FTC Chair Lina Khan’s lawsuit isn’t about breaking up Amazon, for now

FTC Chair Lina Khan, known for advocating Amazon’s breakup, has filed a lawsuit against Amazon claiming it has abused its monopoly power, but isn’t currently seeking to break up the tech giant.

Motivation behind the lawsuit: The lawsuit primarily aims to bring more competition into the marketplace, ensuring fair operations for rivals and consumers.
* “This complaint is focused on establishing liability,” Khan clarified, stating that any relief must “stop the illegal tactics, prevent a recurrence and fully restore competition.”

Key allegations: According to the lawsuit, which is supported by 17 states’ attorneys general, Amazon imposes high costs, coerces sellers into using its delivery network and punishes those who offer lower prices elsewhere.
* Khan pointed out that sellers can essentially disappear from Amazon’s storefront if they offer a lower price somewhere else, which can have devastating effects on a business due to Amazon’s significant customer traffic.
* Khan also mentioned that fees equate to $1 of every $2 that sellers make on Amazon, signaling that half of their revenue goes to the company.

Amazon’s stance: In response, Amazon’s General Counsel David Zapolsky contended that the lawsuit is incorrect regarding facts and law, arguing that the practices being challenged have actually stimulated competition and innovation across the retail industry.
* Around 60% of items sold on Amazon come from third-party sellers. Some sellers admit that despite the high fees, they stay due to Amazon’s dominance in online retail which makes it difficult to sell elsewhere.

The lawsuit’s trajectory: Currently, the FTC and supporting states are seeking a permanent injunction. However, the possibility of Amazon’s breakup remains on the table and could be reconsidered as the case unfolds over the upcoming years.

View original article on NPR

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