The Federal Trade Commission (FTC) is gearing up to launch an antitrust lawsuit against e-commerce giant Amazon, focusing on the company's core online business. The federal agency, led by Amazon critic Lina Khan, is expected to accuse Amazon of leveraging its dominance to favor merchants using its logistics services while penalizing those who do not. This move by the FTC aligns with a similar European antitrust case against Amazon. The imminent lawsuit seeks to address Amazon's alleged anti-competitive practices.

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Alleged Unfair Advantage

According to Bloomberg News, the FTC claims that Amazon's algorithm puts merchants at a competitive disadvantage if they choose not to utilize the company's logistics services. While fees for these services are optional, most merchants end up paying them to avoid being disadvantaged by Amazon's algorithm. The FTC alleges that Amazon improperly wields its dominance to reward merchants using its services while penalizing those who do not, thereby limiting competition in the market.

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European Antitrust Case

The FTC's forthcoming allegation parallels a previous European antitrust case in which Amazon was accused of breaching competition rules by favoring merchants using its logistics and delivery system over other sellers. However, Amazon and the European Commission reached a settlement regarding the matter.

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FTC Preparations and Expected Legal Actions

Headed by Lina Khan, the FTC and its investigators have been preparing the lawsuit for several months. The court papers are anticipated to be filed prior to significant personnel changes within the agency in August. The FTC seeks to pursue a restructuring of Amazon's business model, a move that will likely prompt Amazon to appeal the decision.

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Past Lawsuits and Resistance

Under Lina Khan's leadership, the FTC has already filed three lawsuits against Amazon. However, Amazon has unsuccessfully requested Khan's recusal from antitrust probes due to her prior criticisms of the company. Despite Amazon's objections, Khan continues to oversee investigations into the company's business practices.

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Recent Allegations

Last week, the FTC filed a lawsuit against Amazon, accusing the company of engaging in a long-term effort to enroll consumers into Amazon Prime without their consent. The agency claims Amazon employed deceptive designs, known as "dark patterns," to mislead consumers into subscribing to Prime. Amazon allegedly made it difficult for customers to complete transactions without also signing up for Prime, using unclear buttons and misleading information.

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Amazon's Response

Amazon has consistently denied allegations of improper market dominance and deceptive practices. The company's spokesperson, Heather Layman, refuted the FTC's claims, stating that customers appreciate the Prime service, and Amazon ensures a clear and simple process for both subscription enrollment and cancellation.