US Files Lawsuit Against Amazon Over Price Warping

( – Amazon is having a bad year with US regulators. Multiple factories have received fines in recent months for various workplace violations. Now, the Federal Trade Commission (FTC) has filed a lawsuit against the retail giant.

FTC Lawsuit

On September 26, the FTC announced that it, along with 17 state attorneys general, sued, Inc. and accused the company of using “a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power.” The federal and state governments say the way the company conducts business allows it to stop its competitors from selling their products at a lower price, overcharging them, and preventing them from “fairly competing against Amazon.”

According to the 172-page, heavily redacted complaint, the company has a monopoly in two markets: the online superstore market and the online marketplace services market. Amazon is reportedly controlling what consumers see in order to prioritize “sponsored brand” products and advertisements. They provided screenshots to demonstrate the scope of the alleged problem. When mobile users open the Amazon app, the government claims that “Sponsored Brand and Sponsored Product advertisements are often the only results visible without scrolling.” By doing this, the lawsuit claims it has made it impossible for other companies to compete.

A former company employee reportedly told authorities that the purpose of Amazon Prime, the subscription service, is to make consumers feel as though they have to shop on the app because they are paying for the service. They said the service was never about the fee the company charges but about “changing people’s mentality so they wouldn’t shop anywhere else.”

The lawsuit claims the company has exploited “its monopolies in ways that enrich Amazon but harm its customers.”

States Joined Suit

The following states have joined the FTC’s lawsuit:

  • Wisconsin
  • Rhode Island
  • Oklahoma
  • Oregon
  • New Jersey
  • New Mexico
  • New Hampshire
  • Minnesota
  • Nevada
  • Michigan
  • Massachusetts
  • Delaware
  • Maryland
  • Maine
  • Pennsylvania
  • New York
  • Connecticut

Amazon’s Response

David Zapolsky, the company’s senior vice president of global policy and general counsel, issued a statement saying that the lawsuit was “wrong on the facts and the law.” He claimed the FTC “has radically departed from its mission of protecting consumers and competition.”

Zapolsky went on to say that the policies the FTC takes issue with are ones that have spurred competition, not stomped on it. He warned that if the feds and the states get their way, consumers will have fewer products to choose from, slower deliveries, higher prices, and other problems.

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