New Jersey and 16 other states have joined to file a landmark lawsuit against Amazon, accusing the e-commerce giant of abusing its economic dominance and hurting fair competition.
The lawsuit alleges that Amazon unfairly promotes its own products over third-party sellers on its platform, and forces sellers to use its services in order to get the best seller benefits, which is called “Prime” eligibility. It also accuses Amazon of forcing sellers to list their products at the lowest price anywhere on the Internet, rather than being allowed to offer their products at a lower price on competing marketplaces, like eBay.
The suit says that because Amazon is so dominant in the e-commerce space, sellers have no choice but to abide by its demands, putting them at a competitive disadvantage, resulting in higher prices for consumers, lower incomes for sellers, and a worse overall experience for everyone involved.
“This complaint reflects the cutting edge and best thinking on how competition occurs in digital markets and, similarly, the tactics that Amazon has used to suffocate rivals, deprive them of oxygen, and really leave a stunted landscape in its wake,” Federal Trade Commission Chair Lina Khan said, adding that Amazon is “squarely focused on preventing anyone else from gaining that same critical mass of customers.”
“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 rely on Amazon to reach them,” Khan said. “Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”
The lawsuit currently demands a court order blocking Amazon from continuing its practices, but it could turn into a much larger case – one in which the plaintiffs argue that Amazon should be broken up over anti-trust violations.
Amazon responded by saying that the lawsuit would only hurt customers.
“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 attorney David Zapolsky. “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.”