The state of New Jersey has formally filed an antitrust lawsuit against Amazon.com, accusing the e-commerce giant of exerting monopsony power over its network of contracted delivery businesses.
The complaint alleges that Amazon's third-party delivery model suppresses driver wages, creates unfair working conditions, and stifles competition in the labor market. Regulators and lawmakers have consistently scrutinized Amazon's Delivery Service Partner (DSP) program, which relies on small contractors to handle last-mile package delivery from warehouses to customers' doorsteps.
New Jersey Attorney General Jennifer Davenport announced the lawsuit on Tuesday, citing antitrust violations. The suit claims that Amazon abuses its dominant position over third-party delivery contractors to limit market competition and harm worker rights. According to the Attorney General's office, Amazon prevents delivery workers from forming unions, restricts contractors from recruiting each other's drivers within its network, and hinders labor market competition. This ultimately results in lower wages and forces employees to endure unnecessarily harsh working conditions.
Davenport stated in a press release, "The complaint shows that Amazon, now a trillion-dollar company, uses its strong position in the labor market to artificially lower wages for delivery network drivers and impose tough working conditions." Amazon did not immediately respond to a request for comment.
Amazon launched its DSP program in 2018, relying on thousands of small contracted companies to handle the final leg of package delivery from warehouses to consumers. This system has helped Amazon reduce its dependence on major logistics providers like United Parcel Service (UPS) and FedEx, while improving delivery speed. However, the model has faced ongoing scrutiny from lawmakers, regulators, and labor advocates, who argue that Amazon uses the contractor designation to avoid direct employment responsibilities while still controlling wages, schedules, uniforms, and other details.
Amazon counters that its delivery partners have complete control over their own operations. In New York City, where legislation is under consideration that would force Amazon to directly hire DSP delivery workers, Amazon has warned it would "consider moving its delivery operations out of New York City" if the law passes. Tech industry groups have also cautioned that such policies could lead to higher shipping costs for consumers.
The complaint, filed by Davenport in the U.S. District Court for New Jersey, argues that Amazon has created a monopsony in the labor market for delivery drivers. To clarify the distinction: a monopoly typically refers to a company controlling a market for consumers or sellers, while a monopsony occurs when a single entity is the primary buyer of a specific type of labor, giving it significant power to set wages and working conditions. The suit contends that each delivery service provider is economically dependent on Amazon and cannot operate independently, preventing them from competing for drivers by raising wages or improving conditions, thereby allowing Amazon to continuously suppress driver compensation.