The Federal Trade Commission has filed its long-anticipated antitrust lawsuit against Amazon.
In a sweeping complaint filed in federal court in Seattle on Tuesday, the FTC and attorneys general from 17 states accused Amazon of wielding its “monopoly power” to inflate prices, degrade quality for shoppers and unlawfully exclude rivals, thereby undermining competition.
Amazon shares slid as much as 3% in afternoon trading.
The agency laid out a two-pronged strategy by which Amazon “unlawfully maintains” its monopoly power. It pointed to so-called anti-discounting measures the company uses to punish sellers and deter other online retailers from offering lower, more competitive prices than Amazon, which translates to keeping prices higher for products across the internet, the FTC said.
Amazon also “effectively requires” that sellers use its “costly” fulfillment services in order to obtain the vaunted Prime badge for their products, the FTC said, which in turn makes it more expensive to do business on the platform. Sellers are paying $1 of every $2 to Amazon, FTC Chair Lina Khan told reporters at a briefing Tuesday.
The FTC and states alleged that Amazon forces sellers to pay expensive fulfillment and advertising fees to market their goods on the site, while facing no other choice “but to rely on Amazon to stay in business.” These tactics have degraded the shopping experience on Amazon by flooding search results with “pay to play ads” that steer shoppers toward more expensive and less relevant products, Khan said.
Amazon CEO Andy Jassy speaks during the New York Times DealBook Summit in the Appel Room at the Jazz At Lincoln Center on November 30, 2022 in New York City.
Michael M. Santiago | Getty Images
“The upshot here is that Amazon is a monopolist and it’s exploiting its monopolies in ways that leave shoppers and sellers paying more for worse service,” Khan said at the briefing. “In a competitive world, a monopoly hiking prices and degrading service would create an opening for rivals and potential rivals to come in, draw business, grow and compete, but Amazon’s unlawful monopolistic strategy has closed off that possibility, and the public is paying directly as a result.”
David Zapolsky, Amazon’s general counsel and senior vice president of global public policy, said in a statement that the FTC’s complaint is “wrong on the facts and the law.”
“The practices the FTC is challenging have helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store,” Zapolsky said. “If the FTC gets its way, the result would be 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.”
The FTC didn’t lay out potential remedies such as a breakup or divestitures in its announcement, saying it is primarily seeking to hold Amazon liable. In the complaint, the FTC and states called for the court to prevent Amazon from continuing the alleged unlawful behavior and order “structural relief” to the extent necessary to resolve the harm. Structural relief tends to refer to remedies like breakups and divestments, that alter the business itself, rather than simply order it to discontinue a certain behavior.
Often in antitrust cases, a judge will rule on whether a company is liable for the alleged violations first. Only at that point will a separate proceeding to determine the proper remedies occur, should there be a finding of liability.
The lawsuit is a major milestone for Khan, who rose to prominence for her 2017 Yale Law Journal note, “Amazon’s Antitrust Paradox.” Khan argued in the article that the prominent antitrust framework at the time failed to capture the true extent of Amazon’s dominance and potential harm to competition. Through her work at the FTC, Khan has sought to reset that framework and push the boundaries of antitrust law through risky legal battles.
Lina Khan, Chairwoman of the Federal Trade Commission
Courtesy: FTC
Amazon sought Khan’s recusal from antitrust investigations into its business, arguing that her past writing and critiques showed she had prejudged the outcome of such probes.
The charges are the culmination of several years of pressure on federal enforcers to deal with what some competitors, sellers and lawmakers saw as anticompetitive practices. Amazon was one of four Big Tech companies investigated by the House Judiciary subcommittee on antitrust, which found it held monopoly power over most of its third-party sellers and many suppliers. The majority Democratic staff at the time alleged that Amazon shored up “competitive moats” by acquiring rival sites like Diapers.com and Zappos.
At the time, an Amazon spokesperson said in a statement that “large companies are not dominant by definition, and the presumption that success can only be the result of anti-competitive behavior is simply wrong.”
Founded by Jeff Bezos in Seattle in 1994, Amazon has transformed from an online bookseller into a retail, advertising and cloud computing giant with a staggering market valuation of roughly $1.4 trillion. The company has sought to expand its dominance by entering verticals like health care, streaming and grocery, acquiring primary-care provider One Medical, legendary film and television studio MGM, and upscale supermarket chain Whole Foods.
Those moves have attracted intense regulatory scrutiny. The House subcommittee report also accused Amazon of abusing its position in online retail to harm third-party merchants who rely on the platform to sell goods, and alleged it uses “strong-arm tactics” to bully retail partners. The FTC is also reviewing Amazon’s planned $1.7 billion acquisition of Roomba maker iRobot on antitrust grounds. Amazon recently paid roughly $30 million to settle two privacy lawsuits brought by the FTC concerning its Ring doorbell and Alexa units. The agency followed up in June with a lawsuit accusing Amazon of tricking users into signing up for Prime, while making it too difficult for them to cancel.
Amazon’s marketplace has evolved into a linchpin of its e-commerce business. At the time of the marketplace’s launch in 2000, Amazon had already expanded beyond its origins as a bookseller to offering things like CDs and videos. But once it opened its doors to third-party sellers, it supercharged the number and variety of products for sale on its website, earning it the moniker “the everything store.”
The third-party marketplace has given Amazon access to a higher-margin business than just selling books. It has also increased the fees it charges sellers to do business on its site, run advertisements, and tap into its fulfillment and delivery services. In the first half of 2023, the company collected a 45% cut of every sale made by sellers in the U.S., up from 19% in 2014, according to the nonprofit Institute for Local Self Reliance. Sales from third-party sellers now comprise 60% of total units sold, the company recently disclosed.
This photo illustration created on Jan. 7, 2025, in Washington, D.C., shows an image of Mark Zuckerberg, CEO of Meta, and an image of the Meta logo.
Drew Angerer | AFP | Getty Images
Chinese online retailers have cut back their spending on Facebook and Instagram ads in reaction to President Donald Trump’s tough trade policy with the country.
Meta’s finance chief Susan Li said Wednesday that “Asia-based e-commerce exporters” have reduced their spending with the social media company. It’s likely those firms did so as they prepare for the de minimis trade loophole ending this Friday, Li said during a first-quarter earnings call.
“A portion of that spend has been redirected to other markets, but overall spend for those advertisers is below the levels prior to April,” Li said.
Trump in early April signed an executive order to end the de minimis trade exemptions for Chinese imports, which benefited online retailers like Temu and Shein. Analysts have said they believe that Temu and Shein make up the bulk of Meta’s 2024 China-related sales of $18.35 billion.
Meta’s advertising sales in the Asia-Pacific region were $8.22 billion for the first quarter, the company said. That was below Wall Street projections of $8.42 billion.
Li said that Meta’s second-quarter revenue would come in the range of $42.5 billion to $45.5 billion, which was in line with analysts expectations of $44.03 billion.
“It’s very early, hard to know how things will play out over the quarter, and certainly, harder to know that for the rest of the year,” Li said.
This echoes what Google said last week during its earnings call, warning that it expects headwinds to its advertising business, particularly from the Asia-Pacific region. Similarly, Snap on Tuesday said it had “experienced headwinds to start the current quarter.”
Trump’s China tariffs of 145% also appear to be impacting Meta’s Reality Labs unit, which creates virtual reality and augmented reality devices.
Meta said its 2025 capital expenditures will come in the range of $64 billion to $72 billion, which is higher than its prior outlook of $60 billion to $65 billion.
“This updated outlook reflects additional data center investments to support our artificial intelligence efforts as well as an increase in the expected cost of infrastructure hardware,” the company said in the earnings release.
Regarding the higher costs of infrastructure hardware, Li told analysts that it’s the result of “suppliers who source from countries around the world.” The higher cost of infrastructure hardware and “higher expected Reality Labs cost of goods sold” has “partially offset” Meta’s lowered projected range for its 2025 total expense, she said.
“There’s just a lot of uncertainty around this, given the ongoing trade discussions,” said Li, adding that Meta is modifying its supply chain as a result.
Microsoft CEO Satya Nadella speaks during an event commemorating the 50th anniversary of the company at Microsoft headquarters in Redmond, Washington, on April 4, 2025. Microsoft Corp., determined to hold its ground in artificial intelligence, will soon let consumers tailor the Copilot digital assistant to their own needs.
David Ryder | Bloomberg | Getty Images
President Trump’s tariffs have dominated global news headlines for weeks. During Microsoft‘s earnings call with investors on Wednesday, though, tariffs came up only once, during prepared remarks.
The reference from Amy Hood, Microsoft’s finance chief, had to do with sales of personal computers and Windows operating system licenses to other PC makers.
“Windows OEM and devices revenue increased 3% year over year, ahead of expectations, as tariff uncertainty through the quarter resulted in inventory levels that remained elevated,” Hood said.
While Microsoft does sell Surface PCs and Xbox video game consoles, impact will likely be less direct than it will be on companies that sell physical products.
Still, Microsoft does stand to see second-order effects, like other software vendors. Its clients might feel the effects of higher prices on goods imported into the U.S. and choose to soften their spending, and Microsoft does purchase equipment from other countries.
The Redmond, Washington-based company is investing heavily to buy and install the necessary Nvidia graphics processing units across the world to power OpenAI’s ChatGPT and other artificial intelligence products.
If anything, software might help companies respond in the event that their costs go up because of tariffs, CEO Satya Nadella said on the conference call
“I think if you sort of buy into the argument that software is the most malleable resource we have to fight any type of inflationary pressure or any type of growth pressure where you need to do more with less, I think we can be super helpful in that,” he said. “And so if anything, we would probably have more of that mindset is, how do we make sure we are helping our customers, and then, of course, we’ll look to share gains.”
The company sells a slew of AI products, including the GitHub Copilot that spits out source code suggestions for developers and the Microsoft 365 Copilot assistant that answers questions in Excel, Teams and other productivity apps.
Microsoft shares traded up about 8% in extended trading after the call. The company reported higher revenue and earnings than analysts had predicted and issued an upbeat forecast.
Customers walk past an Apple logo inside of an Apple store at Grand Central Station in New York on Aug 1, 2018.
Lucas Jackson | Reuters
Apple willfully violated a 2021 injunction that came out of the Epic Games case, Judge Yvonne Gonzalez Rogers said in a court filing on Wednesday.
She wrote that Apple Vice President of Finance Alex Roman “outright lied” to the court about when Apple had decided to levy a 27% fee on some purchases linked to its App Store.
“Neither Apple, nor its counsel, corrected the, now obvious, lies,” Rogers wrote, saying that she considers Apple to “to have adopted the lies and misrepresentations to this Court.”
Rogers added that she referred the matter to U.S. attorneys to investigate whether to pursue criminal contempt proceedings on both Roman and Apple.
The decision is a striking repudiation of Apple’s conduct in the Epic Games trial, which was decided in 2021 and appealed in 2023.
On Wednesday, Rogers accused Apple of willfully trying to violate her ruling, and she held the company in contempt.
Rogers wrote that it was expected under her ruling that those kind of off-app purchases would not have an Apple commission. But Apple introduced new policies in 2024 that collected a 27% commission from some of those purchases, only a slight discount from the 30% Apple usually collects from in-app purchases. Rogers said nearly every Apple decision on its app-linking policies was anticompetitive.
Rogers wrote that Apple presented evidence to the court of internal deliberations about its rule that were “tailor-made for litigation,” instead of the company’s actual internal discussions.
“In stark contrast to Apple’s initial in-court testimony, contemporaneous business documents reveal that Apple knew exactly what it was doing and at every turn chose the most anticompetitive option,” Rogers wrote. “To hide the truth, Vice-President of Finance, Alex Roman, outright lied under oath.”
Rogers also accuses Apple of withholding documentation of a June 2023 meeting including CEO Tim Cook about how they would comply with the 2021 court order. Rogers said that Apple hid the existence of the meeting from the court until 2025. She also said that Apple abused privilege in order not to share documents that it was supposed to.
Apple had a “a desire to conceal Apple’s real decision-making process, particularly where those decisions involved senior Apple executives,” Rogers wrote.
Former Apple senior vice president and current fellow Phil Schiller did not want Apple to take a commission on web links, but Cook ignored him, Rogers said.
“Cook chose poorly,” Rogers wrote.
The judge ordered, effective immediately, for Apple to stop imposing its commissions on purchases made for iPhone apps through web links inside an app. She also ordered Apple to pay Epic Games’ attorney fees over this specific issue.
“This is an injunction, not a negotiation. There are no do-overs once a party willfully disregards a court order,” Rogers wrote.
An Apple representative did not respond to a request for comment. Roman didn’t immediately respond to a message.
“It’s a huge victory for developers, and it means all developers can offer their own payment service side-by-side with Apple’s payment service,” said Epic Games CEO Tim Sweeney on a call with reporters on Wednesday. “This forces Apple to compete. This is what we wanted all along.”