FTC Sues Amazon For Using Its Influence to Warp Prices

FTC Sues Amazon For Using Its Influence to Warp Prices
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The FTC is accusing Amazon of preventing sellers from lowering prices below what is available on Amazon, making prices higher across the internet.

The Federal Trade Commission sued Amazon on Tuesday, claiming that the company has used its market power to warp e-commerce prices across the internet.

The allegations from the U.S. government’s business regulator focus on the company’s primary marketplace, Amazon.com, and evoke an image of a company that is able to use its size and power to pressure sellers to warp the prices of goods.

“There is an immediate harm that is ongoing here,” FTC Chair Lina Khan said at a news conference. “Sellers are paying one of every $2 to Amazon. Shoppers are paying higher prices as a result, not just on Amazon but across the internet. And the public as a whole has been deprived of the benefits of open and fair and free competition. And so that’s what this case is really about, and those are the harms that we’re looking to fix.”

FTC Sues Amazon

The FTC is accusing Amazon of deterring sellers from discounting goods and lowering prices below what is available on Amazon in turn making prices higher across the internet. The agency also argues that Amazon pushes sellers into its fulfillment services and makes it more expensive for sellers to offer their goods elsewhere.

The FTC filed the an antitrust lawsuit in the U.S. District Court for the Western District of Washington state, which is where the company is based, backed by the attorneys general of 17 states. California filed a lawsuit with similar complaints over a year ago.

Khan, a longtime critic of Amazon, was brought into the FTC by President Joe Biden to reinvigorate the government’s enforcement of competition laws specifically around technology companies.

According to NBC , during Khan’s leadership, the FTC has already taken action against Amazon several times. It sued the company in June for the way it automatically renewed customers’ Prime subscriptions. It has suggested that Amazon pay $25 million for alleged improper storage of children’s data that is obtained through Alexa devices. Amazon, also, settled with the agency for $5.8 million in May after it accused amazon of allowing employees to view data obtained via Ring cameras.

William Kovacic, a former FTC chairman and current professor at George Washington University, told NBC that the case will come down to whether the agency can prove that Amazon’s actions hurt consumers. He noted antitrust trials typically take at least three years just for an initial decision and then comes appeal which can drag on for years.

“The heart and soul of the case will be the debate over whether or not the techniques used by Amazon improved consumer experience or degraded,” Kovaic said.

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Kylie Werner