MA Sues Amazon Over Monopolistic Practices: AG Campbell

MASSACHUSETTS — Massachusetts is one of 17 states joining the Federal Trade Commission (FTC) in suing Amazon over alleged monopolistic practices. Attorney General Andrea Joy Campbell said this week that the state is suing the tech giant over "anticompetitive and unfair strategies" that allow the company to "illegally maintain its monopoly power."

The FTC and states allege that Amazon’s practices have inflated prices for consumers through practices such as charging exorbitant seller rates to use its platform while punishing sellers for offering lower prices elsewhere. The result is that consumers are effectively charged an Amazon tax, according to Campbell.

“Amazon has become dominant as an online superstore. But—out of view from the average person, family, or business—Amazon has used that dominance to inflate prices, coerce third-party sellers, and stifle competition,” Campbell said in a statement.

Amazon responded in a statement that the FTC's lawsuit is "misguided" and said if it is successful, the litigation would "force Amazon to engage in practices that actually harm consumers and the many businesses that sell in our store—such as having to feature higher prices, offer slower or less reliable Prime shipping, and make Prime more expensive and less convenient."

Amazon describes its pricing model as "procompetitive" and claims that the FTC allegations demonstrate a "fundamental misunderstanding of retail." The company said that it doesn't highlight offers that are not competitively priced.

The suit claims that Amazon takes nearly 50% of sellers' total revenue via fees while using
anti-discounting measures that punish sellers and deter other online retailers from offering lower prices. If Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can "bury discounting sellers so far down in Amazon’s search results that they become effectively invisible," according to the statement.

Researchers from the Institute for Local Self-Reliance, a national research and advocacy organization, found that Amazon had jacked sellers' fees from 19% in 2014 to to 45% in 2023, making it a primary driver of the company's profits, USA Today reported. Amazon doesn't disclose profits generated from seller fees.

The suit also accuses Amazon of restricting sellers’ ability to be Prime eligible for their products on sellers using Amazon’s costly fulfillment service. This in turn negatively affects sellers' ability to offer products for sale on other platforms.

However, the company responded that consumers are choosing Prime "because it's such a great experience."

"Antitrust laws encourage companies to compete vigorously by offering the best deals they can for consumers," the company said in a statement. "We’ve done that with Prime. This has been good for competition, consumers, and sellers in our store, and we’ll vigorously oppose any attempt to degrade or destroy Prime."

The lawsuit also accuses Amazon of deliberately manipulating search results to push its own products and junk ads "that worsen search quality and frustrate both shoppers seeking products and sellers who are promised a return on their advertising purchase."

The other states suing Amazon are Connecticut, Delaware, Maine, Maryland, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin.