Why US government is locking horns with Amazon

The US government is soon to take action against tech industry giant Amazon following a long process of investigations starting from 2019 on alleged power abuse and violations within the online marketplace.

The Federal Trade Commission (FTC) ran a chain of investigations on multiple practices of the online company in recent years, including violation of privacy through ring cameras and Alexa digital assistant and Amazon’s purchase of robot vacuum maker iRobot.

A potential antitrust suit against the tech giant is prepared by FTC that will have an extensive effect on the company’s business practices as anti-competitive. 

Even though many antitrust suits have been filed against Amazon in Washington D.C. and California, the recent federal cases come as a potent challenge to the global company. The exact timing of any potential case is not determined yet.

The FTC in recent years has been observing how outside sellers are treated on Amazon.com, and whether its own products are favoured over competitors on its platforms.

The FTC also has been scrutinising the Amazon Prime subscription service’s bundling practices – a practice that allows sellers to create multiple listings for the Amazon catalogue without launching new products.

The company, on the other hand, has repeatedly emphasised its fair competition, stating its online service benefits both customers and sellers. 

If the commission does file a lawsuit, it would be a turning point in the FTC Chair Lina Khan's tenure. Khan launched her career by arguing in a widely read scholarly study that Amazon had accumulated too much market dominance and that antitrust legislation had failed to constrain it.

An FTC complaint would also intensify efforts by US antitrust regulators to control the biggest technological corporations in the country. In 2020, the commission sued Facebook, alleging that it had bought and frozen out small firms in an effort to stifle competition. The case is still open. One of the two broad antitrust lawsuits the Justice Department, which also has antitrust power, filed against Alphabet Inc.'s Google last month specifically targets the firm's ad-tech division.

While Republican Chairman Joseph Simons oversaw the FTC during the administration of Donald Trump, the agency started looking into Amazon in recent years. A jurisdictional agreement for federal antitrust investigations of significant technology businesses was negotiated in 2019 by Simons and his colleagues at the Justice Department. While the FTC grabbed control of Amazon and Facebook, the Justice Department took control of Google and Apple Inc.

As of 2021, Ms. Khan was elected as chair of the FTC, leading to the submission of a petition by Amazon to the commission, asking for her removal from any inquiries into the business in light of her substantial prior critiques of it. 

Although the panel has rejected Facebook's identical recusal justifications, it hasn't publicly reacted to that petition. Additionally, a federal judge rejected Facebook's request for having the judge changed.

In 2020, a day before a 16-month congressional antitrust investigation report targeting Amazon, Apple, Google, and Meta was released, Amazon issued a blog post warning against "ill-conceived ideas" of regulation that could impose modifications to its platform that would harm both customers and small sellers. Denying all the allegations against it, Amazon argued that the perception that “success can only be the result of anti-competitive behaviour is simply wrong.” 

Here is a brief review of how the agency is now pursuing Amazon:

1. The FTC is debating whether to contest Amazon's $1.7 billion acquisition of robot vacuum manufacturer iRobot, with the agency's staff attorneys being pro filing lawsuits.
2. There are at least two ongoing privacy investigations, one into Amazon's Ring camera and security system business and the other into its Alexa voice assistant over possible violations of the Children's Internet Privacy Protection Act. Before Khan joined Ring, FTC employees had already suggested bringing a complaint over alleged privacy and data security concerns.
3. A significant antitrust action focusing on Amazon's retail operations may also be filed in the upcoming months. Even though the specifics of a complaint are unknown, it might mention service bundling through its Prime membership business. 
4. The "Amazon Choice" label that the business assigns to particular products on its marketplace is also the subject of an investigation regarding fraudulent advertising. The FTC is looking into how that label is applied to products that show up in search results, including whether pay-to-play is involved.

Amazon has already been sued by the FTC for allegedly illegally withholding tips from some delivery drivers. When the matter was resolved, the business reimbursed drivers with a payment of roughly $60 million.

Since 2019, the FTC has been looking into almost every facet of the company's operations, and a lawsuit has long been anticipated. So far both parties have declined to comment on the investigations. With so many warning FTC to be cautious on how its proceeding with lawsuit as it had accused Amazon of different corruptions earlier as well.

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