Amazon Investors Sue Jeff Bezos Over ‘Massive’ Losses, Expansion

Amazon.com Inc. investors sued Jeff Bezos and other senior company leaders, claiming they exposed the e-commerce giant to a “massive financial hit” through antitrust violations and breakneck expansion that had to be scaled back.

The 195-page lawsuit, filed Thursday, targets 20 members of Amazon’s board and management. It accuses them of lying about the tech giant’s practices in two major areas: its private-label business selling products in competition with third-party merchants, and the ultra-fast delivery that’s critical to the company’s identity.

While Bezos and the others were touting the success of Amazon’s private-label brands as organic and sustainable, they were hiding their dependence on anticompetitive data practices toward third-party sellers that have subjected the company to damaging legal scrutiny, according to the complaint in Delaware’s Chancery Court.

At the same time, they were rigging Amazon’s search algorithms to favor its own products—a tactic that’s also the focus of investigations and litigation—while pushing to expand fulfillment and delivery services at an unnecessarily fast pace that stretched company resources, the suit says.

News of alleged antitrust violations emerged in fits and starts, pushing Amazon’s stock price down by 1.59% to 3.66% six separate times between mid-2020 and mid-2022, according to the complaint. Revelations about its fulfillment problems, meanwhile, sent Amazon’s stock cratering 14% in April 2022, the suit says.

Amazon didn’t immediately respond to a request for comment Friday.

The shareholder claims echo a steady drumbeat of antitrust headaches that have confronted Amazon on several fronts since lawmakers and regulatory agencies began heavily scrutinizing competition in Silicon Valley several years ago.

The company is fighting enforcement cases and proposed class actions targeting nearly every aspect of its business, from “most favored nation” pricing pacts—which have allegedly driven up the online price of virtually everything—to policies that allegedly penalize merchants for avoiding its shipping and logistics services.

It’s common for investor lawsuits to piggyback on earlier scandals or ongoing court cases on the theory that a company’s leaders steered it into trouble while misleading shareholders about the wrongdoing and its effect on stock prices.

The new suit, filed by two individual investors, involves shareholder derivative claims, which are technically brought on a company’s behalf against its leaders. Any damages awarded by a judge or in a settlement would be paid into Amazon’s corporate coffers by Bezos and the others, or by their insurers.

The investors leading the case, Narendra and Manjula Patel, are represented by Bielli & Klauder LLC and Gainey McKenna & Egleston.

The case is Patel v. Bezos, Del. Ch., No. 2023-0816, complaint filed 8/10/23.