Breaking Down the Amazon Antitrust Lawsuit
The Lawsuit
Whats Happening?
Currently the Federal Trade Commission (FTC) is perusing a lawsuit against the major online retailer, Amazon. The FTC is suing Amazon based on their antitrust behavior and actions, claiming that, “Amazon is an illegal monopoly that that stifles technological innovation… and drives up prices for Americans to gobble more power for itself.” (Ovide).
Essentially saying that, Amazon has worked its way to the top by cheating the system to capture Americans as consumers. They believe that Amazon has imprinted themselves in the minds of Americans because of their system of delivering items people can order from their couch. Due to this, Amazon becomes a first choice for consumers, enabling them to raise prices on common products from various manufacturers, selling them alongside third-party businesses on their platform. Because of this parallel selling style, the U.S. government claim that the retailer is using, “an interconnected set of illegal actions to strong-arm marketplace sellers that drive up prices for consumers no matter where they shop.” (Ovide). Amazon is preventing consumers from easily finding and buying lower-priced products in the “Marketplace” compared to their traditional online retail.
Amazon wants buyers to purchase from the retail store as it allows them to make a higher profit by controlling the prices. But consumers have no idea which part of Amazon they are buying from, so they just search and shop. Consequently, this buying behavior plays into Amazon’s strategy, as they ensure to promote their marked-up products. Ultimately, as a result, it becomes more difficult for businesses to compete with Amazon, and thus, making it so Americans are unnecessarily paying higher prices.
Antitrust Laws
What Are They?
So, what are Antitrust Laws, and why is there a lawsuit? Put simply and briefly, “antitrust laws are regulations that encourage competition by limiting the market power of any particular firm.” (Twin). Essentially, these laws are created and put into place over our American market to ensure there is fair competition for any and every business. They want to make sure there are no opportunities for a monopoly to develop. Antitrust laws are primarily enforced by the Federal Trade Commission (FTC) and the U.S. Department of Justice (DOJ), the two entities work in conjunction with other agencies to identify violations, try to put them to a stop, and if not successful, bring legal action upon firms that are not complying with the regulations.
The U.S. Government and FTC believe Amazon has violated these antitrust laws, because they are working to suppress other businesses with their business tactics. The FTC sees Amazon controlling how/when consumers see cheaper products that they’re selling at higher prices. This means Amazon is promoting an unhealthy commerce environment that lacks in competition. On paper, it looks like Amazon is violating these laws and the FTC has a fair case against them. But, as more information develops about the situation, there will be adjustments to the case.
References
Alexandra Twin. (2023, January 31). Antitrust Laws: What They Are, How They Work, Major Examples. Investopedia. https://www.investopedia.com/terms/a/antitrust.asp
Shira Ovide. (2023, September 26). FTC Amazon antitrust lawsuit explained. The Washington Post. https://www.washingtonpost.com/technology/2023/09/26/ftc-amazon-antitrust-lawsuit-explained/
This is very intriguing, the layout is very easy to understand. It is very interesting to see the angle on how the US government is approaching this run in with Anti-trust. Anti-trust is something that has been around for a long time and seeing it get faced head on with the technology industry is interesting. I am looking forward to learning more.
Thank you! And I agree, it seems as if they may almost be overreacting to the issue, as it feels like this giant tech company hasn’t drastically changed their business practices for years.
You did a great job organizing the information and clearly explaining the antitrust lawsuit. I didn’t know much about antitrust laws and how much of a role the FTC and DOJ play. I agree that consumers prefer Amazon due to its convenience. You can buy anything on Amazon and is very convenient which makes it more appealing to consumers, regardless of the higher prices.
Thank you! It is interesting to see what impact those agencies really have, and how it has a certain hold over just a major e-commerce company, regardless of their practices.