The FTC and 17 states in the United States join forces to combat e-commerce monopolies: Amazon is accused of artificially raising prices and "taking away" nearly half of sellers' income.

The US government regulatory agency has once again targeted a tech giant, formally accusing Amazon of violating antitrust laws.

On Tuesday, September 26, the Federal Trade Commission (FTC) and the Attorneys General of 17 states including New York, Michigan, Massachusetts, and New Jersey jointly filed a lawsuit in a Seattle court, accusing Amazon of stifling competition, using its monopoly power to artificially raise prices, and suppressing innovation related to consumers and businesses.

In the statement announcing the lawsuit, the FTC pointed out that Amazon illegally maintains its monopoly power by using a series of interconnected anti-competitive and unfair strategies. The FTC and the states believe that Amazon's actions prevent competitors and sellers from lowering prices, reducing the quality of the shopping experience, charging sellers excessive fees, and preventing fair competition with Amazon.

According to the FTC's allegations, Amazon engages in anti-competitive behavior in two markets: the online supermarket serving consumers and the online marketplace serving sellers, which is commonly referred to as third-party e-commerce. The main tactics include:

• Punishing online retailers that offer lower prices by taking measures to suppress discounts, thereby keeping product prices on Amazon at a higher level. For example, if Amazon discovers that a seller's prices are lower on platforms other than Amazon, Amazon can prevent buyers from seeing these discounted sellers in Amazon's search results.
• Restricting sellers' eligibility to have their products included in Amazon's Prime membership service. If sellers want their products to be listed under the Prime service, they must use Amazon's expensive delivery service, which significantly increases the cost of selling products on other platforms. This illegal coercion in turn limits the ability of competing platforms and Amazon to compete with each other.

The FTC also mentioned that Amazon forces hundreds of thousands of sellers who rely on Amazon to use its advertising and other services. The fees paid by sellers to Amazon for these services account for nearly 50% of Amazon's total revenue. These fees harm both sellers and shoppers, as consumers end up paying higher prices for products sold on and off the Amazon platform.

FTC Chair Lina Khan stated on Tuesday that in addition to fees for logistics, advertising, and other services, "for every $2 a seller earns, Amazon takes $1."

The FTC stated that it is currently seeking a permanent injunction from federal courts, along with the 17 states that have filed the lawsuit against Amazon, to prohibit Amazon's illegal behavior, dismantle Amazon's monopoly control, and restore normal competition.

Amazon subsequently issued a statement stating that it will challenge the FTC's allegations in court, claiming that the FTC's actions fundamentally deviate from the agency's mission to protect consumers and are "wrong both factually and legally."

David Zapolsky, Amazon's General Counsel, stated that the behavior alleged by the FTC actually promotes competition and innovation in the retail industry, providing consumers with more choices, lower prices, and faster delivery speeds, and giving buyers on the Amazon platform more opportunities. If the court grants the FTC's demands, the result will be counterproductive.

FTC Files Fourth Lawsuit Against Amazon This Year, Marking a Career-Defining Moment for "Antitrust Fighter" FTC Chair

The FTC's latest action is seen as a milestone moment during Khan's tenure. Last month, when news broke of the impending FTC lawsuit against Amazon, some media outlets speculated that based on Khan's previous public statements, she was unlikely to accept any compromise from Amazon and instead sought to restructure the company. It is clear that Amazon will not accept this, and it is expected to appeal the decision.

Following the failed attempt to block Microsoft's acquisition of Activision Blizzard in July, this lawsuit against Amazon represents Khan's most recent effort in her revolution against antitrust enforcement in the tech industry. Some media outlets have referred to this case as a defining moment in her career.

This lawsuit marks the fourth time this year that the FTC has taken legal action against Amazon, highlighting the US government's determination to combat corporate monopolies. Wallstreetcn previously mentioned that Khan has long been known as an "antitrust fighter," and her breakthrough work during her student years was an article titled "The Antitrust Paradox of Amazon," published in the Yale Law Journal in 2017.

Khan's appointment as FTC Chair last year was seen as a loud call for regulation against tech giants, with the possibility of even breaking them up. Just one day after Microsoft announced its plan to acquire Activision Blizzard in January last year, Khan stated in her first public interview as FTC Chair that under her leadership, the FTC would no longer back down in the face of intimidation or threats from these giants.

In July this year, a San Francisco court rejected the FTC's injunction request, allowing Microsoft to proceed with the largest acquisition in the history of the gaming industry. Subsequently, legal experts commented that this showed that US courts do not support the antitrust revolution. However, Khan is expected to continue launching challenging lawsuits, as she hopes the courts will broaden their perspective on competition harm. If the FTC fails to win some cases during this administration's term, companies may ignore regulatory warnings.