AND the hammer dropped. Feds and 17 States
ETA:
https://www.courtlistener.com/docket/67515622/federal-trade-commission-v-amazoncom-inc/
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FTC direct blurb and press release link
Click for FTC Press Release FULL TEXT
LIVE LINKS
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Thereâs a decent number of valid points in the case, a few points that I disagree with, but overall given the anti-trust track record lately I donât think much is going to happen.
Thereâs numerous conflicts of interest in the way Amazon runs itâs store, but ultimately the argument is going to come down to whether the scope of the âmonopolyâ should be all of ecommerce (where amazon only has a 40% share), or just specifically 3P marketplaces (where amazon has a commanding 90% share) is going to be the determining factor here. A 40% market share is not a monopoly, a 90% can be considered one.
The biggest issue to any action happening is Amazonâs going to argue that their service is not a monopoly because you donât HAVE to sell there or shop there. Almost everything buyable on Amazon is buyable elsewhere (I personally choose to buy from Amazon for convenience), and any merchant can go start their own website and buy ads on numerous other platforms. They choose to do so on Amazon because despite the downsides they still get a better bang for the buck. They can also make the argument that theyâre not causing harm because the fact people still choose to use their services over the alternatives means despite all the problems they still offer good value.
The positive thing in this, is Amazon may be willing to make concessions to how they operate to settle the matter.
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(Amazon faces landmark monopoly lawsuit by FTC | Reuters)
WASHINGTON, Sept 26 (Reuters) - The U.S. Federal Trade Commission filed a long awaited antitrust lawsuit against Amazon.com on Tuesday, and asked the court to consider forcing the online retailer to sell assets as the government pressed on with its fight to rein in Big Techâs â â â â â â â â â â of the internet.
The FTC said that Amazon restricts retailers on its marketplace from discounting, which stifled competition, and forced sellers to use its âfulfillment service,â a reference to its nationwide network of delivery vans and warehouses, which some critics say should be hived off from Amazonâs web business.
The lawsuit had been expected after years of complaints that Amazon.com (AMZN.O) and other tech giants abused their dominance of search, social media and online retailing to become gate keepers on the most lucrative aspects of the internet.
The lawsuit, which was joined by 17 state attorneys general, follows a four-year investigation and federal lawsuits filed against Alphabetâs (GOOGL.O) Google and Meta Platformsâ (META.O) Facebook.
The FTC said that it was asking the court to issue a permanent injunction ordering Amazon.com to stop its unlawful conduct. The lawsuit was filed in federal court in Seattle, where Amazon is based.
âLeft unchecked, Amazon will continue its illegal course of conduct to maintain its monopoly power,â the FTC said in its complaint which asked the court âto put an end to Amazonâs illegal course of conduct, pry loose Amazonâs monopolistic control, deny Amazon the fruits of its unlawful practices, and restore the lost promise of competition.â
The FTC complaint asked for the court to consider âany preliminary or permanent equitable relief, including but not limited to structural relief, necessary to restore fair competition.â
Structural relief in antitrust jargon generally means a company sells an asset, such as a part of its business.
Amazon said that the FTC lawsuit was wrongheaded and would hurt consumers by leading to higher prices and slower deliveries.
âThe practices the FTC is challenging have helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazonâs store,â said David Zapolsky, Amazonâs general counsel.
Amazon shares were down 3.3%, although some investors saw upside.
âEither way, the shareholders win. If FTC loses its status quo, if company breaks up, the sum of the parts is greater than the whole as the AWS (cloud) business will command a very high multiple. Analysts will figure this out soon, but for now itâs âshoot first, ask questions later,ââ said Thomas Hayes, chairman at Great Hill Capital.
The FTC said that Amazon, founded in 1994 and worth more than $1 trillion, punished sellers that sought to offer prices that were lower than Amazonâs by making it difficult for consumers to find the seller on Amazonâs platform.
Other allegations include that Amazon gave preference to its own products on its platforms over competitors also on the platform.
âMONOPOLY POWERâ
FTC Chair Lina Khan said that Amazon had used illegal tactics to fend off companies that would have risen to challenge its monopoly.
âAmazon is now exploiting that monopoly power to harm its customers, both the tens of millions of families that shop on Amazonâs platform and the hundreds of thousands of sellers that use Amazon to reach them,â she said.
Khan, while a law student, wrote about Amazon.comâs dominance in online retailing for âThe Yale Law Journalâ and was on the staff of the House committee that wrote a report issued in 2020 that advocated reining in four tech giants: Amazon.com, Apple (AAPL.O), Google and Facebook.
Amazonâs critics welcomed the lawsuit.
âNo corporation has ever centralized this much power across so many crucial sectors. Left unchecked, Amazonâs power to dictate and control threatens the rule of law and our ability to maintain open, democratically governed markets,â said Stacy Mitchell of the Institute for Local Self-Reliance, which has pushed for the government to act against Amazon.
The need to take action against Big Tech has been one of the few ideas that Democrats and Republicans have agreed on. During the â â â â â administration which ended in 2021, the Justice Department and FTC opened probes into Google, Facebook, Apple and Amazon.
The Justice Department has sued Google twice - once under â â â â â â â â â â Donald â â â â â regarding its search business and a second time on advertising technology since Democratic President Joe â â â â â took office. The FTC sued Facebook during the â â â â â administration and â â â â â âs FTC has pressed forward with the lawsuit.
Reporting by Diane Bartz, Additional reporting by David Shepardson and Samrhitha A, Editing by Chris Sanders, Matthew Lewis, Nick Zieminski
I really hope they break Amazon up so AWS canât make up for the profit losses from Amazon selling below dealer cost.
Um @papy maybe you need to look into the censor thingie. too many common words censored.
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what are your guys predictions for how amazon will look post breakup
Tough question to answer. Because they are going after what they are going after itâs not like logistics or AWS spinning off would satisfy it.
Maybe spinning off FBA?
From the Washington Post article:
Unlike ongoing cases against Google and Facebook, the FTCâs case does not seek a breakup of Amazonâs business.
OK, that makes sense, because there is no logical way to break it up in this case. They are just going to try and prevent them from being evil. Unfortunately they are going to find that impossible because Amazon has no idea how Amazon works.
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Or maybe have a reduction in the number of FBA sellers so they can increase their own capacity. And of course highlight the miserable FBA shipping times.
Merry Christmas yâall and to all of yâalls a good night.
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I think Amazon will tack the opposite direction and take a page from retail 101 and simply cull all the small sellers and force everyone to use FBA and or make them vendors and do flash title for all inventory. Just like grocery stores do with big brands like Pepsi and small local brands of BBQ sauce. They have the inventory in their possession but they do not have title ownership of it till the sale occurs.
They will cull most of the IP risk and all the bad actors/performers while keeping the entire logistics chain in place as well as the Prime program. They will also keep all the direct importers.
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The problem is going to be demonstrating how a seller in Vermont is going to sell an item to a buyer in San Diego at the same cost as Prime FBA inventory arguing that FBA is more expensive. The math does not add up. The FTC is trying to strip Amazon of its use of FBA, but consumers will be paying for all the small sellers to use 2 day shipping back and forth across the nation for the same performance. I donât know how they will argue that in court, when you pile on any data Amazon may have about seller performance AND the increased costs needed to provide the same delivery performance.
Look at all the sellers on the OSFE and NSFE who are hit with FBA only, simply due to garbage metricsâŚ
I donât see a way the FTC can neuter Amazon of FBA without making things extremely expensive for those sellers on either coast and by proxy consumers.
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The FBA argument is one of the FTCâs weakest IMO. FBA provides a LOT of value to sellers and buyers.
For sellers, an integrated fulfillment solution where the seller has no responsibility to deal with things like INR claims provides a TON of value. Imagine if it was a 3rd party solution and the seller had to take responsibility for managing all delivery related problems. For buyers FBA provides faster delivery on average than FBM sellers. And that justifies FBA being favored in the buy box. The average customer does care about delivery time somewhat, and the ones who donât can manually choose the FBM sellerâs offer. I do talk about FBAâs problems, but OVERALL FBA provides better delivery than FBM for MOST products.
In fact, FBA is one of the few things where a conflict of interest DOESNâT exist in the Amazon ecosystem. Both Amazon and sellers want things delivered to customers quickly and efficiently. There have been a lot of FBA fee hikes but for smaller items itâs still cheaper to use FBA than to ship things yourself. Larger items are a different story since you have to pay double shipping for it to use FBA.
One thing I would say FBA should be forced to change though is they should not be able to withhold inventory on the basis that Amazon.com suspended your ability to sell the ASIN.
Everything else on the platform is a conflict of interest though.
Like they sell sponsored ads ON DETAIL PAGES. The sellers are already paying a 15% commission for the privilege of having a detail page, but now part of that real estate is being sold off to a competitor. And the volume of sponsored ads in the search results has been ever increasing every year.
And Amazon.com retail competing against 3rd party sellers is a massive conflict of interest. That should really be the focal point here.
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I imagine the catalog would clean up nicely if all the drop shippers who donât actually have any inventory were culled. This is apparent when a listing has 10 sellers, 9 of which are 2x the original FBA sellers price.
Imagine a catalog where you actually had to be a professional in the items you sell to the public and have an actual fiscal responsibility to that end?? Lots of RA trash along with the associated egregious retail theft would vanish overnight if Amazon or better the FTC required some minimal vetting of sellers for the sake of the consumer alone.
We see this all the time in the amazon.ca market where sellers buy our US FBA product and drop ship it to Canada for 3x the amount on a fake listing.
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RA I got nothing against since they actually have the product in stock to deliver. I have a problem with drop shippers because they donât deliver a high % of orders since they donât have any inventory.
Thereâs only one reason I can think of why drop shippers arenât suspended faster, especially the egregious ones that order the FBA listing (they can auto detect that if they wanted to since Amazon has access to all order information. If someone buys an order w/ a prime account to ship to a recently ordered FBM orderâs address, suspend that seller immediately). Amazon gets to collect the referral fee twice on that order. So they let it slide until the sellerâs ODR inevitably gets high enough from drop shipping, then suspend them and withhold their funds.
Lets make a delineation here.
âDrop Shippersâ as we tend to refer to them are OA Drop Shippers.
I used to have one of my brands âDrop Shipâ for me directly to the end buyer. I had a long standing wholesale relationship with, and it worked well, until it didnât one day and they forgot to give me tracking on an order they shipped on Friday until Monday, so we stopped doing it. This is Legitimate and PROPER drop shipping and is NOT what most of us refer to when we write âDrop Shipperâ.
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Right, âdrop shipperâ typically refers to the kind that has a bad rep.
Heaven! And a more satisfied Amazon consumer which is what Amazon SHOULD WANT!
They would be an unstoppable force. Next to nothing for the consumer to complain about.
Sellers on the other hand, same old BS, no matter how great you are.