Tech giant Amazon (NASDAQ: AMZN) has faced its share of headwinds recently. Last year, the company reported a rare net loss as it dealt with economic-related issues. Some investors may also be wary that its legendary founder, Jeff Bezos, is no longer the company's CEO. However, Amazon could now face a potentially more pressing matter: the ire of regulators. The U.S. Federal Trade Commission (FTC) -- whose job is to ensure a healthy and competitive market -- is rumored to be close to formally launching a lawsuit against Amazon. How should investors react to these developments?

The FTC's actions against Amazon date back to the so-called tech probe that began under the administration of former U.S. President Trump. The government decided to investigate several tech giants for alleged anticompetitive practices. The list included Amazon, Meta Platforms, Apple, and . Regulators hoped to remedy these tech giants' alleged monopoly powers by breaking them into smaller businesses.

Turning to Amazon specifically, the FTC claims (among other things) that the company enrolled consumers into its Prime paid subscription program without their knowledge and made it difficult for them to cancel it, coerced or forced merchants to enroll in its logistics program, and blocked lower prices on competing e-commerce platforms. We don't yet know the precise details of the lawsuit, but whatever they are, the allegations against Amazon are serious and could lead to severe consequences for the company if it loses the case.

Continue reading

Source Fool.com