The Federal Trade Commission’s Antitrust Litigation Against Amazon is Expected to be a Lengthy and Complex Endeavor

As Amazon prepares for one of its most significant annual sales events—Prime Day—it faces a pending lawsuit accusing the company of restricting sellers from offering their products at more competitive prices on other platforms.

This antitrust suit, initiated by the Federal Trade Commission (FTC), marks the agency’s boldest action yet to curtail Amazon’s market influence, a company now virtually synonymous with e-commerce and rapid delivery services.

FTC Chair Lina Khan, appointed by President Joe Biden, has been unreserved in her willingness to challenge America’s largest corporations by pushing the boundaries of antitrust legislation. This aggressive strategy has not been without setbacks, such as the FTC’s failed attempts to prevent Microsoft’s acquisition of Activision Blizzard and Meta’s purchase of virtual reality start-up Within Unlimited. These setbacks are currently under appeal.

The lawsuit against Amazon is particularly significant for Khan, who previously examined the company in a seminal paper, “Amazon’s Antitrust Paradox,” written during her time at Yale Law School. In her paper, Khan argued that the conventional focus on price effects in antitrust evaluations is outdated, advocating for a broader examination of market impact.

Two years ago, after her appointment to lead the FTC, Amazon unsuccessfully tried to disqualify her from investigations into the company, claiming she held biases. Now, her agency is tasked with demonstrating in court that Amazon both holds monopoly power and uses it to stifle market competition.

“A successful outcome will revitalize competition and result in lower prices, better quality, and increased variety for consumers,” Khan recently stated in a call with the media.

A conclusive verdict on the Amazon lawsuit may take years and could be influenced by a change in administration, a judge’s dismissal, or a settlement similar to Amazon’s agreement with European authorities last year. The FTC’s case also faces several challenges, such as defining which market segment Amazon purportedly monopolizes.

In its 172-page federal complaint, the FTC outlines Amazon’s coercive practices with sellers, asserting the company wields monopoly power in specific online market sectors—not the entire U.S. e-commerce market, where Amazon controls an estimated 40%.

Amazon’s General Counsel, David Zapolsky, responded by accusing the FTC of manipulating market definitions. He argued that Amazon is merely one component of a robust retail environment, highlighting that over 80% of retail purchases still occur in physical stores.

The online retail landscape has also seen the emergence of formidable competitors like Walmart, Shein, and Temu from China, as well as platforms such as Etsy and Shopify that empower small businesses.

In addition to market definition complexities, the FTC’s complaint zeroes in on Amazon’s increasing fees for third-party sellers and the subsequent impact on consumers. It alleges that Amazon enforces punitive measures against sellers who offer better prices elsewhere online.

Legal experts note that the paucity of recent monopolization cases could make the FTC’s case against Amazon challenging. Maurice Stucke, a law professor at the University of Tennessee and former senior advisor at the FTC, warned that even if the FTC prevails, market conditions could enable Amazon to sustain its dominant position without the conduct currently under scrutiny.

Khan has refrained from commenting on whether the FTC aims to dismantle Amazon but stated the immediate goal is to establish liability. However, the lawsuit does mention the potential for “structural relief,” indicating that the agency may later request court-ordered changes to Amazon’s business practices.

Sean Sullivan, a law professor at the University of Iowa, noted that few monopolization cases have resulted in court-mandated company divestitures. Judges, he says, are cautious, understanding that any mistake could have widespread economic repercussions.

Frequently Asked Questions (FAQs) about FTC Antitrust Lawsuit Against Amazon

More about FTC Antitrust Lawsuit Against Amazon

• FTC’s Announcement of the Antitrust Lawsuit against Amazon
• Lina Khan’s Scholarly Paper “Amazon’s Antitrust Paradox”
• Amazon’s Response to FTC Lawsuit
• California’s Antitrust Lawsuit against Amazon
• Department of Justice’s Antitrust Case against Google
• Overview of U.S. Antitrust Law
• Antitrust Cases and Market Definition
• Global E-commerce Market Analysis
• Antitrust Enforcement under the Biden Administration
• Historical Overview of Antitrust Cases against Microsoft