A U.S. District Judge has dismissed a shareholder lawsuit against Amazon, clearing the company of allegations that it misled investors regarding its treatment of third-party sellers and the over-expansion of its infrastructure. The lawsuit, which was filed in 2022, accused Amazon of defrauding shareholders by allegedly hiding its practices that favored private-label products over third-party sellers and led to overcapacity within its fulfillment network.
Judge John Chun’s ruling on Monday was issued with prejudice, meaning the case cannot be refiled. The lawsuit had claimed that Amazon’s actions led to a $2 billion loss for the company due to excessive infrastructure expansion, which contributed to a sharp drop in its stock price in April 2022. This was the company’s first quarterly loss since 2015.
Shareholders contended that Amazon manipulated its algorithm to favor its private-label goods by pricing them lower than third-party merchandise. They also argued that the company hid the costs of its overexpansion, which ultimately impacted its profitability.
However, Judge Chun found that the plaintiffs failed to present specific facts showing that Amazon executives, including former CEO Jeff Bezos and current CEO Andy Jassy, knowingly engaged in fraudulent activities to inflate the company’s stock value or mislead shareholders. Instead, the judge noted that the most likely explanation was that Amazon’s executives focused on maximizing profits, possibly through aggressive business tactics, rather than intentionally misleading investors.
This dismissal comes amid other legal challenges for Amazon, including an ongoing antitrust case brought by the Federal Trade Commission (FTC). The FTC’s lawsuit, filed in September 2023, accuses Amazon of using monopoly power to stifle competition, leading to higher prices for consumers and a degraded shopping experience. Eighteen U.S. states and Puerto Rico have joined the FTC’s case, which is set for a nonjury trial in October 2026.
The shareholder lawsuit, titled Joyce v. Amazon.com Inc. et al., covers shareholders who owned Amazon stock from February 1, 2019, to April 28, 2022. With the case now dismissed, Amazon is no longer facing legal action over these particular claims, though the company continues to contend with the ongoing FTC lawsuit.
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