The U.S. Federal Trade Commission (FTC) has launched a significant antitrust lawsuit against the e-commerce behemoth, Amazon.com Inc (NASDAQ:AMZN). The anticipated legal action accuses Amazon of using its online marketplace to establish and maintain a monopoly, resulting in diminished quality for consumers and inflated charges for sellers.
The FTC, in conjunction with 17 states, lodged the complaint in a federal court in Seattle on Tuesday. They claim that Amazon has systematically engaged in practices designed to marginalize rivals in the online marketplace sector and suppress competitive activity.
Moreover, Amazon stands accused of leveraging its position to coerce sellers on its platform into using its logistics and delivery services. This is allegedly done under the promise of high-visibility placement on the site. Furthermore, it is alleged that Amazon penalizes merchants who dare to offer their products at lower prices on rival platforms such as Walmart.com.
The FTC has also claimed that Amazon unjustly prioritizes its own retail operations, in addition to marketplace sellers who utilize the company’s logistics services.
This case shines a light on the growing concern over the unchecked power of tech giants and their potential to stifle fair competition and manipulate market dynamics to their advantage.
“Amazon is a monopolist and it is exploiting its monopolies in ways that leave shoppers and sellers paying more for worse service,” stated FTC Chair Lina Khan during a press briefing. “The stakes here are high. There is immediate harm that is ongoing. Sellers are paying $1 of every $2 to Amazon.”
The lawsuit is the fourth of its kind filed against Amazon by the agency this year, emphasizing the Biden administration’s resolution to focus on the increasing concentration of corporate power, particularly in Big Tech firms, as a central part of economic strategy.
Amazon responded to the lawsuit with a statement saying it plans to contest the FTC’s lawsuit in court. The company added that the lawsuit significantly diverges from the agency’s goal of consumer protection and is incorrect in both facts and law.
AMZN Price Action
At the time of writing, Amazon’s stock has fallen by $4.26, representing a 3.20% decrease, bringing the share price to $127.09. The company, with a market capitalization of $1.35 trillion, is currently trading at 39.80 times its estimated earnings per share (EPS) for the next 12 months. Its trailing-12 P/E ratio is over 104 times. The stock’s 52-week range is between $81.43 and $145.86.
Reference: Bloomberg
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