FTC chairman Lina Khan has long argued that tech companies have grown too powerful

Credit: POOL/REUTERS

Joe Biden’s competition tsar has accused Amazon of using “punitive and coercive tactics” to lock in businesses and squeeze money from Prime subscribers.

Lina Khan, the 34-year-old Democratic chair of the Federal Trade Commission (FTC), has sued Amazon to block its “unlawful” online marketplace monopoly.

The US competition watchdog and 17 states sued the company on Tuesday, claiming it had used its dominance to keep prices high and forced sellers to use its own delivery services.

The FTC claimed Amazon had taken to providing biased recommendations and search results that favour its own products, even if they are lower quality than those of rivals.

It claimed Amazon has gradually degraded the customer experience of its online store, littering the website with products that sellers have paid to boost even if they are of inferior quality.

The regulator added sellers were routinely “punished” if they offered products for less on rival websites, as Amazon would reduce their visibility on its store.

Sellers also need to secure eligibility for “Prime” delivery discounts by using Amazon’s own delivery services. The FTC claimed the $1.3 trillion company “extracts enormous monopoly rents from everyone within its reach”.

Third-party businesses selling on Amazon are in some cases handing over as much as 50pc of their total revenues to the tech giant, the FTC claimed.

Ms Khan said Amazon had made its service worse for the “tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon”.

In a legal filing, the FTC said: “Amazon has violated the law not by being big, but by how it uses its scale and scope to stifle competition.”

Amazon rejected the allegations. David Zapolsky, Amazon’s general counsel, said: “Today’s suit makes clear the FTC’s focus has radically departed from its mission of protecting consumers and competition.

“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.”