Amazon Faces First Antitrust Lawsuit... US Government Targets IT Giants (Comprehensive)

Photo by WSJ

[Asia Economy Reporter Yujin Cho] The Washington DC Prosecutor's Office in the United States has filed an antitrust lawsuit against Amazon. The lawsuit alleges that Amazon used its monopolistic position to artificially control consumer prices, thereby hindering market competition. This antitrust lawsuit targeting Amazon is seen as a sign that the U.S. government's regulatory efforts against the four major IT giants?Facebook, Google, Apple, and Amazon?are gaining momentum.

According to Bloomberg and other sources on the 25th (local time), the Washington DC Prosecutor's Office filed a complaint in the Washington DC court based on antitrust laws, claiming that Amazon abused its dominant position in the e-commerce market to undermine fair competition. Karl Racine, the Washington DC Attorney General, stated, "Amazon has clauses that prohibit retailers selling on its platform from offering lower prices on other platforms, which has hindered market competition and artificially raised prices, harming consumer interests."

The contract clause, known as the "price parity clause," was renamed the "fair pricing policy" in 2019 when antitrust regulatory actions against Amazon became more visible. The prosecutors believe that this clause artificially established a high price floor across all online retail markets, resulting in reduced competition, innovation, and consumer choice. Amazon rebutted, saying, "The Washington DC Attorney General has misunderstood the situation completely," and added, "Sellers set their own prices for products on our marketplace."

The focus of this lawsuit is to check a single company holding over 70% market share in the entire U.S. e-commerce market. The U.S., which had previously taken a defensive stance on regulating IT giants, officially launched regulatory efforts at the end of last year by dividing oversight of these four companies between the two major antitrust regulatory agencies: the Department of Justice and the Federal Trade Commission (FTC). The rapid growth of the digital market during the COVID-19 pandemic caused the IT giants to become excessively large in a short period.

The Biden administration has also indicated aggressive legal enforcement to promote market competition by targeting IT giants since its inception. This is the first time Amazon has been sued for antitrust violations, and it is also the first antitrust lawsuit under the Biden administration. Bloomberg assessed that this antitrust lawsuit against Amazon will open a new front in the investigation of IT giant companies.

Notably, Karl Racine, the prosecutor leading this Amazon lawsuit, is reportedly being considered by President Biden for the position of FTC Chair, which adds significant weight to the lawsuit. Racine also suggested the possibility that other states or the federal government might join the antitrust lawsuit against Amazon in the future.

Some speculate that, as seen in the past with the breakup of AT&T, there could be ultra-strong measures such as corporate breakups or legislation to reduce business scope. The political sphere has also joined this trend. Richard Blumenthal, U.S. Senator from Connecticut, issued a statement supporting the lawsuit and added that the federal government should have acted sooner, criticizing that only Washington DC has taken action without cooperation from the federal and state governments.

Meanwhile, despite the lawsuit risk, Amazon's stock, listed on the Nasdaq, closed up 0.43% at $3,259.05 on the day.

This content was produced with the assistance of AI translation services.