Network Optimization Firm Sues AWS Over 'Monopoly Power' in Antitrust Suit
Amazon Web Services (AWS) refuses to provide direct internet connections via “peering,” linking its network to network optimization service provider Subspace and similar competitors, said an antitrust complaint (docket 2:23-cv-01772) filed Saturday in U.S. District Court for Western Washington in Seattle.
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AWS took “deliberate and anticompetitive actions” to leverage its “monopoly power” in controlling direct connections to the AWS Network to drive out of business Wyoming-based Subspace and other competitors who offered services to “optimize the performance” of the network in delivering content to end users, the complaint said.
Epic games entered into a contract with Subspace to improve the online gaming experience of end users after an “unsatisfactory” gaming experience using the AWS network, said the complaint. Initially, Subspace handled Epic Games’ internet traffic in the Middle East, and AWS agreed that Subspace could improve the user experience for mutual customer Epic Games by allowing Subspace to connect directly to the AWS Network via “peering,” it said. Because AWS and Subspace “mutually benefited from the arrangement, the peering was ‘settlement-free,'” the complaint said, and “no money changed hands in either direction.” Subspace discussed expanding the relationship worldwide, it said.
After initially agreeing to Subspace’s requests for expanded peering, AWS “suddenly and inexplicably reneged on its agreement by not only refusing to expand peering with Subspace” but also demanding that even pre-established peering connections with Subspace be removed, said the complaint. Instead, AWS required Subspace to connect to its network via its “Direct Connect” product, which “did not provide viable internet connectivity," gave Subspace "far less control over how Internet traffic was routed, materially degraded the network experience of end users, and was vastly more technologically cumbersome and costly to use than peering,” it said.
Months later, AWS demanded that Subspace halt peering with AWS that was already in place in the Middle East, making Subspace unable to perform under its contract with Epic, said the complaint. The Amazon company also “refused to peer” with other companies attempting to provide services to AWS customers to whom AWS hoped to sell competing services, it said.
AWS’ refusal to peer forced Subspace to terminate its Epic relationship because it was no longer able to deliver the superior network optimization service to Epic without being able to peer with AWS, the complaint said. Subspace went out of business as a result because Epic was “by far” its largest customer, the complaint said. AWS then took over “the very network optimization services to Epic Games that Subspace had previously provided,” by leveraging its “network monopoly to thwart Subspace’s ability to continue to provide a superior network experience to Epic Games and its customers,” it said.
Subspace alleges AWS violated the Sherman Act, the Communications Act and section 19.86.040 of the Revised Code of Washington. It also asserts tortious interference with contractual relations and unfair competition. It seeks damages of $416.8 million, trebled to $1.25 billion, and legal costs.