sue Amazon

In this case, the lawsuit is the next step in the landmark proceedings on charges of monopoly, which in a sense sums up and draws a symbolic line under the long-standing claims against the aforementioned e-commerce giant related to the alleged abuse of the company’s economic dominance and involvement in actions that caused damage to fair competition.

The groundbreaking trial by the Federal Trade Commission and 17 attorneys General means something like a large-scale attack by the authorities on Amazon. This company has sold an impressive path that began at the stage of the book sales business and at the current historical moment is at the chronological point when the brand became a kind of everything store. Currently, Amazon is experiencing the peak of its development, having a global logistics network and realizing its intentions to achieve leadership in the cloud computing industry.

The 172-page complaint contains a statement that the e-commerce giant unfairly promotes its platform and services at the expense of third-party sellers, for whom the virtual retail space is the main medium for business development.

According to the FTC, Amazon has damaged competition by requiring merchants whose products are presented on the company’s virtual platform to purchase logistics services of this brand. The regulator also claims that the e-commerce giant is forcing sellers to place their products in its online store at the lowest prices anywhere on the Internet. This practice contradicts the norms of fair competition, according to which traders should be able to offer products within the limits of the cost corresponding to market realities, due, among other things, to the regional factor.

The FTC also claims that due to Amazon’s dominance in the e-commerce area, sellers have virtually no choice but to agree to the terms of the industry giant. The regulator states that this state of affairs provokes an increase in consumer prices and negatively affects the customer experience. The FTC also claims that the e-commerce giant rates its products higher in the Marketplace search results than products offered by third-party sellers.

FTC Chairman Lina Khan said last Tuesday, September 26, that Amazon is focused on preventing anyone from gaining the same critical mass of customers. She also noted that the complaint sent to the court reflects the advanced and best ideas about the implementation of competition processes in digital markets. According to her, there is currently an understanding of Amazon’s tactics aimed at limiting the possibilities of competitors’ activities.

The following states are involved in this trial on the part of the prosecution: Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Wisconsin and Rhode Island. The complaint was filed in the U.S. District Court for the Western District of Washington. The purpose of the proceedings by those who initiated this process is a court order prohibiting Amazon from performing actions that fall under the category of anti-competitive behavior.

Lina Khan said that the FTC does not rule out the possible breakup of the e-commerce giant. He also believes that within the framework of the landmark antimonopoly proceedings, individual managers should be named. During a speech in Washington, on September 26, Lina Khan did not make any statements about possible actions by the FTC aimed at breaking up Amazon as a kind of remedy against the company’s monopoly, which the regulator considers illegal. In response to the relevant question, she stated that the complaint is currently focused on the issue of responsibility.

At the same time, the media reports that the FTC complaint filed in Seattle Federal Court indicates that the solution to the problem may be structural relief – a term denoting an actual breakup. Commenting on this wording, Lina Khan said that the regulator is interested in any relief that will become an effective tool against the allegedly anti-competitive behavior of the e-commerce giant. She noted that, ultimately, there is a desire to make sure that the remedy used prevents the possibility of illegal practices and their repetition, and is a guarantee that actions that violate the norms will no longer become a source of profit.

Lina Khan also described an open possibility that Amazon executives will be held personally liable if evidence justifying such legal measures is presented. She accuses the e-commerce giant of punitive and coercive tactics to maintain an illegal monopoly. According to her, the company, using monopoly power, raises prices and worsens the quality of service for millions of American families shopping on the platform of this brand, and hundreds of thousands of businesses that rely on the firm to contact consumers.

The e-commerce giant joins Google and Meta, which the US government has also accused of involvement in the implementation of practices that violate antitrust laws. According to experts, these proceedings reflect the lack of political favor towards major players in the technology sector.

David Zapolsky, Amazon’s senior vice president of global public policy and general counsel, said the lawsuit is evidence of the FTC’s departure from its mission to protect consumers and competition. According to him, the practice of the e-commerce giant helped to stimulate the process of competition, and innovation and ensured selection in the retail area. He also said that the victory of the regulator following the results of the proceedings will entail a reduction in the choice of products for consumers, will cause prices to rise, slow down supplies, and limit the space of opportunities for small businesses.

As we have reported earlier, FTC Investigates OpenAI for Potential Harm to Consumers.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.