Amazon antitrust lawsuit is likely to be a long journey for the FTC

Amazon is heading into one of its biggest sales events of the year — Prime Day — with a lawsuit hanging over its head that accuses it of preventing sellers from hawking their merchandise at lower prices on other sites.

The Federal Trade Commission's long-awaited antitrust case is the agency's most aggressive move yet to tame the market power of Amazon, a company that's become synonymous with online shopping and fast deliveries.

Under chair Lina Khan, the agency hasn't been shy about taking big swings against some of America's biggest companies and testing the limits of competition law to reverse what many of her supporters see as decades of weak antitrust enforcement. But that approach has also led to some highprofile setbacks, most notably in the FTC's bid to block Microsoft's takeover of Activision Blizzard and Meta's acquisition of the virtual reality startup Within Unlimited. The FTC is appealing the judge's ruling in the Microsoft case.

The Amazon case, which was backed by 17 states, marks a full-circle moment for Khan, who is finally confronting the company she scrutinized in an influential scholarly paper she penned as a Yale Law student. In the paper, which was called “Amazon's Antitrust Paradox” and released in 2017, Khan argued the prevailing way of looking at anticompetitive conduct by the impact it has on prices was insufficient in the modern economy. Instead, she pushed for a more progressive approach that examines how corporate concentration impacts the broader market.

Two years ago, Khan was tapped to lead the FTC by President Joe Biden, whose administration has taken a tougher stance on antitrust enforcement. That same year, Amazon unsuccessfully sought to get her recused from agency probes against the company, arguing she was too biased.

Now, her agency must prove in court both that

Amazon is a monopoly and is using its dominance to prevent competition from flourishing in the marketplace.

“If we succeed, competition will be restored and people will benefit from lower prices, greater quality, greater selection as a result,” Khan said during a recent call with reporters.

A final decision in Amazon case will likely come years down the road, assuming the lawsuit isn't dropped under a new administration, dismissed by a judge or ends in a settlement akin to the one Amazon reached with European regulators last year. A similar lawsuit filed last year by the state of California is set to go to trial in 2026. The District of Columbia also tried to sue Amazon on antitrust grounds before, but its lawsuit was dismissed by a federal judge last year.

Experts say the FTC faces a few hurdles in its own case, including convincing the court which slice of the market Amazon is allegedly monopolizing.

In the 172-page complaint filed in federal court, the government paints a picture of an institution that strong-arms sellers and exercises monopoly power in what it calls the “online superstore market” and “online marketplace services.” This isn't the entire U.S. e-commerce sector, of which Amazon is estimated to control about 40%. But rather, the agency is describing the types of single-destination online stores that offer a large array of products, and allows sellers to access a significant number of shoppers.

In a blog post responding to the lawsuit, Amazon General Counsel David Zapolsky accused the FTC of attempting to “gerrymander alleged market” to portray Amazon as something it's not. He said consumers buy over 80% of all retail products in physical stores and that Amazon was “just a piece of a massive and robust retail market” that offers options to consumers and sellers. Brick-and-mortar retailers, online stores and newer buy-online-pick-upin-store options, he says, are all competing vigorously with each other.