In a long-awaited lawsuit, the Federal Trade Commission and 17 states sued Amazon on Tuesday, accusing the company of using illegal tactics to control online shopping in ways that stifled competition and raised consumer prices and costs. for sellers.
Amazon saying would challenge the lawsuit, which it claims fails to understand how the retail industry operates and how its policies benefit consumers and sellers.
The FTC focused on two main ways it said Amazon was breaking the law:
Amazon controls competitors’ prices
The FTC said Amazon controls its competitors’ prices and effectively raises them for consumers. He said Amazon discouraged third-party sellers on its site from offering discounts on other websites by controlling a key piece of online real estate, an area on its site known as the “Buy Box.” This area on a product page prompts users to “Add to Cart” or “Buy Now” and is a major sales driver.
Amazon wants to offer competitive prices, so it crawls the web to make sure products aren’t available for less elsewhere.
“If customers trust that they will only see competitive prices in our store, they will come back more often,” said Varun Soni, who leads Amazon’s seller pricing team. explained at a conference last year. He said a price “is considered non-competitive even if it is just a penny above reputable retailers outside of Amazon.”
If a product is offered for less on another site, Amazon removes that seller’s Buy Box buttons on its site and replaces them with a less attractive design.
“As Amazon recognizes internally, removing a seller from the Buy Box causes that seller’s sales to ‘sink,’” the complaint said.
The FTC said selling on Amazon is so important to sellers that they cancel discounts on other sites to get the Buy Box back on Amazon. That raises prices for consumers, the commission said, and makes it harder for other sites to compete on prices.
Amazon said it did not want to promote bad deals to its customers and that if it were to change its policies, “we would have to stop many of the things we do to offer and highlight low prices.”
Amazon forces sellers with Prime delivery
The FTC also said that Amazon forces sellers to use its vast fulfillment and delivery services if they want to succeed, raising prices for customers and blocking competition.
Using Amazon’s fulfillment services, the commission said, is a condition for a product to be eligible for fast, free delivery to customers who sign up for Amazon’s Prime membership program.
Those product listings receive a “Prime” checkmark logo and are easier to find on Amazon’s site. “The Prime designation makes sellers’ products more visible and therefore more likely to be purchased,” the FTC said.
A An estimated 170 million Americans They have Prime memberships, making FBA services essential, according to the lawsuit.
The FTC said some sellers prefer to have a single fulfillment network for all their online orders, both on and off Amazon, and that running different sets of operations can be costly and make it difficult to sell elsewhere. He also said Amazon deprives other warehousing and fulfillment providers of gaining enough scale to compete.
Amazon said its logistics services were optional and on average cost 30 percent less than standard services offered by other providers. He said sellers could choose not to use them and that many have success using other providers.
Pricing policies and compliance requirements reinforce each other, the FTC said, deterring sellers from offering products at low prices elsewhere.
