The United States Federal Trade Commission (FTC) is reportedly preparing an antitrust lawsuit against e-commerce giant Amazon for some of its controversial business practices, a source familiar with the agency’s proceedings told the Wall Street Journal.
The anonymous sources did not provide further details about which aspects of the business could be under scrutiny as the agency is still working on the details of the proceeding. It could also be the case that the regulator declines from bringing forth a complaint.
Regulators in both the United States and overseas have been looking closely at how Amazon (AMZN) does business as some practices have been flagged as unlawful including the use of sales data from third-party sellers to identify trending products and introduce Amazon-branded competing goods.
Moreover, complaints have been brought forward regarding the billing practices associated with Amazon Prime – the firm’s premium subscription service – and the acquisitions of iRobot and production studio MGM.
Amazon Reaches Settlement with EU Regulators to Avoid Huge Fine
In late December last year, the e-commerce giant reached a settlement with the European Commission to avoid a hefty fine that could have ascended to 10% of the company’s global turnover if the allegations made by regulators in the region turned were ultimately substantiated.
The investigation in Europe was related to the conflict of interest that results from Amazon’s ability to gather and analyze all the data from the vendors that commercialize their goods within their platform as the company is, in some segments, a direct competitor to them.
“Data on the activity of third party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers. The conditions of competition on the Amazon platform must also be fair. Its rules should not artificially favour Amazon’s own retail offers or advantage the offers of retailers using Amazon’s logistics and delivery services”, commented Margrethe Vestager, the Executive VP and Commissioner for Competition of the European Commission.
Other Large Tech Companies Are Being Thoroughly Scrutinized As Well
Amazon is not the only tech company that has landed on the radar of regulators in multiple corners of the world as Meta Platforms (META) – the parent company of Facebook, Instagram, and WhatsApp – has also been accused of engaging in monopolistic practices involving the acquisition of companies that are a direct threat to their business model or software.
In July last year, the company founded by Mark Zuckerberg was sued by the FTC as well to block the acquisition of VR fitness app developer Within. However, a judge from the California District Court reportedly ruled against the regulatory agency two days ago according to sources cited by top business news sites like Bloomberg and the New York Times.
Another big tech corporation that is being hit by large-scale regulatory proceedings is Alphabet (GOOG) as 38 states in the US have joined forces to accuse the internet company of abusing the dominant position of its mobile operating system Android to create unfair advantages for its applications.
Google can do this by demanding that certain apps it creates are preinstalled in the operating system or otherwise the manufacturers are forced to pay a higher price for using the software for their devices.
Another lawsuit concerning its advertising business alleges that Google has colluded with Meta Platforms to rig the online advertising industry – which the two companies dominate – by preventing competitors from building their businesses and smothering products that are considered a threat to their dominance.
Finally, Microsoft (MSFT) is facing the opposition of regulators in both Europe and the US for the acquisition of Activision Blizzard – a videogame developer that owns some of the world’s most popular games for consoles and PCs like Call of Duty and Warcraft.
These lawsuits will likely take a long time to be resolved and the companies involved will likely attempt to reach settlements to avoid reputational damages and maintain the status quo.
However, the frequency and scope of the latest proceedings suggest that regulators are seriously considering the possibility of breaking up some of Amazon’s and Google’s businesses to avoid these kind of practices that are considered harmful to both consumers and small businesses.
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