Why is Amazon getting sued? $1 billion class action lawsuit against the tech giant explained

Global e-commerce giant Amazon has once again run into some major problems with the regulatory authorities, and it now faces a mammoth $1 billion class action lawsuit. The recent charges are a continuation of the company's previous actions, but the magnitude is certainly more considerable this time.

The Jeff Bezos-led company is fighting the latest charges in the UK against the Competition Appeal Tribunal. Charges brought against the American tech company are not only huge in amount, but the implications can be quite grave unless its name is cleared. While the potential fine is something that has set the global community talking, the underlying reasons are a bit complex.

The most recent charges seem to be due to a break in anti-trust laws and the allegation that Amazon might have used its services to provide preferential treatment. In the past, the company has run into trouble in countries like India over preferring its retailers over others.

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Amazon faces its biggest challenge regarding penalty charges as its UK activities come under the scanner

As reported by The Guardian, Amazon's Buy Box has come under the scanner based on charges made by lawyers, who contend that the service induces buyers to spend more, and more importantly, it gives preferential treatment to some. The lawyers claim that retailers under the commercial giant's roster and those who use its logistics seem to have an edge.

Those who have brought the charges claim that the Buy Box is shown on top of the search results and cheaper alternatives are pushed down. The Buy Box mechanic is the most widely used in the UK; hence, it might have resulted in millions of consumers paying extra when buying different things.

The act of pushing cheaper alternatives low on search results is unfair on multiple grounds, and the lawsuit claims damages worth £900 million ($1 billion). It covers any UK resident who has bought goods from the website since October 2016. There's no requirement for them to opt-in.

If the charges turn out to be true, it gives an unfair advantage to sellers within Amazon's network. In response, the company has stated that the charges have "no merit" and that these are false facts. It added that more than half of the products they sell in the UK are from individual sellers.

The lawsuit doesn't guarantee that the company will have to pay the penalties. The tribunal will first have to approve the case over the validity of its claims. Once the case proceeds, claimants can choose to opt-out; otherwise, they will be included in the loop.

Whether the massive charges hold up in the courts will be a matter of uncertain future. What could make Amazon wary is that similar charges have been brought against them in the past. It has faced an earlier injunction in California and India, among other places. These cases have been major reasons for the commercial giant to change its operations.