Second FTC Suit Alleges Monopolistic Practices By Amazon

The Federal Trade Commission and the state Attorney’s General of 17 states filed an antitrust lawsuit against Amazon on September 26. The suit alleges that Amazon has illegally exploited its position in the e-commerce marketplace to inflate prices and reduce competition artificially. This is the second lawsuit filed against Amazon by the FTC after a March filing regarding the company’s deceitful marketing to attract Prime subscriptions.

Amazon began as an online bookseller in the mid-1990s and has become the world’s largest online retailer of everything from household supplies to major appliances. Owner Jeff Bezos is one of the world’s wealthiest individuals and has an estimated net worth of $154 billion. Amazon currently employs 300 million employees worldwide and has a total worth of nearly $2 trillion.

Lina Khan, the current head of the FTC has sought ways to break up Amazon for years, dating back to her days as a law school student when she argued in a paper that low-priced goods harmed consumers by artificially creating value that does not provide a return for the manufacturer. Ultimately, Khan argues, by keeping prices low, competitor businesses would be unable to fund innovation and competition in the marketplace.

The lawsuit is the latest in a series of antitrust actions taken this year seeking to break up some of the world’s largest companies. A recent filing against Google alleging similar unfair business practices is putting pressure on Big Tech to reform or face punishment that in the past was used to end monopolies by Big Oil and curtail Microsoft, once the world’s most dominant tech company.

In response to the filing, an Amazon spokesperson called the suit “wrong on the facts and law.” The statement goes further to call the action a mistake, even accusing the FTC of losing its purpose in protecting consumers by targeting Amazon’s low prices and fast delivery business model.

The innovations that Amazon has brought to consumers are undeniable. Just a decade ago, it was unthinkable to order groceries online, but today, it is a standard practice that numerous companies and even grocery stores have adopted, largely in response to consumer demand generated by Amazon.

Khan’s efforts to apply antitrust actions against Big Tech have not gone unchallenged. Numerous sources including newspapers and politicians have derided the 34-year-old who shot to the head of the powerful commission in 2021 as the youngest and most liberal person to ever hold the position.

The fallout from the antitrust suits could have far-reaching effects that could include higher prices, less service, and poorer quality, but could also cause innovation in these same areas while allowing small start-up businesses room in the marketplace to grow. A date has not been set to begin hearing the claim in court.

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