US Trade Commission sues Amazon for using power to create monopoly

The US Federal Trade Commission has accused Amazon of wielding monopoly power to inflate prices and stifle innovation in a landmark lawsuit taking aim at Big Tech’s dominance of the internet.

The claim by the anti-trust watchdog, which was joined by 17 state attorneys general, follows a four-year investigation into complaints that Amazon and other giant tech groups abused their dominance of search, social media and online retailing to become gatekeepers of commerce on the web.

“The FTC and its state partners say Amazon’s actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon,” the agency said.

The FTC said that it was asking the court in Seattle, where Amazon is based, to issue a permanent injunction ordering it to stop “unlawful conduct”. Amazon shares fell by 3 per cent shortly after details of the claim were released.

Amazon dismissed the claims as being “wrong on the facts and the law” and said that the action would hurt consumers by leading to higher prices and slower deliveries.

“We fundamentally disagree with the FTC’s allegations — which are in many cases wrong or misleading — and with their overreaching and misguided approach to antitrust, which would harm consumers, hurt independent businesses and upend longstanding and well-considered doctrines. We will contest this lawsuit”, David Zapolsky, Amazon’s general counsel, said.

The FTC said that Amazon, founded in 1994 and worth more than $1 trillion, punished sellers that sought to offer prices lower than Amazon’s by making it difficult for consumers to find the seller on its platform.

It said: “Amazon’s illegal, exclusionary conduct makes it impossible for competitors to gain a foothold” by “degrading the customer experience by replacing relevant, organic search results with paid advertisements — and deliberately increasing junk ads that worsen search quality and frustrate both shoppers seeking products and sellers who are promised a return on their advertising purchase.”

Lina Khan, the London-born chairwoman of the FTC, is a long-time critic of Amazon and was on the staff of the House committee that wrote a report in 2020 that advocated reining in Amazon, Apple, Google and Facebook.

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US Trade Commission sues Amazon for using power to create monopoly