US regulators have launched a long-anticipated antitrust case against Amazon, alleging that the tech giant is illegally maintaining monopoly power by stifling ecommerce competition and exploiting sellers on its platform.
The case was launched by the Federal Trade Commission (FTC) and 17 states overnight. In response, Amazon said it would fight the case in court, saying the regulator is “wrong on the facts and the law”.
The showdown in the US comes as the Albanese government begins work on major competition reforms and considers a new scheme for regulating digital platforms.
The FTC is claiming Amazon is using a monopoly power to stop rivals and sellers from lowering prices.
Amazon is also accused of actions that “degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon”.
The case has been widely expected as Amazon’s dominance increased and with the appointment of Big Tech critic Lina Khan as chair of the Federal Trade Commission in 2021.
“Amazon is a monopolist and it is exploiting its monopolies in ways that leave shoppers and sellers paying more for worse service,” FTC chair Lina Khan told reporters on Tuesday. “The stakes here are high. There is immediate harm that is ongoing. Sellers are paying $US1 of every $US2 to Amazon.”
Amazon has rejected the claims, saying the practices being challenged by the US regulator have had positive impacts on competition, innovation and consumers.
“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,” Amazon senior vice president, global public policy and general counsel David Zapolsky said in a statement.
Amazon is also under close watch by European antitrust regulators after settling a case regulators that alleged it was “systematically exploiting sellers’ data to advantage its own retail business”.
Australia’s competition regulator, which has been frustrated by Amazon refusing to explain its algorithms, is closely monitoring the overseas actions, but Amazon’s local foothold doesn’t meet the market dominance threshold.
Last month, the Albanese government established a two year review of Australia’s competition policy by a new Treasury Competition Taskforce. It will provide continuous advice to government for reform rather than a final report.
In a statement, Assistant Minister for Competition Andrew Leigh told InnovationAus.com that the government is “closely watching the practices of large technological marketplaces, to see whether any change to our competition laws are required”.
“To the extent that these platforms act as gatekeepers to the economy, they play a powerful role for consumers and suppliers,” he added.
With Justin Hendry
Do you know more? Contact James Riley via Email.