Amazon faces major lawsuit over alleged monopolistic practices

September 26, 2023 Rob Abruzzese

Attorney General Letitia "Tish" James, leading the charge against Amazon's alleged anticompetitive practices alongside a coalition of attorneys general.
Photo: Seth Wenig/AP

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Attorney General Letitia James spearheaded a bipartisan coalition of 17 attorneys general, in collaboration with the Federal Trade Commission (FTC), to sue Amazon on allegations of illegally upholding monopoly power.

The litigation claims that the technology behemoth utilizes anti-competitive strategies, positioning it to prevent rivals from fair competition and enabling it to fix prices and deteriorate the quality of service.

The comprehensive lawsuit asserts that Amazon’s breach of antitrust laws stems not from its sheer size, but from the company’s ongoing anticompetitive actions that bar the growth of existing competitors and the emergence of new ones.

By effectively monopolizing price, product assortment and quality facets, Amazon ensures it remains unrivaled. The company’s alleged strategies influence hundreds of billions in retail sales annually, encompassing hundreds of thousands of items from various businesses and influencing over a hundred million shoppers.

“Amazon illegally raised prices for consumers and took advantage of online sellers in its storefront, and they should be held accountable,” said Attorney General James.

“Amazon’s monopolistic behavior is hurting consumers, online sellers, competition and the overall economy. Today, my office is leading a multi-state coalition in joining the FTC to put an end to Amazon’s abusive and manipulative practices to protect consumers and small businesses nationwide. Every company, big or small, must abide by the law and my office is not afraid to hold those that don’t to account.”

The lawsuit highlights Amazon’s anticompetitive behavior in two arenas: the online retail space for customers and the services market for online merchants. Alleged tactics include anti-discounting policies that penalize sellers and deter other e-retailers from underpricing Amazon. Additionally, by compelling sellers to use Amazon’s pricey fulfillment service to qualify for the “Prime” label, Amazon effectively curbs competitors’ capabilities.

Amazon’s actions allegedly extend to reducing the quality of the customer experience by prioritizing paid advertisements over organic search results, showcasing its products over better-quality alternatives, and imposing hefty fees on sellers heavily reliant on its platform. Some merchants reportedly disburse nearly half of their total earnings to Amazon.

The goal for Attorney General James, FTC and the coalition is a lasting injunction that would deter Amazon from perpetuating its alleged illegal activities, aiming to restore competitive balance in the market.

Several states, including Connecticut, Delaware, Massachusetts and Nevada, among others, have joined in voicing concerns about Amazon’s monopolistic control.