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< U.S. sues Amazon in a monopoly case that could be existential for the retail giant

U.S. sues Amazon in a monopoly case that could be existential for the retail giant

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ARI SHAPIRO, HOST:

The U.S. and 17 states are suing Amazon. They say the retail giant has abused its monopoly power, leading to higher costs for sellers and shoppers. We'll note that Amazon is among NPR's recent financial supporters and pays to distribute some of our content, but we cover it like any other company. NPR's Alina Selyukh is here to tell us more about the lawsuit. Hey, Alina.

ALINA SELYUKH, BYLINE: Hello. Hello.

SHAPIRO: OK, what's in the suit? What are the details?

SELYUKH: The suit itself could be pretty existential for Amazon. It is a sweeping antitrust case built by the Federal Trade Commission and a bipartisan group of attorneys general. It's filed in federal court in Seattle. And to your question, it accuses Amazon of breaking the law to remain the undefeated winner of online retail, and it largely focuses on how Amazon treats sellers on the platform.

SHAPIRO: Explain. What kind of example can you give us?

SELYUKH: Yeah. So to step back, most of what you buy on Amazon - about 60% - is sold by other companies, these third-party sellers. And Amazon has a tricky relationship with them. For them, it's both the owner of the marketplace where they sell and a competitor on the very same marketplace. So it controls advertising. It controls what you see when you search for stuff. And in simple terms, it could mean Amazon knows if you're selling something that's suddenly really popular, people really want it, and Amazon can maybe sell the exact same thing for maybe less.

SHAPIRO: Amazon Basics, I think they're called.

SELYUKH: And they can tweak the search results so that that Amazon option comes up higher, but it can go also deeper than that.

SHAPIRO: Explain. How so?

SELYUKH: So Amazon also has this huge delivery network, as we all know. And the lawsuit alleges that Amazon pressures sellers to use - to pay for using it. And for sellers, that means Amazon can charge more and more, and they can't really use any other shipping option. And then there's the big accusation about prices. The lawsuit alleges that Amazon punishes sellers if they try to offer cheaper prices elsewhere on the internet. Here's what FTC Chair Lina Khan said.

LINA KHAN: Amazon's conduct causes online shoppers to face artificially high prices even when they're shopping somewhere other than Amazon.

SELYUKH: Between the cut that Amazon takes from every sale, the shipping, perhaps advertising, she says after all of Amazon's fees, sellers effectively keep only half of what they make on the platform. But they also can't afford to leave. It's the top destination. And in the end, shoppers pay the price.

SHAPIRO: So what kind of a solution is the FTC asking for? What do the FTC and state attorneys general want the court to do?

SELYUKH: They're asking the court to force Amazon to change its anti-competitive behavior. Just know the case isn't going as far as it could have. There is no language asking the court to, say, split up the company, but the case will take years to play out. So all of that could change.

SHAPIRO: What's Amazon said today?

SELYUKH: Amazon in a statement argued the FTC's claims are wrong, that the lawsuit radically departs from the agency's mission to protect consumers. The company argues that if the government wins, the result would be, quote, "fewer products to choose from, higher prices, lower deliveries for consumers and reduced options for small businesses."

SHAPIRO: Now, in another part of the show, we'll hear about the FTC chair's history of criticizing Amazon. It has been in her sights for so many years.

SELYUKH: Yes.

SHAPIRO: Why is the commission bringing this case now?

SELYUKH: So it has been working on this case for a while. The investigation did begin under President Trump. But yes, Khan is a part of this new group of lawyers under President Biden who are really skeptical of big tech, who are rethinking competition law. And she did rise to prominence arguing that today's tech giants and Amazon in particular operate much like the oil barons and railroad tycoons back in the day and perhaps should be similarly broken up. So now that the investigation has reached the point of a case, she gets to test at least part of this legal thinking in federal court.

SHAPIRO: NPR's Alina Selyukh. Thank you.

SELYUKH: Thank you.

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