Online marketplaces have reformulated the conventional shopping experience, offering an extensive range of products at a single click. However, with digital transformation comes the risk of imbalances in market power, and in its light, one of the chief giants in the online retail realm, Amazon, is currently under scrutiny.
The Federal Trade Commission (FTC) and 17 state attorneys general have recently charged the company with allegations of monopoly abuse. Keep reading to know why and what happens next.
What Is Going On?
FTC's charges highlight Amazon's unfair and anti-competitive strategies. The company's practices, which allegedly stifle competition on price, product variety, and quality fronts, are
The lawsuit underscored that Amazon's strategies:
- impact hundreds of thousands of products;
- generate hundreds of billions in annual retail sales; and
- affect over a hundred million shoppers.
FTC Chair Lina M. Khan and John Newman, Deputy Director of the FTC's Bureau of Competition, echoed similar sentiments. They stated that the tech giant has reportedly utilized its monopoly power to its advantage, resulting in increased prices and decreased service quality for consumers and businesses alike.
And What Are The Charges Against Amazon?
Amazon's alleged anti-competitive behavior is said to be apparent in two specific markets: the online superstore market targeting consumers and the online marketplace catering to sellers.
Amazon is accused of implementing anti-discounting measures to punish sellers offering lower prices on other platforms, and coercing sellers into availing Amazon’s expensive fulfillment service.
Based on that, the FTC and its state partners are seeking a permanent injunction to halt the company's alleged illegal conduct and dismantle its monopolistic control, thereby reviving competition.
This action – again, backed by 17 states –, will proceed with equitable relief in the U.S. District Court for the Western District of Washington. For now, FTC is providing updates and resources through social media and its blog if you need more information.