California Files Antitrust Lawsuit Against Amazon

The attorney general of California filed an antitrust lawsuit against Amazon on Wednesday.

If the suit succeeds, it could have a broad impact on the country.

The lawsuit focuses on how Amazon penalizes sellers for listing their products on other websites. If a product is listed for cheaper on a competitor's website, Amazon will often remove important buttons from the product listing page.

Losing those buttons can hurt a company's business quickly.

The dilemma for marketplace sellers is created by that. The cost of using sites other than Amazon can lead to lower prices for products. The complaint said that because Amazon is the largest online retailer, the sellers would rather raise their prices on other sites than lose sales on Amazon.

Without basic price competition, prices are artificially higher than would be the case in a competitive market.

The California suit is the latest in a string of actions by states and regulators to curb the influence of technology companies. On Wednesday, a European Union court gave its approval to a record multi-billion dollar fine against the internet giant.

The case brought by the attorney general of the District of Columbia was thrown out. The Superior Court of the District of Columbia found that there wasn't enough evidence to show that Amazon's policies were anti-competitive. Mr. Racine is challenging the decision.

Amazon argues that sellers have control over prices and that including a seller's offering in the so-called "Buy Box" is an endorsement of a good deal for customers, so it would not feature an offer if it was not priced competitively. The argument is that online sales are still a small part of the market.

The majority of Amazon's sales last quarter were from third-party merchants on the website. They pay Amazon a referral fee to list their products and often pay for Amazon's other offerings. Amazon collected more than 100 billion in third-party service fees in the last year.

California has been investigating Amazon for more than two years and a complaint was filed in San Francisco Superior Court. It wanted to end the anticompetitive behavior and pay penalties.

An official in Mr. Bonta's office said that the California attorney general would succeed where D.C. has failed by providing more information about how Amazon was hurting consumers.

Amazon captured so much online sales that it was able to charge sellers more. Paying for advertising is one of the rising costs for sellers. There are internal documents that are redacted.

The complaint said that sellers had to raise prices on Amazon to make up for their costs. Because of Amazon's pricing provisions, other online stores can't attract consumers away from Amazon with lower prices.

Mr. Bonta said that emails between a personal care electronics brand and another retailer asked the retailer to raise prices on a discounted item because Amazon suppressed their listing. The brand wanted to remove all deals and inventory until the beginning of the new year because they are causing a lot of disruption to the Amazon business. We can't afford buy-box shutdowns on Amazon.

The seller stopped giving products to the competitor.

The Federal Trade Commission is looking into whether Amazon has broken antitrust laws. The process of buying or canceling an Amazon Prime membership can be confusing and the agency is looking into it.

The F.T.C. has been attacked by Amazon. Last year it was said that Ms. Khan should not be involved in antitrust inquiries into the company.

Last month, Amazon moved to stop the agency from interviewing Jeff Bezos, Amazon's founder, and Andy Jassy, its CEO, in the Prime inquiry on the grounds that the requests were designed to harass Amazon's highest-ranking executives.

Legislators in Washington are looking at Amazon as well. The company fought the bill that would have stopped Amazon from favoring its own products. The proposed law hasn't passed yet, and it's unlikely that it's going to pass in time for the upcoming elections.

Other times the company has been more diplomatic. Facing an inquiry into its retail practices in Europe, the company proposed a series of changes, including limiting the data it collects from rival sellers and allowing them to sell to Prime customers.