As first appeared in Law.com
By Aron Solomon
On September 26, 2023, the Federal Trade Commission (FTC) and 17 states filed a lawsuit against Amazon, accusing the e-commerce behemoth of anti-competitive practices that inflate online prices and stifle competition.
While Amazon has denied these allegations, there is a strong argument that the lawsuit is a good thing for consumers, small businesses, and American society as a whole.
The Lawsuit Can Help Consumers
Amazon’s alleged anticompetitive practices harm consumers in several ways.
First, they lead to higher prices. By using its monopoly power to prevent sellers from offering lower prices on other platforms, Amazon can charge higher prices on its own platform. This hurts consumers who are forced to pay more for the same products.
Second, they limit consumer choice. When Amazon prevents sellers from offering lower prices on other platforms, it reduces the number of options available to consumers. This harms consumers who may prefer to shop on other platforms or who may be looking for a better deal.
Finally, they stifle innovation. When Amazon uses its monopoly power to prevent competitors from entering the market, it reduces the incentive for innovation. This harms consumers who may miss out on new products or services that could have been developed if there was more competition.
Small Businesses Might Finally Get Some Relief
Amazon’s alleged anticompetitive practices also harm small businesses as Amazon makes it harder for small businesses to compete.
When Amazon uses its monopoly power to prevent sellers from offering lower prices on other platforms, it makes it harder for small businesses to attract customers. This is because customers are more likely to shop on Amazon, where they can find the lowest prices.
Amazon also limits the access of small businesses to customers. When Amazon uses its monopoly power to prevent competitors from entering the market, it reduces the number of platforms where small businesses can sell their products. This limits their access to customers and reduces their ability to grow.
It’s Ultimately Good for Society
Amazon’s alleged anticompetitive practices also harm American society as a whole as Amazon stifles economic growth.
When Amazon uses its monopoly power to prevent competitors from entering the market, it reduces the incentive for innovation. This reduces economic growth, as new products and services are not developed.
Amazon, in its current incarnation, also harms workers. When Amazon uses its monopoly power to prevent competitors from entering the market, it reduces the number of job opportunities available. This harms workers who may be looking for work or who may be forced to work for lower wages.
As worker’s compensation lawyer Dan Santarsiero observed, “When we think about companies today where the disparity of power between the workers and the companies is the most significant, Amazon is one of the first that come to mind.”
This is the entire point of competition, and anticompetitive lawsuits such as this when companies are alleged to have seriously broken the rules. Where there is no competitive landscape, everyone is hurt, precisely because of this disparity in power.
So the bigger and more powerful Amazon becomes, the stronger the company’s position becomes in relation to us as consumers, the small businesses who seek even the smallest fragment of Amazon’s market, and society as a whole.
The illusion that Amazon provides is one of choice. We choose to make the easiest possible purchase, knowing that it will be delivered to us as little as a few hours later. We don’t think about the downstream effects of that purchase and how making Amazon stronger is almost certainly not a good thing at this point.
So even if the new lawsuit against Amazon doesn’t succeed, just the fact that it was filed is a good thing for consumers, small businesses, and American society as a whole. By seeking to finally address the harms caused by Amazon’s alleged anticompetitive practices, the lawsuit could lead to more competition, lower prices, more innovation, and more job opportunities.
About Aron Solomon
A Pulitzer Prize-nominated writer, Aron Solomon, JD, is the chief legal analyst for Esquire Digital and Today’s Esquire. He has taught entrepreneurship at McGill University and the University of Pennsylvania, and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world. Aron has been featured in Fast Company, Fortune, Forbes, CBS News, CNBC, USA Today, ESPN, Today’s Esquire, TechCrunch, The Hill, BuzzFeed, Venture Beat, The Independent, Fortune China, Yahoo!, ABA Journal, Law.com, The Boston Globe, and many other leading publications across the globe.