Amazon is facing a landmark antitrust lawsuit from the Federal Trade Commission (FTC).

WASHINGTON, Sept 26 (Reuters) – The U.S. Federal Trade Commission filed a long-awaited antitrust lawsuit against Amazon.com Inc (AMZN.O) on Tuesday and asked the court to consider forcing the online retailer to sell assets as the government accuses Big Tech. Monopolizing the most profitable parts of the Internet.

The Federal Trade Commission has accused Amazon, a company that started in a garage in 1994 and is worth $1.3 trillion today, of combating efforts by sellers on its online marketplace to offer products at a cheaper price on other platforms. The FTC said Amazon forces sellers to use its warehouses and delivery services, inflating costs for consumers and sellers.

Amazon is a monopoly and is abusing its powers, according to the Federal Trade Commission, which quoted one seller as saying: “We have nowhere else to go and Amazon knows it.”

The lawsuit was expected after years of complaints that Amazon.com and other tech giants abused their dominance over search, social media and online retail to become gatekeepers to the most profitable aspects of the Internet.

The need to take action against big tech companies was one of the few ideas on which Democrats and Republicans agreed, and the head of the Federal Trade Commission was particularly concerned about Amazon’s power.

The lawsuit, joined by 17 state attorneys general, follows a four-year investigation and federal lawsuits filed against Alphabet Inc’s Google and Facebook Inc’s Meta Platforms (META.O).

The FTC said it has asked the court to issue a permanent injunction ordering Amazon to stop its illegal conduct. The lawsuit was filed in federal court in Seattle, where Amazon is headquartered.

“If left unchecked, Amazon will continue its course of unlawful conduct to maintain its monopoly power,” the FTC said in its complaint asking the court, asking the court to “put an end to Amazon’s unlawful course of conduct, dismantle Amazon’s monopoly control, and deprive Amazon of the right to that”. “The fruits of its illegal practices, and the restoration of the lost promise of competition.”

The FTC’s complaint asked the court to consider “any initial or permanent equitable relief, including but not limited to structural relief, that is necessary to restore fair competition.”

Structural dilution in antitrust terminology generally means that a company sells an asset, such as part of its business.

At a press conference, FTC Chairwoman Lina Khan was asked about the idea of ​​breaking up Amazon, but she declined to discuss the matter. “At this point, the focus is really on responsibility,” she said.

In other antitrust trials, the court first proves that the company violated the law and then discusses, if necessary, how to remedy that.

Amazon said the FTC’s lawsuit was wrong and would hurt consumers by causing higher prices and slower deliveries.

“The practices the FTC is challenging have helped spur competition and innovation across the retail industry, and have produced greater selection, lower prices, faster delivery speeds for Amazon customers and greater opportunity for many businesses selling in the Amazon store,” he said. David Zapolsky, Amazon’s general counsel. In a blog post, the company indicated that it had done so 500,000 independent sellers On the platform.

Amazon shares, which were down 3.2% before the lawsuit was announced, fell 4% in late afternoon trading. Some investors saw upside from the lawsuit.

“Either way, shareholders win. If the FTC loses its status quo, and if the company spins off, the sum of the parts is greater than the whole, as the AWS (cloud) business will require a very high multiple. Analysts will soon find out,” said Thomas Hayes, Chairman of the Board of Directors of AWS. Great Hill Capital: “But for now, shoot first, ask questions later.”

The FTC said Amazon punished sellers who sought to offer lower than Amazon prices by making it difficult for consumers to find the seller on Amazon’s platform.

Other allegations include that Amazon gave preference to its products on its platforms over competitors.

The case, which was filed in the US District Court for the District of Columbia, was assigned to John Coughenour, who was nominated to the court by Republican President Ronald Reagan in 1981.

‘Monopoly power’

Khan said Amazon used illegal methods to fend off companies that would rise up to challenge its monopoly.

“Amazon is now exploiting this monopoly power to hurt its customers, whether the tens of millions of families who shop on the Amazon platform or the hundreds of thousands of sellers who use Amazon to reach them,” she said.

When he was a law student, Khan wrote about Amazon’s dominance in online retail for The Yale Law Journal and was a member of the House committee that wrote a 2020 report calling for a rein in four tech giants: Amazon and Apple (AAPL). ). .O), Google and Facebook.

Amazon’s critics welcomed the lawsuit.

“No company has ever centralized so much power across so many critical sectors,” said Stacey Mitchell of the Local Self Institute. “If left unchecked, Amazon’s power to dictate and control threatens the rule of law and our ability to maintain open, democratically governed markets.” -Reliance, which prompted the government to take action against Amazon.

During the Trump administration, which ended in 2021, the Justice Department and Federal Trade Commission opened investigations into Google, Facebook, Apple and Amazon.

The Department of Justice has sued Google twice, once under Republican Donald Trump regarding its search business, and the second time over advertising technology since Democratic President Joe Biden took office. The Federal Trade Commission sued Facebook during the Trump administration, and Biden’s FTC proceeded with the lawsuit.

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