Amazon is facing the most serious challenge in recent years to its global dominance after the US Federal Trade Commission (FTC), as well as attorney generals from 17 US states, filed a major anti-trust lawsuit against the e-commerce giant. This follows on a separate lawsuit filed by the California Attorney General last year.
The complaint alleges that Amazon has consistently and unlawfully exploited its market dominance to effectively create and maintain a monopoly. It claims that Amazon has reduced any potential competition through various practices, and harming customers by limiting their options and pushing them towards less-beneficial products.
Amazon is accused of using specific software to monitor online sites to see if its sellers were offering the same products cheaper elsewhere – and then taking away their Prime shipping benefits or “burying” their product listings. It also alleges that Amazon has forced third-party sellers to exclusively use its own Fulfilment service, then raising the price of the same; prioritising its own label products over others; and levying excessive terms & conditions on the sellers.
The lawsuit also claims: “Amazon has hiked so steeply the fees it charges sellers that it now reportedly takes close to half of every dollar from the typical seller that uses Amazon’s fulfillment service”. It adds: “Most sellers must now pay for advertising to reach Amazon’s massive base of online shoppers, while shoppers consequently face less relevant search results and are steered toward more expensive products.”
The lawsuit claims that these practices have made it practically impossible for any rivals to offer meaningful competition. Lina Khan, the chairperson of the FTC, said that “Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them. Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”
Amazon has consistently denied the allegations and responded by stating: “The lawsuit filed by the FTC today is wrong on the facts and the law, and we look forward to making that case in court”.
NAM Implications:
- Given the extent of Amazon’s market dominance it is inevitable.
- …that governments in most territories would be sensitive to possible/potential abuse of that dominance.
- Equally, a large company would have staffed up to manage legal issues,
- …but would be sensitive to consumer opinion, and would react accordingly.
- Suppliers should anticipate this issue to continue for the foreseeable future.
- And attempt to conduct ‘business as usual’.
