September 28, 2021

Amazon faces new antitrust lawsuit

3 min read

As Amazon continues to fend off political interests who are increasingly eager to regulate and rein in the tech giant, one attorney general has filed a lawsuit that could have major implications.

The District of Columbia filed an antitrust lawsuit Tuesday against Amazon alleging the company is using its monopoly power to control sellers and inflate prices online.

“We filed this antitrust lawsuit to put an end to Amazon’s illegal control of prices across the online retail market,” said Washington, D.C. Attorney General Karl A. Racine.

The lawsuit alleges that Amazon negotiates aggressive contracts with third-party sellers, requiring that they not offer their products for cheaper on another online platform. Amazon formally banned sellers from selling their goods cheaper on a different platform until announcing a change in that policy in 2019.

“Amazon requires third-party sellers to agree that they won’t offer their products anywhere else online – including their own websites – for a lower price than on Amazon. Amazon claimed it removed its price parity restrictions in 2019,” Racine said. However, he claims Amazon replaced the provision with an “effectively-identical substitute that says third-party sellers can be sanctioned or removed from Amazon if they offer their products for lower prices elsewhere.

“These agreements also impose an artificially high price floor across the online retail marketplace and ensure that high fees charged to third-party sellers by Amazon – as much as 40% of the product price – are incorporated not only into the price charged on Amazon, but also into prices on competing platforms,” Racine added.

Amazon has pushed back against Racine, saying the lawsuit would lead to higher prices for consumers.

“The DC Attorney General has it exactly backwards – sellers set their own prices for the products they offer in our store,” an Amazon spokesperson said. “Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively. The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law.”

Though they take different approaches on the issue, both Republicans and Democrats have showed a willingness to challenge the largest tech companies in the nation. This lawsuit could provide more ammunition in this fight.

U.S. Sen. Josh Hawley, R-Mo, introduced legislation in April to severely limit big tech companies’ ability to grow and expand via mergers.

“Woke Big Tech companies like Google and Amazon have been coddled by Washington politicians for years,” Hawley said after introducing the bill. “This treatment has allowed them to amass colossal amounts of power that they use to censor political opinions they don’t agree with and shut out competitors who offer consumers an alternative to the status quo. It’s past time to bust up Big Tech companies, restore competition, and give the power back to the American consumers.”

Hawley keyed in on a similar point as Racine, taking issue with the fact that Amazon owns the online store and sells its own products within it.

“Amazon should not be able to own Amazon Marketplace and sell their own Amazon products on their marketplace against other competitors,” Hawley’s office said in a statement in April. “Amazon cannot continue to operate an overwhelmingly dominant retail business and simultaneously own an enormous share of the cloud computing technology upon which the internet itself is built.”

Both Google and Facebook have been hit with similar lawsuits, though they involve more states. Whether more actors join the antitrust effort against Amazon remains to be seen.

“We need a fair online marketplace that expands options available to District residents and promotes competition, innovation, and choice,” Racine said.

This article was originally posted on Amazon faces new antitrust lawsuit

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