On Wednesday, California’s attorney general launched an antitrust case against Amazon, alleging the company damaged competition and drove up costs for online Buyers. However, if the lawsuit is successful, it might have far-reaching effects beyond California. Amazon is said to have 25 million customers in the Golden State.
California is suing for allegedly breaking antitrust and unfair competition laws by suppressing rival businesses and participating in methods encouraging sellers to keep product prices high on rival marketplaces. Similar to a complaint lodged by the District of Columbia last year, which was rejected by a district court earlier this year and is now in the appeals process, a lawsuit of 84 pages was filed in San Francisco Superior Court on Wednesday.
This is not the first time that Amazon is facing such a scenario. Last year a similar suit was filed against but was not entertained, but lawmakers have accepted it this year. Amazon has been through such cases for a long time. Still, no response from market giant officials has been given to this lawsuit.
California authorities say they are certain they will avoid a similar fate, thanks in part to the data gathered after a more than two-year probe that included subpoenas and interviews with sellers, rivals, and current and former employees of the e-commerce giant.
California Attorney General launched Anti Trust Case Against Amazon
Rob Bonta, California’s attorney general, during a news conference announcing the case, that “If you think about Californians paying even a little bit more for every product they purchased online over the course of a year, let alone a decade, which is what is at issue here, the collective magnitude of harm here is very far-reaching.”
The complaint primarily targets its practice of penalizing vendors who advertise their products at lower prices on other sites. Amazon routinely removes crucial buttons like “Buy Now” and “Add to Cart” from a product listing page if it finds the item sold cheaper on a competitor’s website.
Losing such buttons might swiftly cripple a company’s bottom line if it relies on Amazon sales. That makes things difficult for vendors in the market. Utilizing other platforms allows them to sell items at cheaper pricing than Amazon. According to the lawsuit, sellers, rivals, and industry advisors agreed that raising prices elsewhere was preferable to losing sales here, the biggest online retailer.
To summarize one complaint, “Without fundamental price competition, without multiple websites striving to outdo one other with lower costs, prices artificially stabilize at levels greater than would be the case in a competitive market.”
The lawsuit in California is an effort to prevent Amazon from engaging in anti-competitive relationships with third-party retailers. In addition, the state wants the market giant to compensate for the hike in the cost of living. The state’s authorities did not disclose the amount of funding they requested.
The firm has previously said that the individual sellers determine all prices on the site. It has also asserted its right to refrain from promoting items whose prices are not in line with the market. In an email released on Wednesday,
Insider Intelligence reports that Amazon has a greater share of online sales in the United States (about 38%) than any of its competitors (including Walmart, eBay, Apple, Best Buy, and Target). Amazon’s third-party marketplace has around 2 million merchants, providing about 58% of the company’s retail revenue.
Some sellers have told Bonta at a press conference on Wednesday that they would offer cheaper pricing on other sites with lower seller costs, but they don’t want to risk getting in trouble with Amazon, so they stick to its higher fees.