U.S. FTC Prepares to File Landmark Antitrust Lawsuit to ‘Break Up’ Amazon
The U.S. Federal Trade Commission (FTC) led by Lina Khan is finalizing its long-awaited antitrust lawsuit against Amazon, a move that could potentially break up parts of the e-commerce giant.
The FTC has been investigating the company on a number of fronts. Among the potential claims are allegations similar to existing cases like Amazon’s rules requiring third-party retailers to offer their lowest prices on its platform. The wide-ranging lawsuit is expected as soon as August 2023, and will likely to challenge a host of Amazon’s business practices. In the event the challenge gains success, it could lead to a Court-ordered restructuring of the $1.3 trillion empire and define the legacy of FTC Chair Lina Khan.
The complaint is said to primarily focus on challenges to Amazon Prime, Amazon rules that the FTC contends to block lower prices on competing websites, and FTC believes that the policies force merchants to use Amazon’s logistics and advertising services. One major concern is that the bundled services offered through Amazon Prime are being exploited to illegally solidify the company's market power which the FTC considers to be detrimental to fair competition.
In its probe, the FTC interviewed dozens of witnesses both inside and outside Amazon, including CEO Andy Jassy and former CEO and founder Jeff Bezos. The FTC has collected millions of documents from Amazon and third parties over the last three years to build its case.
Moreover, the FTC has accused the e-commerce giant of engaging in deceptive tactics to enroll customers in its Amazon Prime service without their full understanding or consent.
The complaint, filed in a Federal Court in Seattle, alleged that Amazon had intentionally misled millions of consumers into unknowingly subscribing to automatically renewing Prime memberships.
The FTC claimed that Amazon used manipulative and coercive user-interface designs, commonly referred to as ‘dark patterns,’ to trick consumers into recurring subscriptions, causing financial harm and frustration.
Amazon Prime costs $139 per year and gives consumers access to free two-day shipping, along with access to Prime Video and music streaming. However, the FTC's addressed concerns based on the alleged deceptive practices used by Amazon to drive customers into subscription plans without their explicit knowledge.
“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” FTC Chair Khan had said in a statement.
FTC Chair Lina Khan has time and again expressed strong disapproval of these practices and pledged to protect consumers from such unfair and deceptive tactics in digital markets. She emphasized that these manipulative strategies not only harm consumers but also adversely impact law-abiding businesses.
On the other hand, Amazon, in response to the pending lawsuit and the previous FTC claim, has strongly denied any wrongdoing. The company's spokesperson refuted the FTC's allegations, stating that their claims were factually inaccurate and misinterpreted the law.