Why US Government and 17 States Sued Amazon ?

The Federal Trade Commission along with 17 states have sued Amazon over Alleged Anticompetitive Practices That Led to Higher Prices for Consumers. The FTC and state attorneys general claim that Amazon has used its dominant position to favour its own products and services, which has harmed third-party sellers on its platform.

Amazon has been accused of anticompetitive practices in the United States, Europe, and India. The FTC's lawsuit is the most significant antitrust challenge that Amazon has faced to date. It is the largest attack from the government against Amazon, a company that started off selling books on the internet but has since become known as “the everything store,” expanding into selling a vast range of consumer products, creating a globe-spanning logistics network and becoming a powerhouse in other technologies such as cloud computing.

The states involved in the case are Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin.

The complaint accuses Amazon of wielding its “monopoly power” to artificially raise prices, degrade quality for shoppers and stifle competition and it is exploiting its monopolies in ways that leave shoppers and sellers paying more for worse service. The FTC and states allege that Amazon has used a variety of anticompetitive tactics to maintain its dominance, including:

· Giving preferential treatment to its own products and services

· Using its market power to pressure sellers to lower their prices.

· Acquiring competitors to stifle competition.

The FTC and states are seeking a permanent injunction that would prohibit Amazon from engaging in these anticompetitive practices and restore competition to the e-commerce market.

If the FTC and states are successful in their lawsuit, it could have a significant impact on Amazon's business. Amazon could be forced to change its business practices and divest itself of some of its assets. This could lead to lower prices and better service for consumers and sellers alike.

The lawsuit is also a sign of the growing scrutiny that Amazon is facing from regulators around the world.

Moving ahead, only time will say how the lawsuit will play out, but it is clear that Amazon is facing increasing pressure from regulators. The outcome of the lawsuit could have a major impact on the future of the e-commerce industry

S Mohini Ratna, Editor, VARINDIA