Advertising
For help, call:
Yahoo Finance’s Dan Howley and Alexis Keenan analyze the claims of the FTC and 17 states and explain how they might have an effect on Amazon’s prestige as an “online hypermarket. “
The Federal Trade Commission and 17 state attorneys general sued Amazon on Tuesday, alleging that its main retailer, Amazon. com, illegally monopolizes two marketplaces.
The case is a big check for FTC Chairwoman Lina Khan, who has made fighting Big Tech the cornerstone of her tenure. At the same time, the antitrust regulator faces a significant impediment to making its case, proposing in its complaint a new technique for assessing harm to competitors.
The lawsuit alleges that Amazon has monopolies on online marketplaces for buyers and distributors. According to the FTC, Amazon is violating U. S. antitrust law. UU. al degrade customer selection and prevent distributors from promoting products at lower prices online.
“Our complaint exposes how Amazon used a suite of punitive and coercive tactics to outlaw its monopolies,” FTC Chair Lina Khan said in a statement.
“The lawsuit lays out detailed allegations highlighting how Amazon is now exploiting its monopoly force to enrich itself while increasing costs and degrading service for the tens of millions of American families who shop on its platform and the thousands of businesses that depend on Amazon for their livelihoods. their purchases. reach them. “
The FTC says Amazon uses anti-discount measures that hurt distributors and prevent other online stores from offering lower prices than Amazon. It also claims that Amazon’s requirement that distributors use its fulfillment service to access its Prime service makes it more expensive for distributors to offer their products on other platforms.
The extra commission claims that Amazon is replacing the effects of biological search on its marketplace with paid classified ads that frustrate consumers and that the company distorts its own search.
The lawsuit seeks a permanent injunction against Amazon to prevent the company from “engaging in its illegal habit and squandering Amazon’s monopoly to repair competition. “
Amazon, however, has refuted those claims.
“The practices challenged through the FTC have helped drive festival and innovation in the retail sector, and have produced greater choice, lower prices, and faster delivery times for Amazon customers, as well as greater opportunities for the many companies that sell in Amazon stores. “David. Zapolsky, senior vice president of global public policy and general counsel at Amazon, said in a statement.
“If the FTC gets what it wants, the result would be lower product choice, higher prices, slower deliveries for consumers, and reduced features for small businesses, the opposite of what antitrust law is designed to do. “
Ongoing cases
Amazon’s latest antitrust case adds to those Khan, 34, is facing against the tech giants. In a case against Meta, which owns Facebook, the company led by Khan tried unsuccessfully to block Meta’s acquisition of virtual fitness company Within.
The FTC is also seeking to force the social media giant to split its social media platforms Facebook, Instagram and messaging service WhatsApp. This case was filed before Khan assumed the presidency.
Another target: Microsoft (MSFT). In July, Khan dropped his challenge to prevent the Windows maker from finalizing the acquisition of “Call of Duty” developer Activision Blizzard (ATVI), after a federal court blocked the commission’s request for an injunction to suspend the deal.
At a July hearing before the House Judiciary Committee, some Republicans criticized Khan’s failures, calling her “intimidating” and arguing that her leadership had been a “disaster. “
The Amazon dispute also marks the latest legal maneuver in a multi-government crackdown on markets dominated by big tech.
The agencies overseen by the Biden and Trump administrations, as well as dozens of U. S. states, are not allowed to do so. U. S. officials have filed antitrust lawsuits alleging that Meta (META), Google (GOOG, GOOGL), and Microsoft (MSFT) are market forces that should be illegally trampled underfoot. Out of competition.
One such case against Google went to trial this month following government allegations that Google illegally paid companies including Apple, Samsung, Mozilla and Verizon to protect its default search engine.
Companies are also renewing pressure to open their platforms to festivals in Europe. Earlier this month, the European Union’s antitrust regulator singled out Amazon, as well as Google’s parent company Alphabet, Apple, Meta, Microsoft and ByteDance, as “gatekeepers” of the issue of the new festival regulating the Digital Markets Act.
Amazon has previously been criticized in the EU for fearing the private knowledge of third parties to expand its own competing consumer products. The company has since agreed to update its business practices.
This is also not the first U. S. complaint against Amazon’s practices.
The FTC alleged in a separate lawsuit filed in June that the company tricked consumers into signing up for their Amazon Prime subscription and slowed their cancellation attempts. Prime memberships currently charge members $139 per year, or $14. 99 per month, in exchange for shipping and services.
Amazon generated $134 billion in sales in its latest quarter. Its dozens of corporations span industries ranging from Amazon. com cloud computing, electronics, publishing, entertainment, payment processing, grocery retail, package delivery, and pharmaceuticals.
He first rose to fame after publishing a 2017 article in the Yale Law Journal titled “Amazon’s Antitrust Paradox. “
The article argued that fashionable antitrust legislation was adequate to fight anti-competitive habits in the tech industry because it relied too heavily on prices as a means of determining customer harm.
Shadows of Khan’s thesis lie in the FTC’s new antitrust complaint.
The commission contends that while Amazon’s competitive pricing benefits consumers, in general, its distributor policies hurt small business owners by favoring corporations that rent Amazon’s in-house services, adding advertising and promotion costs. In turn, according to the FTC’s theory, this harms consumers by forcing them to pay higher prices.
These arguments echo lawsuits filed in the state of California and Washington, D. C. , which claimed that Amazon’s pressure on third-party distributors to sell in Amazon. com at the world’s lowest price forced distributors to raise prices off the platform.
California Attorney General Rob Bonta claimed Amazon’s practice artificially inflated competing retail sites, such as Walmart. com (WMT), Target. com (TGT) and eBay. com (EBAY).
Amazon has denied those claims, saying distributors set their own prices and that Amazon has made no effort to prevent them from offering lower prices elsewhere.
The case brought through Washington, D. C. , was ignored by a ruling last year, and the California case is ongoing.
Bonta’s lawsuit differs from other antitrust cases focused on Amazon’s distributors’ terms in that it alleges violations of California law rather than federal law. It also restricts the so-called applicable market and focuses on the alleged punishment of the company for the behavior of the distributor.
The impediment facing the FTC in its new action is overcoming the price-based criteria underlying antitrust law, as well as the defense theory that low costs promote, rather than block, competition.
“It’s a widespread misconception,” Florian Ederer, an economics professor at Boston University, told Yahoo Finance. “It turns out to be pro-competitive, but at the same time it’s anti-competitive. “
Click here for the latest stock market news and in-depth analysis, events that move stocks.
Read the latest monetary and trade news from Yahoo Finance
Advertising
Advertising
Advertising
Advertising
Advertisement
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising