The Amazon FTC Lawsuit Is Apparently About to Break — Is It Game Over For Amazon?
Key takeaways
- The FTC is said to be ready to file a massive antitrust lawsuit against Amazon
- The online shopping company has had several run-ins with the agency already
- Amazon shares dropped 0.7% at the news
It looks like the Federal Trade Commission is ready to wrap up a four-year investigation into Amazon and hit the e-commerce titan with the mother of all antitrust suits. Amazon’s stock price was gloomy at the news, but some are optimistic about the company’s potential break up. Here’s the latest.
What’s happening with Amazon and the FTC?
The FTC might file a lawsuit against Amazon as soon as next month after the shopping titan didn’t offer any concessions to settle the antitrust lawsuit claims, the Wall Street Journal first reported.
The lawsuit will allegedly target Amazon’s logistics program, Logistics by Amazon, and the prices third-party sellers list on the platform. The remedy? “Structural remedies”, also known as breaking Amazon into separate businesses.
It’s not Amazon’s first run-in with the FTC. The company has previously been accused of duping millions of consumers into taking out $139-a-year Amazon Prime memberships and making it too difficult to cancel. Amazon has also been accused of allegedly favoring its own products on the website ahead of other third-party sellers. Amazon denies all allegations.
How did Wall Street react?
Amazon’s share price was 0.7% down on Wednesday at $136.38 because of the rumored FTC lawsuit, but not every analyst is so glum at the thought of Amazon being broken into separate companies. Analysts at D.A. Davidson put the value of Amazon’s share price as high at $193 if the company was separated into three parts.
Besides, the FTC doesn’t have the best track record at the moment for winning cases. It recently lost its bid to block the $69 billion Microsoft and Activision proposed merger after it ran out of time.
Perhaps the agency was focusing its resources on the Amazon lawsuit; with the FTC’s chair, Lina Khan, penning an article on why Amazon should be broken up in 2017, the e-commerce giant has asked for her to be recused from the case more than once. They haven’t succeeded yet.
The bottom line
The Amazon and FTC showdown has been a long time coming, but there’s no guarantee that the FTC will win the case — and it will take years to happen. In the meantime, investors can focus on the positives — one is that Amazon’s share price has climbed 57% this year.
