A U.S. federal judge has dismissed a shareholder lawsuit accusing Amazon.com Inc. of misleading investors about its treatment of third-party sellers and its aggressive capacity expansion strategy. The ruling, issued by U.S. District Judge John Chun in Seattle, effectively ends the proposed class action with prejudice, preventing the plaintiffs from refiling the case.
The lawsuit alleged that Amazon used an algorithm to ensure its private-label products were priced lower than those of third-party merchants, potentially increasing costs for consumers. Shareholders also claimed that Amazon concealed the extent of its infrastructure expansion, which later led to a $2 billion charge due to excess capacity. When the company reported its first quarterly loss since 2015 in April 2022, Amazon’s stock price fell sharply, fueling accusations that executives had misled investors.
Judge Chun found that the plaintiffs failed to provide “compelling and particularized facts” proving that Amazon’s executives deliberately concealed the alleged preferential treatment of its own products or knowingly misled investors about the scale of its expansion efforts. He concluded that the more plausible explanation was that Amazon was focused on maximizing corporate profits rather than engaging in fraudulent behavior.
This ruling marks a significant legal victory for Amazon, shielding it from potential financial and reputational damage stemming from shareholder claims. However, the company continues to face mounting regulatory scrutiny. In September 2023, the Federal Trade Commission (FTC), alongside 18 U.S. states, filed an antitrust lawsuit against Amazon, alleging that it leveraged its market dominance to suppress competition and prevent third-party sellers from offering lower prices elsewhere.
The FTC’s case against Amazon is part of a larger crackdown on big tech’s market practices and is set to go to trial in October 2026. While the dismissal of the shareholder lawsuit removes one immediate legal threat for Amazon, the broader regulatory challenges surrounding its business practices remain unresolved. As scrutiny over its role in the online marketplace intensifies, the company’s legal battles are far from over.
