The U.S. Federal Trade Commission (FTC) has filed a long-awaited antitrust lawsuit against e-commerce company Amazon (AMZN), alleging the company has an illegal online monopoly.
The FTC and attorneys general from 17 U.S. states accuse Amazon of wielding its “monopoly power” to inflate prices, degrade quality for shoppers, and unlawfully exclude rivals.
The lawsuit says that Amazon’s practices undermine competition in the online marketplace and keep prices high for products sold on the internet.
The lawsuit further alleges that Amazon forces sellers to pay expensive fulfillment and advertising fees to market their goods on its e-commerce platform, and floods search results with so called “pay to play ads” that steer shoppers toward more expensive items.
“Amazon is a monopolist and it’s exploiting its monopolies in ways that leave shoppers and sellers paying more for worse service,” said the FTC in announcing the antitrust suit.
In a written statement, Amazon said that the FTC’s legal action is “wrong on the facts and the law.”
The FTC lawsuit doesn’t outline potential remedies such as a break-up or divestiture of Amazon, saying it is seeking to hold the company liable for anticompetitive practices.
In antitrust cases, a judge will typically rule on whether a company is liable for the alleged violations first before holding a separate hearing to determine what actions should be taken.
The antitrust lawsuit comes after several years of pressure on the U.S. government to deal with what some competitors, sellers, and lawmakers say are anticompetitive practices.
Amazon was one of four Big Tech companies investigated by the House Judiciary subcommittee on antitrust grounds, which found it held monopoly power over most of its third-party sellers and suppliers.
Founded in 1994, Amazon has transformed from an online bookseller into a retail, advertising, and cloud computing juggernaut that today has a market capitalization of $1.4 trillion U.S.
The company has expanded in recent years to new areas, including healthcare, groceries, and online streaming services.
Amazon has also purchased film studio MGM, and supermarket chain Whole Foods. U.S. regulators are currently reviewing the company’s proposed $1.7 billion U.S. takeover of Roomba vacuum maker iRobot (IRBT).
Amazon’s stock has gained 10% in the last 12 months to trade at $125.98 U.S. per share.
