Most shoppers go to Amazon’s site expecting to find low prices, reliable order processing, fast deliveries and easy returns. The latest Price Wars study “confirm[s] Amazon as the lowest-priced retailer for the 7th year in a row, boasting a 16% average price difference compared to its rivals.”[1] At the same time, Amazon’s Marketplace, a separate online platform for products offered by third-party sellers, gives consumers more choices.[2] Its delivery service is also fast and efficient.[3]
Rather than celebrate these benefits, Michigan Attorney General Dana Nessel wants to punish Amazon. Nessel, joined by the Federal Trade Commission and 16 other states, believes “the online retail and technology company is a monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power,” according to the press release issued when the lawsuit was filed in September 2023.[4]
“Amazon has taken improper steps to dominate all other online superstores and online marketplaces, decreased competition, and raised prices for everyday shoppers,” Nessel wrote. “The free market is meant to work for both buyers and sellers, and Amazon has corrupted the market in its favor.”[5]
Amazon counters that the company has spurred competition in the retail industry, so that American consumers benefit from a greater selection of goods at lower prices and shorter delivery times.[6] Judging by what we see in the market, it appears that consumers are demonstrating with their purchases that they mostly side with Amazon.[7] If Nessel is correct that Amazon has increased prices for shoppers and corrupted the retail market, one wonders why consumers continue to prefer Amazon to the alternatives.
Amazon also benefits the third-party sellers on its Marketplace platform. They get access to the company’s massive customer base and reputation, easy entry into its vast regional and international markets and its efficient Fulfilment by Amazon services.[8] Small- and medium-sized sellers use Marketplace to gain access to customers for a far lower cost than if they had to build their own networks. Amazon has helped thousands of small sellers in Michigan reach customers nationwide, allowing them to grow their businesses and achieve success. Putting handcuffs on Amazon should not be done lightly, as it may harm these small merchants.
Amazon should not be exempt from scrutiny for possible anticompetitive conduct. But it is hard to see how this lawsuit will do anything to help either Michigan households who buy on Amazon or the Michigan-based merchants Nessel claims need protection. Both groups will likely be hurt if this lawsuit results in preventing Amazon from doing what has made it such a success: finding new ways to improve their retail and supply chain operations to deliver products more efficiently to customers.
The lawsuit against Amazon is not the only antitrust case Nessel is bringing against a major technology company. On March 21, 2024, the Michigan attorney general joined the U.S. Department of Justice in suing Apple for alleged monopolization of the U.S. smartphone market.[9] As will be discussed below, this case is based on a legally questionable claim that Apple is obligated to assist its competitors by giving them special access to its platform. Federal courts have rejected these sorts of claims in the past.
If Michigan’s attorney general prevails in her lawsuit against Amazon, what is that likely to mean for customers and sellers in Michigan who use Amazon’s platforms? That answer requires looking more deeply at the claims in the lawsuit, and what the government is trying to persuade the court to prevent Amazon from doing.