FTC Prepares Possible Antitrust Suit Against Amazon

Amazon officials haven’t had individual late-stage meetings with each of the FTC commissioners to make their arguments against a legal challenge, those people said.

The commission in recent years has been examining Amazon practices including whether it favors its own products over competitors’ on its platforms and how it treats outside sellers on Amazon.com, according to some of the people familiar with the matter. The FTC also has been scrutinizing the company’s Amazon Prime subscription service’s bundling practices, some of the people said. Exactly which aspects of the business the FTC would target in a potential Amazon lawsuit couldn’t be learned.

Amazon and the FTC declined to comment. The company has said repeatedly that it competes fairly and that its services benefit both customers and sellers on its platform.

If the commission does sue, it would mark a signature moment in the tenure of FTC Chair Lina Khan, who built her career in part by arguing in a widely read academic paper that Amazon had amassed too much market power and that antitrust law had failed to restrain it.

An FTC case also would be an escalation of efforts by U.S. antitrust enforcers to rein in the nation’s largest technology companies. The commission sued Facebook in 2020, accusing it of buying and freezing out small startups to choke competition. The case remains pending. The Justice Department, which shares antitrust authority, has filed two broad antitrust lawsuits against Alphabet Inc.’s Google, including one last month that targets the company’s ad-tech business.

Facebook-parent Meta Platforms Inc. has rejected the FTC’s assertions and said its acquisitions have been good for competition and good for those who use its products. Google said the Justice Department’s arguments are flawed and that the advertising technology sector is highly competitive.

The FTC began investigating Amazon during the tenure of Republican Chairman Joseph Simons, who ran the agency while Donald Trump was president. In 2019, Mr. Simons and his counterparts at the Justice Department brokered a jurisdictional agreement for federal antitrust investigations of big technology companies. The Justice Department took the reins on Google and Apple Inc. while theFTC took Amazon and Facebook.

Shortly after Ms. Khan was confirmed as FTC chair in 2021, Amazon filed a petition with the commission that argued she should be recused in investigations of the company, in light of her extensive past criticisms of Amazon. The commission hasn’t publicly responded to that petition, though it has rejected similar recusal arguments made by Facebook. A federal judge also ruled against Facebook on the recusal issue.

Amazon, Apple, Google and Meta were the focus of a 16-month congressional antitrust investigation into the competitive behaviors of the tech giants that concluded with a 449-page report in 2020. The House Antitrust Subcommittee’s report, which Ms. Khan worked on as a counsel to the panel, determined that Amazon had “monopoly power” over sellers on its site, bullied retail partners and improperly used seller data to compete with rivals.

In a blog post the day of the congressional report, Amazon warned against “ill-conceived ideas” about regulation that threatened to force changes to its platform that it said would hurt both consumers and small sellers. “All large organizations attract the attention of regulators, and we welcome that scrutiny,” it said. “But large companies are not dominant by definition, and the presumption that success can only be the result of anti-competitive behavior is simply wrong.”

The Wall Street Journal in a 2020 article detailed how employees in Amazon’s private brands business have used data about independent sellers on the company’s platform to develop competing products, a practice at odds with the company’s stated policies. The Journal also reported about Amazon’s tactic of leveraging dominance in one business to compel partners to accept terms from another, which rivals said go beyond typical product bundling and tough negotiating in part because the company threatens punitive action on vital services it offers, such as its retail platform.

Amazon at the time said that it prohibited employees from using nonpublic, seller-specific data to determine which products it launched, and that negotiating across its business units was normal practice in business.

The FTC also has been investigating non-antitrust issues related to Amazon, including whether the company might have used misleading practices to sign up subscribers to its Amazon Prime program, and whether it impedes the ability of consumers to cancel their subscriptions.

In August, Amazon complained about the FTC’s probe and accused the FTC of making excessive and unreasonable demands on founder Jeff Bezos and company executives. It asked the FTC to quash civil subpoenas issued to Mr. Bezos and Chief Executive Andy Jassy. The FTC largely rejected the request.

In December, Amazon agreed to settle two European Union antitrust cases related to allegations about its treatment of third-party sellers on its platform.

Amazon, which didn’t pay a fine as part of the settlement, committed to give third-party sellers in the European Union that use Amazon an equal shot at being selected as the default option for the buttons in Amazon’s so-called Buy Box and to qualify for its Prime shipping program. The company also as part of the settlement agreed to abstain from using nonpublic data about sellers on its marketplace to compete against them in the European Union.

Amazon said at the time that it disagreed with several of the EU’s allegations, but engaged in a settlement to preserve its ability to serve customers and businesses in Europe.

Write to Dana Mattioli at dana.mattioli@wsj.com and Brent Kendall at Brent.Kendall@wsj.com