Amazon was sued by the US government for the first time. DC alleges that the world's largest online marketplace is engaging in unfair practices with third-party sellers.

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Amazon was sued by the US government for the first time. DC alleges that the world's largest online marketplace is engaging in unfair practices with third-party sellers.
Amazon now joins Facebook and Google, which have both been hit with antitrust lawsuits.Francis Scialabba

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Do Amazon's marketplace policies make shopping on the internet more expensive?

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Karl Racine, the attorney general for Washington, DC, thinks so, which is why he sued Amazon over antitrust allegations yesterday.

Those allegations: Amazon's restrictive agreements with third-party sellers limit their ability to sell products for less on other e-commerce sites, artificially inflating prices and reducing competition.

  • Until 2019, the suit said, Amazon flat-out barred sellers on its marketplace from offering their items for cheaper elsewhere.
  • When lawmakers started snooping around, Amazon threw out that rule, and then ended up replacing it with a clone, Racine said. If sellers tried to list products on other sites for a lower cost, Amazon would bury them on its site.

In a statement, Amazon said Racine "has it exactly backwards." The company said, "Sellers set their own prices for the products they offer in our store." It added, "And like any store we reserve the right not to highlight offers to customers that are not priced competitively."

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Why it's a big deal

If we're being honest, the lawsuit itself isn't a huge deal. It was filed in DC, not in federal court, and Racine didn't invite other AGs to the party, as is common in these types of cases. So overall, the lawsuit doesn't have a lot of teeth.

But it's important in many ways, too. It's believed to be the first time that Amazon's been sued by the US government over antitrust allegations. It also strikes at the core of Amazon's retail business: its marketplace, which brings in more than half of the company's total sales.

Bottom line: Amazon now joins Facebook and Google, which have both been hit with antitrust lawsuits. Those cases may be slower moving than you on a Saturday morning, and experts said the tech companies have the advantage because of the current structure of antitrust law.

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