In a noteworthy development, the US government has instigated a far-reaching antitrust lawsuit against retail powerhouse Amazon Inc. The case focuses on a range of Amazon's business practices, including policies that hinder competitive pricing and compel merchants to use Amazon's logistics and advertising services.
The Federal Trade Commission (FTC) is spearheading this ambitious endeavor, led by the determined 34-year-old Lina Khan.
“Today, the FTC took a first step to restore the liberty of every individual and business who relies on essential internet platforms to exchange goods, services, and ideas with one another,” said Barry Lynn, who heads the antimonopoly group Open Markets Institute.
This lawsuit is critical for Khan and her antitrust associates. Khan has previously advocated for the breakup of Amazon, and if successful, the suit could lead to a court-mandated restructuring of the $1.3 trillion empire.
In 2019, during the Trump administration, the FTC commenced its inquiry into Amazon. With the ascension of Khan to the agency's helm, the investigation gained momentum, culminating in the FTC diligently formulating a formal complaint in the latter part of 2022.
“The practices the FTC is challenging have helped to spur competition and innovation across the retail industry and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store,” David Zapolsky, Amazon senior vice president of global public policy and general counsel, said in a statement.
Amazon's dominance in consumer online shopping and merchant marketplace services has raised concerns about the user experience, high seller fees, and potential bias toward Amazon's products. The FTC argues that Amazon's tactics stifle competition, leaving a constrained landscape for rivals.
However, Amazon is not new to litigations by individuals, as well as state and federal authorities in the US:
In April 2019, a federal court ruled in favor of a watchmaker, finding that Amazon could be held liable for trademark infringement for allowing counterfeit goods to be sold on its platform.
In July 2019, the FTC fined Amazon $5 billion for privacy violations related to collecting children's data on its subsidiary, Amazon Echo's Alexa device.
In February 2020, Amazon was sued by the New York attorney general for allegedly failing to provide adequate safety measures for workers during the COVID-19 pandemic.
On October 6, 2020, the US House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law released a report following a 16-month investigation into Amazon's market dominance and other tech giants. The report raised concerns about Amazon's potentially anticompetitive practices.
In 2021, an antitrust case was brought against Amazon, Facebook, and Google.
In July 2021, during the COVID-19 pandemic, Amazon faced lawsuits and investigations related to price gouging on essential products sold by third-party sellers on its platform.
In September 2022, Amazon faced antitrust litigation brought by the State of California over its pricing policies and supplier relationship.
In June 2023, the FTC filed a suit against Amazon because the tech behemoth had hoodwinked customers using "manipulative, coercive, or deceptive" means to sign up for Amazon Prime. This hindered their ability to cancel their memberships.
Prominent Antitrust Lawsuits in US
In 2014, Apple found itself entangled in an antitrust lawsuit instigated by the FTC. The core contention was that the tech giant had violated the FTC Act by levying charges on customers for in-app purchases made by children without their parents' approval. The agency contended that Apple had neglected to inform parents that entering their password would not only authorize a purchase, but also trigger a 15-minute window in which unlimited charges could be incurred without further authorization.
According to the court's ruling, Apple is required to issue full refunds, totaling no less than $32.5 million, to consumers who were billed for in-app purchases made by children, whether these transactions were accidental or not authorized by the customer.
Back in 2020, the Justice Department, alongside the attorneys general of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia, filed a civil antitrust suit against Google. The suit alleged that Google had engaged in monopolistic practices in the realms of search and search advertising.
In December 2020, Facebook found itself in the crosshairs as the Federal Trade Commission, along with over 40 states, leveled accusations against the social media giant. The allegations center on claims of anti-competitive practices, contending that Facebook's acquisition of its rivals ($1 billion for Instagram in 2012, and $19 billion for WhatsApp in 2014) was aimed at suppressing competition. This regulatory offensive signifies an intensified effort against major tech players, with potential repercussions for the social media industry's structure and dynamics.
“Seldom in the history of US antitrust law has one case had the potential to do so much good for so many people,” John Newman, deputy director of the FTC’s Bureau of Competition, who helped supervise the investigation.
Regarding the potential breakup of Amazon, Khan emphasized that for now, the focus is on establishing liability, with top enforcement officials committed to holding major tech companies accountable.