FTC launches massive antitrust investigation Amazon may face restructuring
The US Federal Trade Commission (FTC) is reportedly preparing a massive antitrust lawsuit against Amazon that will target the e-commerce giant's core online business.。The FTC may also try to force Amazon to "restructure" its business。
The US Federal Trade Commission (FTC) is reportedly preparing a massive antitrust lawsuit against Amazon that will target the e-commerce giant's core online business.。
The FTC will accuse Amazon of improperly using its dominance to reward online merchants who use its logistics services, while punishing those who don't.。The FTC may seek to restructure Amazon, a development that could prompt the company to appeal。The FTC will likely seek to force Amazon to spin off its lucrative web services division, or spin off its logistics business, or even cancel big acquisitions such as MGM and Whole Foods.。
Amazon's massive marketplace is at the heart of the company's e-commerce business。Third-party merchants, who currently account for more than half of the company's online sales, pay commissions for each sale and can also pay Amazon for a range of services, from warehousing to shipping to advertising.。
Marketplace Pulse said in a research note: "Based on the profit and loss statements provided by a sample of sellers, the typical Amazon seller pays a 15% transaction fee (Amazon calls it a referral fee -), a 20-35% delivery fee (including storage and other fees), and up to 15% advertising and promotion fees.。Total fees vary based on category, product price, size, weight, and seller's business model。Marketplace Pulse also mentioned that Amazon's average share of each sale in its marketplace has increased in recent years, to more than 50 percent in 2022, up from 35 percent in 2016.。
While these fees are optional, most merchants see them as a necessary cost of doing business, so they all end up paying them, and if they don't, Amazon uses algorithms to put them at a competitive disadvantage.。
The FTC is said to have gathered evidence that Amazon used Buy Box's offer rankings to favor online merchants who paid for their logistics services, while punishing those who did not use their logistics services.。Buy Box allows consumers to add items from specific retailers to their shopping cart with one click, and getting a Buy Box means more sales。
The FTC's allegations are similar to an antitrust case Amazon previously faced in Europe.。The European case accuses Amazon of violating competition rules by favoring merchants who use its logistics and delivery systems over other sellers.。Amazon and the European Commission reached a settlement on the matter.。The terms of the settlement include changing its Buy Box practices and limiting how it uses third-party seller data in European online stores.。But now the FTC has said it will strongly oppose such remedies.。
The FTC's antitrust investigation into Amazon has a long history.。Amazon was reportedly notified of the initial investigation back in June 2019.。Two months later, Amazon was asked for records for the first time, including questions about how the use of Amazon's warehousing and delivery service "affected the placement of products by third-party sellers."。In February 2020, the FTC issued a mandatory document request asking Amazon to provide more information about these issues and its Web Services Cloud Computing division.。Amazon responds with plenty of information over 2020-21。At the time, however, only a handful of FTC investigators were involved in investigating Amazon, as the agency was focusing most of its resources on investigating Meta.。
The antitrust lawsuit would be the fourth charge filed by the FTC against Amazon this year.。
In May, the FTC sued Amazon in two separate cases.。One is alleging that Amazon's Alexa voice assistant collected children's data without parental consent and did not delete it in time.。Another alleges that Amazon's Ring division "violated users' privacy by allowing thousands of employees to view video recordings from customers' private spaces."。
In both cases, Amazon said it disagreed with the FTC's allegations but agreed to pay $30.8 million to resolve the cases.。
Last week, the FTC again sued Amazon, saying it had been making it subscribe to Amazon Prime without consumer consent for years and that the subscription was difficult to cancel.。Amazon used deceptive designs to trick consumers into signing up for Prime, a service that offers subscribers perks such as faster delivery at a cost of $139 per year or 14 per month, the FTC said..99美元。
Amazon denies FTC allegations。
"The FTC's claims are factually and legally wrong.。Amazon spokeswoman Heather Layman said in a statement, "The fact is that customers love Prime, and by design, we give customers the ability to sign up or cancel Prime membership clearly and simply."。"
In addition, the FTC is separately investigating Amazon's proposed 16.$500 million acquisition of Roomba vacuum cleaner manufacturer iRobot Corporation。
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