Amazon stock dropped more than 3% Tuesday after the US government sued the retail giant.
The Federal Trade Commission sued Amazon over anticompetitive business practices.
"[Amazon] uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power," the FTC said.
Amazon shares were trading at $126.98 just after 1:00 p.m. in New York, down about 3.28%.
Rumors of a potential antitrust lawsuit had been swirling for several years dating back to the Trump administration and come amid the current administration's actions against what it sees as unchecked corporate power, particularly among Big Tech. The move by the FTC is supported by 17 state attorneys general.
Amazon, the FTC said in its statement, is "a monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power."
The online retail giant does not just violate the law because of its size, but because of specific "exclusionary conduct" that keeps existing competitors from growing and new competitors from emerging, the regulator said. Amazon's actions prevent rivals from lowering prices, it overcharges sellers, and stifles innovation, the FTC added.
Lina M. Khan, the chair of the regulator, said Amazon uses "punitive and coercive" tactics to maintain its dominance.
"The complaint sets forth detailed allegations noting how 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 and the hundreds of thousands of businesses that rely on Amazon to reach them," Khan said. "Today's lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition."
David Zapolsky, Amazon senior vice president of global public policy and general counsel, said the FTC's allegations are not substantiated by facts.
"If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses — the opposite of what antitrust law is designed to do," Zapolsky said in a statement. "The lawsuit filed by the FTC today is wrong on the facts and the law, and we look forward to making that case in court."
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