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Amazon Seeks Dismissal of Antitrust Lawsuit Over Web Traffic Sharing

By  |  April 9, 2024

Tech giant Amazon.com  is currently seeking to have a lawsuit dismissed that accuses its cloud-computing division, Amazon Web Services (AWS), of engaging in anti-competitive practices. The lawsuit was filed by Subspace Omega, a Wyoming-based startup specializing in web traffic optimization, which ceased operations in 2022.

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    According to a report by Reuters, Subspace alleges that AWS wrongly terminated a peering agreement—a partnership that allowed both companies to share network resources—thereby infringing on antitrust laws. This termination, Subspace claims, was a deliberate move by Amazon to eliminate competition and consolidate its dominance in the cloud networking market.

    Subspace’s lawsuit, filed in a federal court in Seattle, is seeking $417 million in damages. The company argues that AWS’s actions have not only forced it out of business but have also restricted market competition, thereby harming innovation. “Amazon has a vested interest in forcing innovators out of business and limiting the free market to create an illegal moat around AWS’s monopoly profits,” Subspace’s attorneys stated, as reported by Reuters.

    Read more: Amazon Denies Monopolistic Threat in Mexico Amid Regulatory Scrutiny

    The crux of Subspace’s complaint centers on Amazon’s refusal to continue the peering arrangement, which Subspace views as an abuse of Amazon’s market power. This move by Amazon reportedly led to Subspace losing its largest client, Epic Games, the creator of the popular online game Fortnite. Subspace claims it was unable to fulfill its contract with Epic Games following the termination of the peering agreement with AWS.

    In response, Amazon has argued that the lawsuit lacks merit, emphasizing that business negotiations are commonplace and that not achieving desired terms in a deal does not constitute an antitrust violation. “If not receiving the terms you want in a business deal were an antitrust violation, courts would be flooded with contrived antitrust claims,” Amazon stated in its filing.

    This legal battle comes at a time when Amazon is facing several other antitrust lawsuits from both consumers and government agencies, including the Federal Trade Commission, highlight their concerns over Amazon’s market practices and its impact on competition.

    Source: Reuters