Dive Brief:

• A federal judge ruled Monday that Sezzle, the buy now, pay later provider, had "plausibly alleged” that e-commerce platform Shopify wields monopoly power and demonstrated anticompetitive conduct in the BNPL market.
• At the same time, U.S. District Judge Eric Tostrud granted part of Shopify’s motion to dismiss the lawsuit related to Sezzle’s claims that Shopify had coerced merchants or consumers into using its own BNPL payment option, Shop Pay Installments.
• “Sezzle has plausibly alleged that Shopify has monopoly power in both the United States drag-and-drop e-commerce platform market and the BNPL services aftermarket on Shopify-based platforms,” wrote Tostrud, a judge for the U.S. District of Minnesota.

Dive Insight:

Sezzle released a statement Tuesday summarizing the court’s decision. Spokespeople for Shopify and Sezzle did not respond Tuesday to emails seeking comment on the ruling.

Sezzle filed its lawsuit in June, alleging that the Canadian e-commerce marketplace systematically damaged its business and violated antitrust laws when it favored Shopify’s own BNPL offering over that of Sezzle for a four-year period.

Ottawa-based Shopify, which offers technology to build online stores, says it powers websites for millions of businesses in more than 175 countries. It launched Shop Pay Installments in 2021 and reaches about 4.4 million merchants globally, according to court filings.

Minneapolis-based Sezzle alleged that Shopify’s efforts to advantage its own BNPL services imposed fees on merchants through contracts that “penalized them” for using Sezzle or another non-Shopify BNPL option, according to the suit. 

Shopify violated the Sherman Antitrust Act, the Clayton Act and Minnesota laws concerning antitrust and deceptive trade practices, according to the lawsuit.

In its September motion, Shopify argued that much of Sezzle’s complaint concerns aspects of the commerce platform that the BNPL company doesn’t like because it’s not helpful to Sezzle’s business.

“Sezzle’s allegations — whether about checkout flow, inventory locking, or order IDs — boil down to frustration that Shopify does not provide Sezzle the assistance it wants on the terms it prefers,” the motion said. 

Tostrud heard oral arguments on Shopify’s motion in December. 

Sezzle “plausibly alleged an antitrust injury,” wrote Tostrud, who sits in Minneapolis. “Sezzle has also plausibly alleged that Shopify acquired monopoly power in the BNPL market on Shopify-based websites ‘willfully’ rather than ‘as a result of a superior product, business acumen, or historical accident.’”