The Federal Trade Commission (FTC) and the attorney generals of 17 states recently filed an antitrust lawsuit against Amazon. The suit essentially charges the company with using business practices that abuse third party sellers and force them to pay high fees for services that results in higher prices for consumers. We have provided some additional information about the lawsuit below.
A main assertion in the lawsuit concerns Amazon’s pricing policy regarding outside sellers. The policy in question requires outside sellers to keep prices they charge for their goods the same or higher on rival websites. The FTC alleges that the policy hurts online shoppers by raising prices across the internet.
According to the FTC, Amazon used a first-party anti-discounting algorithm in 2017 to crush a competitor’s attempt to compete on price. While the suit doesn’t directly mention Walmart, keep in mind that Walmart launched a program in 2016 that offered online shoppers discounts of 3-5% to pick up their orders from stores as opposed to the company shipping them out.
The FTC alleges in the suit that Amazon concluded that its first-party anti-discounting strategy ultimately helped induce [Walmart] to stop competing on price through its discount program.
The suit alleges that Amazon’s commissions and fulfillment fees are taking a hefty cut from the revenues of outside sellers. Amazon took approximately 50% of outside sellers’ revenue through fees in 2022. This is up from about 35% in 2106.
The FTC’s lawsuit is definitely major news, and we will monitor the case as it advances and report back with updates. We’re definitely not attorneys at Brand Focus Digital, but it seems that the outcome of this case will depend on how the law and the court interpret acceptable and fair competition.
In addition, it doesn’t seem likely that the lawsuit will slow Amazon down to a large degree. The suit also seems a bit misguided since the people bringing this case to the FTC don't fully understand Amazon. Both points are more fully expressed in a Forbes article authored by Kiri Masters.
Brand Focus Digital works tirelessly and diligently with the makers of (and not limited to):
Our team has decades of experience working at Amazon as well as other online retailers. In partnership, we deliver comprehensive solutions to maximize profits for your brands. Contact us now to get the help that truly makes a difference.
P.O. Box 10743
Bainbridge Island, WA 98110
206-420-8068
info@brandfocusdigital.com