Just last week, we noted that a Federal Trade Commission lawsuit may hit e-commerce giant Amazon (NASDAQ:AMZN) on Tuesday. Well, it’s Tuesday, and the lawsuit we looked for today has indeed hit. As a result, Amazon now faces an activist government agency looking to test its chops against one of the biggest names in business. Investors, meanwhile, cut bait and bolted, taking with them over 4% of Amazon’s market cap.
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The lawsuit is about pretty much what those who followed the news expected it would be about: illegal monopoly power with its online marketplace that forces sellers to remain on its platform for every function and stifles competition. That the case would launch was little surprise; current FTC chair Lina Khan has been a vocal opponent to Amazon since at least 2017. Khan wrote for the Yale Law Journal, chiding previous FTC operations for dismissing the law’s concerns and letting Amazon operate quietly.
Khan, in a statement, noted that Amazon has “…used a set of punitive and coercive tactics to unlawfully maintain its monopolies.” Further, Khan asserted, Amazon “…is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform….” Khan’s assertions come at an odd time; just yesterday, we offered a report right here about how Amazon is actively developing strategies to fend off Temu and Shein, two new online ventures focused heavily on value provision. If, as Khan suggests, Amazon is using its monopoly power to stifle competition, then how are there two brand new competitors right here that Amazon is working to counter? Such competition never should have been, if Khan were correct.
At any rate, Amazon still enjoys strong analyst support. With 39 Buy ratings and one Hold, Amazon stock is considered a Strong Buy. Meanwhile, an average price target of $176.18 gives Amazon stock an upside potential of 39.83%.
