An Amazon Breakup? The FTC Looks to Shrink the Growing Amazon Monopoly

Sammi DietrichNews & Insights

Throughout its lifetime, Amazon has become both massively popular and significantly controversial. On September 26, 2023, the Federal Trade Commission (“FTC”) and 17 states filed a complaint against Amazon, alleging that the company uses illegal business practices that harm both buyers and sellers.[1] According to the complaint, Amazon is an unfair monopoly that stifles opposition by controlling the price, quality, and even selection of products on the market.[2] The FTC alleges that Amazon achieves this by employing anti-discounting tactics; requiring sellers to utilize multiple Amazon services; engaging in harmful advertising practices; and using a secret price setting algorithm to artificially raise prices on competing websites. [3]  

The full story behind Amazon’s pricing algorithm remains unclear. Codenamed “Project Nessie,” the controversial program allegedly allows Amazon to raise prices only on products where other platforms will follow suit, which ensures that no consumers are lost to cheaper options.[4] Project Nessie is said to have been turned on and off over the years since its creation to avoid suspicion.[5] The FTC additionally alleges that Amazon uses coercive and exclusionary tactics to “stifle price competition,” and “coerce sellers into using Amazon’s fulfillment services”.[6]

The FTC alleges that Amazon stifles competition by monitoring sellers who sell both on Amazon and competing websites. [7] If Amazon finds that the sellers offer discounts or lower prices elsewhere, Amazon buries the seller’s products to make them effectively invisible on the site.[8] In fear of this sort of retribution, sellers will proactively raise prices on other websites or refrain from offering discounts to protect their Amazon position.[9]

The FTC also claims that Amazon forces sellers to use its fulfillment services in order for products to be “Prime eligible,” which allows Amazon to regulate prices and force its sellers to be entirely dependent on the site.”[10] Amazon allegedly conditions eligibility for Prime on the use of its fulfillment service, Fulfillment by Amazon or “(FBA”), which gives Amazon the power to store and package customer orders even though many sellers prefer alternative methods or independent fulfillment providers who can work across marketplaces.[11] A vast majority of Amazon sellers rely on FBA to ensure that their products are shown the largest amount of potential buyers.[12]

In addition to forced FBA use,  Amazon also promotes certain items over others is by utilizing pay-to-play advertisements, which sellers purchase in in order to reach more buyers.[13]  Although some buyers may benefit marginally, the complaint alleges that “shoppers get lower-quality search results for higher priced products.”[14] The FTC concludes that Amazon absorbs a majority of the profits and sustains its control by raising prices, making advertisement and fulfillment profit, and discouraging competition on other websites.[15]

The FTC originally obtained its regulatory authority over antitrust matters through the Sherman Act of 1890 (the “Sherman Act”) and the FTC Act of 1914 (the “FTC Act”).[16] The Sherman Act prohibits anticompetitive agreements and conduct that monopolizes or attempts to monopolize “any part of the trade or commerce among several States, or with foreign nations.”[17] Such monopolization falls within the prohibited conduct of the FTC Act, which states that “unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce” are unlawful.[18]

 The FTC is primarily concerned with economic areas such as “health care, pharmaceuticals, professional services, food, energy, and certain high-tech industries like computer technology and Internet Services.”[19] Accordingly, Amazon falls within the FTC’s purview as a high-tech company. Amazon has faced allegations from the FTC before, such as privacy lawsuits concerning Amazon’s Alexa and Ring doorbell services, as well as a claim that Amazon Prime is unnecessarily hard to cancel.[20]

In Amazon’s public response to the FTC’s present complaint, the company states that its practices actually help competition, sellers, and consumers.[21] According to a public statement by Senior Vice President of Global Public Policy & General Counsel David Zapolsky,, the FTC’s attempt to restrict its current practices will result in “fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses—the opposite of what antitrust law is designed to do.”[22]

Amazon maintains that services like FBA and Prime exist to lower costs for sellers and provide sellers and buyers with the best service on the market.[23] Amazon contends that it promotes trust and satisfaction among its users by promoting the most competitively priced products.[24] Amazon also asserts that its inclusion of third-party sellers on its website provides buyers with ample choice in their purchases and also supports various sellers in their attempts to grow and maintain businesses.[25] Ultimately, Amazon “fundamentally disagree[s] with the FTC’s allegations” and claims that its approach to antitrust laws will do more harm than good.”[26]

In contrast, the FTC believes that success in this suit is integral in the restoration of fair competition and an end to deceptive and coercive tactics.[27] The FTC requests that Amazon be permanently barred from engaging in the conduct included in the complaint, as well as any related conduct.[28] Additionally, the FTC asks that Amazon be made to help restore fair competition from the harm the company has caused with its actions.[29] It is unclear whether this litigation will result in a breakup of Amazon, but supporters would like to see an end to Amazon’s current practices.[30]

As a pending matter with many relevant factors, the battle between Amazon and the FTC will likely be a long one. Whatever the outcome may be, it will certainly impact the massive consumer base Amazon has encapsulated and likely have lasting effects on the role of online retailers.


[1] Compl. at 1, FTC and Pl. States v. Amazon.com, Inc, No. 2:23-cv-01495 (W.D. Wash. Sept. 26, 2023), chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.ftc.gov/system/files/ftc_gov/pdf/1910129AmazoneCommerceComplaintPublic.pdf.

[2] Victoria Graham, FTC Sues Amazon for Illegally Maintaining Monopoly Power, FTC (Sept. 26, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/09/ftc-sues-amazon-illegally-maintaining-monopoly-power.

[3] Brian Fung, 5 Takeaways from America’s Landmark Lawsuit Against Amazon, CNN (Sept. 28, 2023, 7:33 AM), https://www.cnn.com/2023/09/28/tech/amazon-ftc-lawsuit-takeaways/index.html.

[4] Haleluya Hadero, Amazon Used an Algorithm to Essentially Raise Prices on Other Sites, The FTC Says, AP News (Nov. 2, 2023, 4:25 PM), https://apnews.com/article/amazon-ftc-lawsuit-antitrust-lina-khan-d40f5437bac57f7f4a3ab5a49650f98d.

[5] Id.

[6] Compl., supra note 1 at 3.

[7] Id. at 11.

[8] Id.

[9]Id. at 11-14.

[10] Id.

[11] Id. at 12.

[12] Id. at 13.

[13] Id..

[14] Id.

[15] Id.

[16] The Enforcers, FTC (last visited Nov. 24, 2023) https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/enforcers.

[17] 15 U.S.C. § 1-2.

[18] 15 U.S.C. § 45.

[19] The Enforces, supra note 16.

[20] Josh Sisco, FTC Readies Lawsuit That Could Break Up Amazon, Politico (July 25, 2023, 6:25 PM), https://www.politico.com/news/2023/07/25/ftc-lawsuit-break-up-amazon-00108130 (Amazon settled the privacy lawsuits, paying $30 million).

[21] David Zapolsky, The FTC’s Lawsuit Against Amazon Would Lead to Higher Prices and Slower Deliveries for Consumers – and Hurt Business, Amazon (Sept. 26, 2023), https://www.aboutamazon.com/news/company-news/amazon-ftc-antitrust-lawsuit-full-response.

[22] David Zapolsky, Read Amazon’s Response to The FTC’s Antitrust Complaint, Amazon (Sept. 26, 2023), https://www.aboutamazon.com/news/company-news/amazon-response-to-ftc-antitrust-lawsuit.

[23] Sisco, supra note 20.

[24] Id.

[25] Id.

[26] Id.

[27] Graham, supra note 2.

[28] Compl., supra note 1 at 152.

[29] Id. at 153.

[30] Annie Palmer and Lauren Feiner, Amazon Sellers Sound Off on The FTC’s ‘Long-Overdue’ Antitrust Case, CNBC (Oct. 6, 2023, 5:32 PM), https://www.cnbc.com/2023/10/06/amazon-sellers-sound-off-on-the-ftcs-long-overdue-antitrust-case.html.