The Federal Trade Commission is planning to file a lawsuit against the largest e-commerce firm in the world, amazon, which might lead to its possible dissolution.
This could signal the beginning of a fight between Amazon and government regulators about whether it is unduly powerful. The company has established itself as a mainstay in Americans’ lives.
Amazon Faces Potential Antitrust Lawsuit
It also runs an advertising agency, a shipping network, a grocery chain, and a film studio. But despite its rapid expansion, which has made its founder Jeff Bezos one of the richest people in the world, consumer advocates have long called for the firm to be restrained, alleging that the behemoth engages in monopolistic behavior to maintain its dominance.
An attempt to break up the firm would be a career-defining gamble for FTC Chair Lina Khan, who initially gained notoriety while still a law student by drafting a thesis asserting that Amazon is a monopoly.
The FTC has recently been unsuccessful in its attempts to stop high-profile acquisitions, such as Microsoft’s $68.7 billion acquisition of Activision and Meta’s acquisition of VR company Within.
An FTC lawsuit would be successful if it could demonstrate how Amazon’s business operations violate antitrust legislation from a century ago.
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Impact of Amazon’s Pricing Policy on Sellers
Politico reports that government regulators are focusing on a number of issues, including Amazon’s requirement that third-party sellers not offer their products for less elsewhere, their encouragement of sellers to use their shipping and advertising services, and their bundling of services as part of the Amazon Prime membership program.
Independent sellers account for more than 60% of Amazon’s revenues, and as a condition of using its platform, Amazon prohibits these companies from offering their products at lower prices elsewhere.
As low prices benefit consumers, guaranteeing low prices seems like a smart idea. However, they might be detrimental to other platforms.
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