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FTC takes on Amazon

by on30 June 2023

A major anti-trust battle 

The Federal Trade Commission is preparing to file a major antitrust lawsuit accusing Amazon of "using its power to reward online merchants that use its logistics services and punish those who don't."

According to Bloomberg the forthcoming lawsuit as "the big one," following several earlier lawsuits filed by the FTC under Chair Lina Khan.

"In the coming weeks, the agency plans to file a far-reaching antitrust suit focused on Amazon's core online marketplace, according to documents reviewed by Bloomberg and three people familiar with the case," the report said.

Khan may try to force Amazon to "restructure" its business. "Based on her public comments, Khan is unlikely to accept compromises from Amazon and could seek to restructure the company -- a dramatic outcome that Amazon would surely appeal," Bloomberg wrote. 

Third-party sellers can rely on Amazon for warehousing, shipping, and other services through the Fulfillment by Amazon (FBA) system, but it takes a big cut out of their revenue.

A recent Marketplace Pulse study based on profit and loss statements from a sample of sellers found that "Amazon is pocketing more than half of sellers' revenue -- up from 40 percent five years ago," because "Amazon has increased fulfillment fees and made spending on advertising unavoidable."

A typical Amazon seller pays a 15 percent transaction fee (Amazon calls it a referral fee), 20-35 percent in Fulfillment by Amazon fees (including storage and other fees), and up to 15 percent for advertising and promotions on Amazon. The total fees vary depending on the category, product price, size, weight, and the seller's business model," Marketplace Pulse wrote in February.

The "FTC has amassed evidence that the company disadvantages sellers that don't use these services, and the agency is investigating an algorithm that selects merchants for the web store's coveted 'Buy Box,' where consumers can add products to their cart with one click."

"The expected allegations are similar to a 2020 report from a US House subcommittee -- which counted Khan as a staff member -- and overlap with a European antitrust case that charged Amazon with rewarding sellers that use its fulfillment services and using merchants' sales data to boost its own retail business," Bloomberg wrote.

Amazon agreed to a settlement with the EU in December 2022. The FTC's current investigation began two years before Khan became chair.


Last modified on 30 June 2023
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