California files antitrust lawsuit against Amazon

15 September 2022 279
California files antitrust lawsuit against Amazon

On Wednesday, California's attorney general filed an antitrust lawsuit against Amazon, referring to the fact that the retailer suppresses competition and raises the prices that consumers pay online.


The lawsuit is mainly focused on how Amazon punishes sellers for offering products on other websites at lower prices. If Amazon notices a product offered cheaper on a competitor's website, it often removes important buttons like "Buy Now" and "Add to Cart" from a product listing page.


These buttons are considered the driving force for companies selling through Amazon marketplace, and the removal of buttons can do great harm to their business.


“Without basic price competition, without different online sites trying to outdo each other with lower prices, prices artificially stabilize at levels higher than would be the case in a competitive market,” the lawsuit said.


The California lawsuit is the latest among increasingly aggressive efforts by states and regulators in Washington and Europe to limit the influence of the largest companies seen in the tech industry. On Wednesday, a European Union court also approved the record multibillion-dollar fine imposed on Google in 2018.


According to Christopher R. Leslie, a professor of antitrust law at University of California, Irvine, given the size of the California's economy and the role Amazon plays in it, this lawsuit has a significant impact on the country. In addition to this, if antitrust claims prevail, other states will also turn to this practice and bring other cases.


Most of Amazon's sales—57 percent last quarter—are products that third-party sellers list on the website. They pay Amazon a referral fee for offering their products and often cover Amazon's fulfillment services, advertising and other offerings. Financial documents show that Amazon has collected more than $100 billion in third-party service fees over the past 12 months.



So far, the lawsuit is limited to California, where, according to officials, there are about 25 million Amazon customers. However, if it succeeds, it has an opportunity to broaden influence across the country and the world.






This content is for informational purposes only and is not intended to be investing advice.

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