Amazon Under Fire For Abusing Pricing Power, 17 States And FTC File Antitrust Lawsuit

Years after the Federal Trade Commission (FTC) began investigating tech giant Amazon, the regulatory agency is now ready to bring the company to court. The FTC is being joined by 17 U.S. states in its filing of an antitrust lawsuit, alleging that Amazon has used its power in the marketplace to stifle competition, overcharge sellers using its platform, and inflate market prices. The lawsuit may end up being Amazon's most significant legal challenge since it was founded by Jeff Bezos in 1994.

Filed in the U.S. District Court for the Western District of Washington by the FTC — alongside 17 state attorney generals — the suit is requesting the court issue Amazon a permanent injunction to cease its anti-competitive practices. Amazon is one of the largest companies in the world, with a dominant share of the e-commerce industry, and the federal government is alleging that the company is using that advantage unlawfully.

"The complaint," said FTC chairman Lina Khan in an official statement, "sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them." 

So far, the FTC seems more intent on imposing fines than breaking Amazon up in any way, which is how some monopolies in the past have been dealt with. However, that option hasn't been ruled out, either.

Despite the FTC's charges and lawsuit, Amazon shows no signs of slowing down in its growth. It's even expanding further into other sectors of the market besides e-commerce and cloud services. The company is working to transform the grocery industry in the way it has book sales and other retail products, and has made clear its intentions to become a major player in the healthcare sphere as well.

This may be why the FTC is looking to act now after years of regulatory investigations. Historically, the U.S. government has tried to keep corporations in check after organizations have grown to the point of becoming a monopoly, stifling growth and competition and harming both consumers and other businesses. 

The massive telecommunications giant Bell Systems, founded by telephone inventor Alexander Graham Bell in 1876, was famously broken up by the government in 1982. Now, Bell Systems currently exists as multiple separate and competitive companies including AT&T and Verizon.

Even more recently, Microsoft was nearly broken up into smaller companies after dominating the PC industry in the 1990s with its Windows platform. It avoided the breakup on appeal, and has remained a major player in the tech industry. Considering the increased scrutiny on major tech companies by the FTC, Microsoft could join Amazon as the government looks to address any unlawful antitrust actions. 

For now, Lina Khan implied the FTC isn't looking to get ahead of itself by breaking up Amazon, saying "At this stage, the focus is more on liability."