The FTC accuses Amazon of 'monopolistic practices' in long-expected antitrust suit

The Federal Trade Commission (FTC) filed an antitrust lawsuit against Amazon today in Western Washington district court, with 17 states joining the federal agency. The case isn’t surprising (the FTC was reportedly nearly ready to file in late August), but its specifics weren’t yet known.

The FTC accuses the online retailer of monopolistic practices, including preventing merchants from offering lower prices on other platforms and forcing them to use Amazon’s logistics service if they wanted to be included in customers’ Prime shipping perks. Those anticompetitive practices allegedly led to higher prices and an inferior shopping experience.

The suit describes “Amazon's one-two punch of seller punishments and high seller fees” that forces vendors to “use their inflated Amazon prices as a price floor everywhere else.” The complaint reads, “Amazon's punitive regime distorts basic market signals: one of the ways sellers respond to Amazon's fee hikes is by increasing their own prices off Amazon.”

“Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition,” said FTC chair Lina Khan, according to The New York Times.

“Amazon is a monopolist,” the lawsuit reads. “It exploits its monopolies in ways that enrich Amazon but harm its customers: both the tens of millions of American households who regularly shop on Amazon's online superstore and the hundreds of thousands of businesses who rely on Amazon to reach them.”

The 17 states joining the FTC include New York, Connecticut, Pennsylvania, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, Oklahoma, Oregon, Rhode Island and Wisconsin.

The FTC has had its eye on Amazon for several years. This is the fourth action the agency has taken against the company this year. Amazon settled a previous lawsuit (for $30.8 million) filed in May over Alexa children’s privacy concerns and snooping with Ring cameras. In June, the FTC sued the retailer again, claiming the company tricked customers into signing up for Prime subscriptions and then made it hard to cancel them.

Amazon claimed that the FTC’s actions are out of line. “Today’s suit makes clear the FTC’s focus has radically departed from its mission of protecting consumers and competition,” said David Zapolsky, Amazon's Senior Vice President of Global Public Policy and General Counsel. “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.”

The media’s narrative about the suit will likely frame it as a long-awaited title bout between Khan and Amazon. The FTC chair gained prominence by publishing a 2017 Yale Law Journal paper arguing US antitrust laws fell short of adequately reining in the tech giant. That helped begin a national conversation about whether the nation’s anti-monopoly laws were prepared to handle modern Silicon Valley behemoths.

But more important than one-on-one championship fight framing, the showdown will serve as a test for Washington regulators and Amazon, as the federal agency tests its authority and the retailer faces its most consequential political fight to date.