They sue Amazon! for overcharging

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US regulators and 17 states are suing Amazon over allegations that the e-commerce giant abuses its market position to inflate prices on and off its platform, overcharge sellers and stifle competition.

The lawsuit, filed Tuesday in federal court in Amazon's home state of Washington, is the result of a year-long investigation into the company's business and one of the most significant legal challenges brought against it in its near future. 30 years of history.

The Federal Trade Commission and states that joined the lawsuit allege that Amazon is violating federal and state antitrust laws. They ask the court to issue a permanent injunction that they say would prohibit Amazon from engaging in their illegal conduct and loosen its "monopoly control to restore competition."

The complaint accuses the company of engaging in anti-competitive practices through measures that discourage sellers from offering lower prices for products on non-Amazon sites, an argument that mirrors allegations made in a separate lawsuit introduced last year by the state of California.

The lawsuit says Amazon buries listings offered at lower prices on other sites. At the same time, it also charges high fees to sellers, forcing merchants to increase their prices on the platform, as well as other e-commerce sites, to keep their products competitive on Amazon.

“The lawsuit lays out detailed allegations that point out how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that depend on it.” Amazon to buy. get to them,” FTC Chairwoman Lina Khan said in a prepared statement.

Seattle-based Inc. said the FTC is “factually and legally wrong” and had departed from its role of protecting consumers and competition.

"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," said Amazon general counsel David Zapolsky. he said in a prepared statement.

The lawsuit also accuses Amazon of degrading the customer experience by replacing relevant search results with paid ads, favoring its own brands over other products it knows are of better quality, and charging high fees that force sellers to pay almost the half of its total income to Amazonas. According to the antitrust organization Institute for Local Self-Reliance, the share that sellers give to Amazon of their income has increased from 35% in 2020 and 19% in 2014.

The lawsuit also says that Amazon forces sellers to use its logistics service, FBA, to make their products eligible for Amazon Prime, even though many of them would prefer to use alternative logistics services to get orders to customers.

Some estimates show that Amazon controls around 40% of the e-commerce market. The majority of sales on its platform are facilitated by independent sellers made up of small and medium-sized businesses and individuals. In exchange for the access it provides to its platform, Amazon collects billions through referral fees and other services such as advertising, making products sold by sellers more visible on the platform.

The vast majority of third-party merchants also use the company's fulfillment service to store inventory and ship items to customers. Amazon has steadily increased fees for those who rely on the program and, more recently, imposed (and then abandoned) another tariff to those who don't, a move that was criticized by the company's critics. Last quarter, Amazon reported $32.3 billion in revenue from third-party services.

Consumer advocacy groups applauded the lawsuit, while one industry group said many large retail companies have policies that mirror Amazon's.

There has been speculation that the agency would seek a forced breakup of the retail giant, which also dominates cloud computing and has a growing presence in other sectors, such as food and healthcare. In a briefing with reporters, Khan dodged questions about whether that will happen.

"At this stage, the focus is more on responsibility," he said.

Amazon has long faced accusations of undermining companies that sell on its platform by evaluating merchants' data and creating its own competing products that it then pushes on its site. In August, the company said it was eliminating some internal brands that were not resonating with customers and would relaunch some items under existing brands such as Amazon Basics and Amazon Essentials. Booksellers and authors have also urged the Justice Department to investigate what they have called “Amazon's monopoly power over the market for books and ideas.”

If successful, a court case could be a big boost for the FTC's Khan, a critic of Big Tech who rose to prominence as a Yale Law student in 2017 for her academic work "The Amazon Antitrust Paradox." In 2021, Amazon had tried to have her impeached of the agency's investigations against the company because of its previous criticisms.

Under Khan, the FTC has aggressively attempted to mitigate Big Tech's influence, but has been unsuccessful recently in some of the most high-profile cases, including its attempt to block Microsoft's acquisition of video game maker Activision Blizzard and Meta's acquisition of virtual reality. start within unlimited. The agency is now in the middle of a protracted lawsuit against Facebook parent Meta, which it alleges has engaged in monopolistic behavior. The Justice Department is also challenging Google's market power in court.

In addition to the California lawsuit, the District of Columbia also sued Amazon over its treatment of third-party sellers. That lawsuit was dismissed by a federal judge early last year and is currently under appeal.

The federal complaint follows other actions the FTC has taken against Amazon in recent months. In June, the agency sued the company, alleging it was using deceptive practices to enroll consumers in Amazon Prime and make it difficult for them to cancel their subscriptions. Amazon denies the allegations.

In late May, the company agreed to pay a $25 million civil penalty to resolve allegations that he violated a children's privacy law and misled parents about data deletion practices on its popular Alexa voice assistant.

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