Amazon was just formally sued for overcharging sellers

On Tuesday local time, the U.S. Federal Trade Commission ( FTC) and attorneys general of 17 states formally filed a lawsuit against Amazon, accusing Amazon of charging sellers too much, affecting fair competition, and preventing sellers from lowering prices.

Amazon immediately responded to the accusation, saying it was untrue.

According to the FTC, Amazon has some practices that have a significant impact on sellers’ business strategies:

It is reported that Amazon will punish sellers who sell at low prices on other platforms and prevent other online retailers from offering lower prices than Amazon, thereby maintaining higher product prices across the entire network.

For example, if Amazon discovers that a seller is offering a lower-priced item elsewhere, it will hide that seller from search results, making them harder for consumers to find.

In addition, whether a seller can obtain "Prime" qualification depends on whether the seller uses Amazon's expensive delivery service, which greatly increases the cost of third-party sellers on Amazon.

The FTC also claimed that Amazon's practices degraded the shopping experience for consumers by replacing results from normal searches with paid ads, and said this frustrates both shoppers and sellers.

The agency also believes that Amazon's search results favor Amazon's own products over those from better-quality third-party sellers.

In a press release issued on Tuesday, the FTC also said that Amazon charges sellers high fees, but these sellers have no choice but to rely on Amazon to maintain their business.

"These fees include monthly fees for sellers, commissions for each product sold, and high advertising fees. All these fees add up, and sellers need to contribute nearly half of their revenue to Amazon."

It is understood that the FTC is seeking a permanent ban on Amazon from engaging in similar conduct again and is calling for " structural adjustments " in the lawsuit to prevent Amazon's alleged violations from happening again.

While the agency did not offer how it thought the Supreme Court should make “structural changes,” that typically means it calls for breaking up the company.

In response to the news of the FTC's lawsuit, the local institute advocated that Amazon be split into multiple companies. "Separating Amazon's e-commerce platform from its retail division and spinning off its logistics business into several independent companies will prevent Amazon from using the collaboration between its divisions to implement monopolistic behavior."

But Amazon clearly disagrees with calls to split its business into an independent company, and it remains to be seen how this lawsuit will develop.

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