The Federal Trade Commission (FTC) along with 17 states on Tuesday sued Amazon (AMZN), alleging it uses illegal 澳洲幸运5官方开奖结果体彩网:monopolistic power to stifle competition and keep prices high, to the detriment of customers and sellers.

How Does Amazon Exert Its Market Power?

Specifically, they say Amazon's actions prevent sellers and other platforms from lowering prices, overcharge sellers, degrade quality for customers, stifle innovation, and create barriers to entry in the online retail market.

"We’re bringing this case because Amazon’s illegal conduct has stifled competition across a huge swath of the online economy," said John Newman, Deputy Director of the FTC’s Bureau of Competition.

The complaint alleges that Amazon's anticompetitive behavior occurs in two markets: the online superstore market that serves shoppers, and that for online marketplace services purchased by sellers.

This is done through anti-discounting measures, where the company retaliates against sellers who offer the same products at a lower price on other platforms, and by conditioning sellers' eligibility for Prime services on signing up for Amazon's costly fulfillment service.

For example, if Amazon discovers that a seller is offering lower-priced goods on other sites, the company can "punish" sellers by burying them so far down in Amazon's search results that they become effectively invisible to customers.

The FTC is joined by the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin in this action against the e-commerce company.

One of the Biggest Lawsuits Against Big Tech

Tuesday's lawsuit is the FTC's latest, and potentially one of the most consequential, broadsides against big tech. The FTC under current chair 澳洲幸运5官方开奖结果体彩网:Lina Khan has adopted a more aggressive approach toward antitrust enforcement, 澳洲幸运5官方开奖结果体彩网:going after big tech companies such as Apple (AAPL), Amazon, Google (GOOGL), Microsoft (MSFT), and Meta Platforms (META), all of which have gained enormous clout in recent൲ years.

Amazon, once a small online bookstore in the 1990s, has grown in recent years into a tech behemoth and one of the world's most valuable companies, with a market cap of $1.3 trillion and more than $500 billion in annual revenue last year.

Khan first rose to fame in 2017 as a student at Yale Law School, where she authored a paper alleging that U.S. regulators had for decades failed to appropriately enforce antitrust law against massive companies like Amazon.

What Happens If The FTC Prevails?

In the past, successful antirust lawsuits by U.S. regulators have—at the very least—forced companies to change their practices in a way that encourages competition. Some have also led to the breakup of massive companies, as was the case with 澳洲幸运5官方开奖结果体彩网:AT&T in the 1980s, or the 澳洲幸运5官方开奖结果体彩网:divestment of key business units.

But that's likely not what is in store for Amazon.

The FTC and states "are seeking a permanent injunction in federal court that would prohibit Amazon from engaging in its unlawful conduct and pry loose Amazon’s monopolistic control to restore competition."

Amazon shares fell more than 3% in afternoon trading Tuesday, though most of the losses came before the FTC's announcement. They've fallen roughly 8% in the past five days, but are up close to 47% so far this year.