Washington, D.C. Attorney General Karl Racine on Tuesday filed an antitrust lawsuit against Amazon, alleging the e-commerce giant's anticompetitive pricing practices result in higher costs for consumers and less choice in the online retail market.
Why it matters: The lawsuit concerns how Amazon negotiates with more than 2 million third-party sellers on the platform, which are crucial to the company's business and end up absorbing fees that Amazon charges to list their merchandise.
- This results in artificially high prices for third-party sellers' goods, and allow Amazon to maintain monopoly power in violation of D.C.'s Antitrust Act, per the lawsuit.
Details: The lawsuit alleges that provisions known as "most favored nation" agreements bar third-party sellers from offering their merchandise on other platforms for lower prices, including the third-parties' own websites.
- "These agreements effectively require third-party sellers to incorporate the high fees charged by Amazon — as much as 40% of the total product price — not only into the price charged to customers on Amazon's platform, but also on any other online retail platform," Racine alleges.
Flashback: In 2019, Amazon said it would end the "most favored nation" pricing provisions after criticism from Democratic Sens. Richard Blumenthal and Elizabeth Warren, who was then a presidential candidate.
- Yes, but: The lawsuit alleges that Amazon quietly replaced that policy with a similar one that effectively holds third-party sellers to the same restrictions.
Between the lines: Racine's name has been in the mix as a contender for the Biden administration's pick to be chairman of the Federal Trade Commission. Suing Amazon — without other state or federal partners — could be an attempt to show his anti-monopolist chops.
- As attorney general, Racine also sued Facebook over the Cambridge Analytica data leak controversy and other anticompetitive conduct, and joined a multi-state suit against Google in December.
Amazon did not immediately respond to a request for comment.
