Delaware has joined a federal lawsuit that says Amazon has created a monopoly that financially hurts and limits companies whose products it sells and the people who shop on the site.
Attorney General Kathy Jennings joined the Federal Trade Commission and 16 other state attorneys general Tuesday to sue Amazon.com Inc.
They charge the retail and technology company is a monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power.
The FTC and its state partners say Amazon’s actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation and prevent rivals from fairly competing against Amazon.
Joining the lawsuit means that Delaware will have a share of any settlement with the $1.2 trillion company.
The complaint alleges that Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging.
By stifling competition on price, product selection and quality, and by preventing its current or future rivals from attracting a critical mass of shoppers and sellers, Amazon ensures that no current or future rival can threaten its dominance, a joint press release said.
Amazon charges
Amazon’s far-reaching schemes impact hundreds of billions of dollars in retail sales every year, touch hundreds of thousands of products sold by businesses big and small and affect over a hundred million shoppers, the press release said.
The FTC and states allege Amazon’s anticompetitive conduct occurs in two markets—the online superstore market that serves shoppers and the market for online marketplace services purchased by sellers.
These tactics include anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. If Amazon discovers a seller offering lower-priced goods elsewhere, Amazon can bury that seller’s results.
Amazon extracts enormous monopoly rents from everyone within its reach, the press release said. That includes degrading the customer experience by replacing relevant, organic search results with paid advertisements—and deliberately increasing junk ads that worsen search quality and frustrate both shoppers seeking products and sellers who are promised a return on their advertising purchase.
The company also charges costly fees on the hundreds of thousands of sellers that currently have no choice but to rely on Amazon to stay in business. The fees range from a monthly fee sellers must pay for each item sold, to advertising fees that have become virtually necessary for sellers to do business.
Combined, all of these fees force many sellers to pay close to 50% of their total revenues to Amazon. These fees harm not only sellers but also shoppers, who pay increased prices for thousands of products sold on or off Amazon.
The lawsuit seeks a permanent injunction in federal court that would prohibit Amazon from engaging in its unlawful conduct and pry loose Amazon’s monopolistic control to restore competition.
Betsy Price is a Wilmington freelance writer who has 40 years of experience, including 15 at The News Journal in Delaware.
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