U.S. regulators and 17 states, including Wisconsin, are suing Amazon over allegations that the e-commerce behemoth abuses its position in the marketplace to inflate prices on and off its platform, overcharge sellers, and stifle competition, according to the Associated Press.
The lawsuit, filed Tuesday in federal court in Amazon’s home state of Washington, is the result of a yearslong investigation into the company’s businesses and one of the most significant legal challenges brought against it in its nearly 30-year history.
The Federal Trade Commission and states that joined the lawsuit allege Amazon is violating federal and state antitrust laws. They are asking the court to issue a permanent injunction that they say would prohibit Amazon from engaging in its unlawful conduct and loosen its “monopolistic control to restore competition.”
The complaint accuses the company of engaging in anti-competitive practices through measures that deter sellers from offering lower prices for products on non-Amazon sites. It says Amazon buries listings offered at lower prices on other sites. At the same time, it also charges sellers high fees, forcing merchants to raise their prices on the platform, as well as on other e-commerce sites, in order to keep their products competitive on Amazon.
The lawsuit also accuses Amazon of degrading customers’ experience by replacing relevant search results with paid advertisements, favoring its own brands over other products it knows to be of better quality, and charging heavy fees that force sellers to pay nearly half of their total revenues to Amazon. According to the anti-monopoly organization Institute for Local Self-Reliance, the cut sellers give to Amazon from their revenue is up from 35% in 2020 and 19% in 2014.
The lawsuit also says Amazon compels sellers to use its logistics service, Fulfillment by Amazon, in order to make their products eligible for Amazon Prime, even though many of them would rather use alternative fulfillment services to get orders to customers.
