The Federal Trade Commission and 17 states filed suit Tuesday against Amazon, accusing the online retail giant of illegally maintaining its monopoly power and stifling competition.
The sweeping antitrust lawsuit was long expected and could change the way millions of people shop online.
Regulators alleged that Amazon “uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power.” They pointed to measures aimed at keeping sellers and other retailers from offering goods for less off the site and conditions set for sellers hoping to be eligible for the Amazon Prime program.
The practices allow Amazon “to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon,” according to the FTC.
David Zapolsky, Amazon’s senior vice president of global public policy and general counsel, said the lawsuit showed “the FTC’s focus has radically departed from its mission of protecting consumers and competition.”
“The practices the FTC is challenging have helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store,” he said in a statement shared by the company.
“If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses—the opposite of what antitrust law is designed to do.”
According to the FTC, Amazon worsened the customer experience by replacing organic results with paid advertisements and deliberately increased “junk ads,” worsening search quality. It also gives preference to its own products in search results “over ones that Amazon knows are of better quality,” regulators said.
The company also charges sellers who “currently have no choice but to rely on Amazon to stay in business” costly fees for items sold, advertising and more, according to the FTC.
“We’re bringing this case because Amazon’s illegal conduct has stifled competition across a huge swath of the online economy,” said John Newman, deputy director of the FTC’s Bureau of Competition. “Seldom in the history of U.S. antitrust law has one case had the potential to do so much good for so many people.”
The lawsuit filed Tuesday was joined by Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island and Wisconsin.
It comes after the FTC sued the online retailer over Amazon Prime, accusing the company of tricking customers into signing up for the program and then intentionally making it difficult for them to cancel their memberships.
Amazon has denied any wrongdoing.