What you need to know
- The FTC, alongside 17 state attorneys general, is suing Amazon for its "monopolist" treatment of businesses.
- The lawsuit explains that Amazon's fulfillment services "trap" businesses, and the platform's "tax" causes sellers to raise prices for the consumer.
- The FTC's aim is to not dismantle Amazon but to restore a balance where sellers can sell their products favorably and consumers won't have to pay out of pocket.
The FTC has served Amazon an antitrust lawsuit on Tuesday. According to the Washington Post, the suit was put forth in the Western Washington District court by the FTC and 17 state attorneys who have stated Amazon "engages in illegal behavior in both its online shopping marketplace."
The lawsuit puts it simply that "Amazon is a monopolist." The joint effort adds that the company "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."
While Amazon and other companies have been placed under a more watchful eye by regulatory staples, dismantling the company is reportedly not what the FTC is after.
The FTC is looking to correct the treatment of businesses as it makes its argument clear that Amazon's anti-discounting mindset is preventing third-party sellers from keeping their products at a low cost. It's been stated that there is a "50% Amazon tax" that it deducts from every product purchased on the platform — this results in a poor experience for the consumer.
Moreover, FTC chair Lina Khan further states Amazon's fulfillment services are a "trap" for sellers. Those who do not opt into using it "effectively disappear" from the website, leaving their goods unseen and unpurchased.
In a statement, Amazon's senior vice president of global public policy and general counsel, David Zapolsky, says, "Today’s suit makes clear the FTC’s focus has radically departed from its mission of protecting consumers and competition."
He adds, "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."
Zapolsky's stance is that the FTC is "wrong on the facts" and that moving forward with a lawsuit like this would cause "fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses."
Amazon was in the hot seat with the FTC earlier this year as the commission kickstarted a lawsuit over "digital dark practice" regarding its Prime subscription. Much like that encounter was about helping consumers save money, the current lawsuit is seen as a "benefit" to consumers and businesses should the FTC, per Kahn.
