Amazon faces landmark antitrust lawsuit from FTC

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

Amazon, which started in a garage in 1994 and is worth $1.3 trillion today, has been accused by the FTC of fighting efforts by sellers on its online marketplace to offer products more cheaply on other platforms. Amazon forces sellers to use its warehouses and delivery services, raising costs for consumers and sellers, the FTC said.

Amazon is a monopoly and abusing its powers, according to the FTC, which quotes one seller as saying: “We have nowhere else to go, and Amazon knows that.”

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

Cracking down on Big Tech is one of the few ideas Democrats and Republicans agree on, and the FTC chairman is particularly concerned about Amazon’s power.

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

The FTC said it will ask the court to issue a permanent injunction to stop Amazon’s illegal conduct. The lawsuit was filed in federal court in Seattle, where Amazon is based.

“In order for Amazon to maintain its monopoly power, Amazon will continue its illegal conduct,” the FTC told the court, “to end Amazon’s illegal conduct, loosen Amazon’s monopoly control, and deny Amazon the benefits of its illegal practices and restore the lost promise of competition.”

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

Structural relief in antitrust jargon usually 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 ​​cracking down on Amazon, but declined to discuss it. “At this point, the responsibility is really focused,” he said.

In other antitrust tests, the court first establishes that the company violated the law and then discusses how to correct it, if necessary.

Amazon says the FTC lawsuit is unfair and hurts consumers by leading to higher prices and slower deliveries.

“The FTC’s challenging practices have helped spur competition and innovation across the retail industry, and have created greater opportunity for Amazon customers to have more choice, lower prices and faster delivery speeds, and more businesses to sell in the Amazon store,” he said. David Zapolsky, General Counsel of Amazon. In a blog post, the company mentioned that 500,000 independent sellers on stage.

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

“Either way, shareholders win. If the FTC loses its status quo, if the company goes bust, the sum of the parts will be greater because the AWS (cloud) business will command a much higher multiple. Analysts will figure this out soon. , but for now it’s ‘shoot first, ask questions later.’ ,” said Thomas Hayes, president of Great Hill Capital.

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

Other allegations were that Amazon prioritized its own products over competitors’ on its sites.

The case, filed in the U.S. District Court for the District of Columbia, was assigned to John Kogener, who was nominated to the bench in 1981 by Republican President Ronald Reagan.

‘Monopoly Power’

Khan said Amazon used illegal tactics to block companies that challenged its monopoly.

“Amazon is now using that monopoly power to the detriment of its customers, the tens of thousands of families who shop on Amazon’s site and the hundreds of thousands of sellers who use Amazon to reach them,” he said.

Kahn, while a law student, wrote about Amazon’s dominance of online retail for “The Yale Law Journal” and was on the staff of a House committee that wrote a report released in 2020 that called for four tech giants, Amazon, Apple ( AAPL .O ), Google and Facebook. .

Amazon critics welcomed the lawsuit.

“No company has ever concentrated so much power in such an important sector. Left unchecked, Amazon’s mandate and control threaten the rule of law and our ability to maintain open, democratically governed markets,” said Stacey Mitchell of the Institute for Local Self-Government. -Reliance urges government to act against Amazon.

During the Trump administration, which ends in 2021, the Justice Department and the FTC opened investigations into Google, Facebook, Apple and Amazon.

The Justice Department has sued Google twice — over its search business under Republican Donald Trump and a second time over ad tech after Democratic President Joe Biden took office. The FTC sued Facebook during the Trump administration and pushed forward with Biden’s FTC case.

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Reporting by Diane Barts, additional reporting by David Shepherdson and Samrita A; Editing: Chris Saunders, Matthew Lewis, Nick Zieminski

Our Standards: Thomson Reuters Trust Principles.

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Focuses on American antitrust and corporate regulation and legislation, with experience covering the war in Bosnia, elections in Mexico and Nicaragua, Brazil, Chile, Cuba, El Salvador, Nigeria and Peru.

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