Amazon faces potential break-up as FTC finalizes antitrust lawsuit

[midian182]

In brief: The FTC is in the final stages of filing an antitrust lawsuit against Amazon that is so large and far-reaching, it has the potential to break up parts of the company. It's expected to be officially filed as soon as August and could force the tech giant to change several of its business practices.

The suit's main allegation is that Amazon abuses its dominance in the market to reward merchants who use its logistics (warehousing, shipping) and advertising services, punish those who don't, and block lower prices on competing websites.

According to Bloomberg, citing documents reviewed by the publication and three people familiar with the matter, FTC investigators and the office of agency boss Lina Khan have been honing the case for several months, finalizing details such as where to file.

The Commission has interviewed dozens of witnesses from within and outside of Amazon, writes Politico, including CEO Andy Jassy and former CEO and founder Jeff Bezos. It has collected millions of documents from the company and third parties to build the case.

Among the suit's allegations is that Amazon requires third-party retailers on its site to offer goods at their lowest prices on the platform, meaning they can't be found cheaper than on Amazon. The company previously denied these allegations, claiming that sellers decide their own prices.

Amazon's Prime subscription, which includes next/same-day deliveries, video streaming, music, books, and games, is also a target for the FTC as the agency believes it illegally solidifies the company's market power.

More than half of Amazon's sales come from third-party merchants who this year started paying an average of over 50% commission on every sale, up from 35.2% in 2016, the result of it raising Fulfillment by Amazon fees every year and increasing storage fees.

While paying for Amazon's logistics and advertising services is optional, most merchants consider these, especially advertising, a necessary part of doing business. Moreover, the FTC has reportedly amassed evidence that Amazon disadvantages merchants who don't use the services by giving them lower placements.

If the suit is successful, Khan is likely to seek a court-ordered restructuring of Amazon. The FTC is likely to file its case in federal court rather than its in-house tribunal.

The FTC has had Amazon in its sights this year. The company recently agreed to a $5.8 million settlement with the Commission over Ring privacy violations that included employees spying on customers. And in June, the FTC sued Amazon over "deceptive" Prime subscription tactics.

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https://www.techspot.com/news/99562-amazon-faces-potential-break-up-ftc-finalizes-antitrust.html

 

[Uncle Al]

Amazon is long overdue for a break-up. I only hope that also prevents them from owning even a small part of what they have to spin off both now and in the future .....

 

[Underdog]

I have often complained about Amazon's "deceptive" Prime subscription tactics."

Buying anything from Amazon there is a high risk of being signed up for their Prime membership without realising it. Their response is always that it is free for the trial period and then it can be cancelled. It can be, but it is like jumping through burning hoops to achieve.

 

[kira setsu]

I have often complained about Amazon's "deceptive" Prime subscription tactics."

Buying anything from Amazon there is a high risk of being signed up for their Prime membership without realising it. Their response is always that it is free for the trial period and then it can be cancelled. It can be, but it is like jumping through burning hoops to achieve.

how is it deceptive?

all you have to do is read and not hurriedly click the buy button, key word here is read.

amazon became a behemoth because people are lazy and dont wanna deal with other people, why go deal with the masses when you can just order it and get it just as fast without cranking a car, riding a bus or walking in this heat.

amazon isn't going away anytime soon.

 

[dangh]

That's one way to handle consolidation, just do same with apple, google, ms, and those huge food industry and pharma megacorpos and we might see some small competition coming back to the market. Fix the patent law while on it so patent trolls won't squash rising startups to death.

 

[Zaythan]

Will they truly go anywhere with an antitrust suit or is this just politicians looking for some under-the-table action?

 

[hahahanoobs]

This AND a crackdown on cybersecurity? Am I dreaming???

 

[Eldritch]

Outcome will likely be a fine of couple of hundred millions, if that. Breaking Amazon is a pipe dream. They have too much 'influence' for that to happen.

 

[BuckarooBonzaii]

All this will come to pass like anything else. In a few years people will forget and Amazon will become a giant once again. In 1984 AT&T was broken up into 7 Baby Bells, in 2018 all 7 came full circle back to AT&T. Things are not as simple as people believe it to be.

 

[Underdog]

how is it deceptive?

all you have to do is read and not hurriedly click the buy button, key word here is read.

amazon became a behemoth because people are lazy and dont wanna deal with other people, why go deal with the masses when you can just order it and get it just as fast without cranking a car, riding a bus or walking in this heat.

amazon isn't going away anytime soon.

"all you have to do is read and not hurriedly click the buy button, key word here is read."
After selecting an item you are faced with a full page of Prime trying to get you to take the free trial offer (with no mention of opting out before it becomes an automatic charged for renewal. Once you get past that one you get to the checkout page where there are a further three chances to slip up and get lumbered with unwanted membership. This can be called nothing less than a high pressure sales tactic. I have discussed this with everyone I know and they all find it irritating and unnecessary. A few say they avoid Amazon because of their distrust.
And don't get me started on their badly designed website with a near useless Search and filter function. Trying to wade through unrelated search results wastes time. Amazon could take a lesson from Ebay in that respect. Give us more filters that actually work.

 

[StrikerRocket]

I only buy on amazon articles sold and sent by amazon. For the rest, I go to Aliexpress, same article, less expensive. Oh, I have to wait 2-3 weeks for delivery?! Big deal... I wait, and that's it.

 

[hwertz]

how is it deceptive?

all you have to do is read and not hurriedly click the buy button, key word here is read.

amazon became a behemoth because people are lazy and dont wanna deal with other people, why go deal with the masses when you can just order it and get it just as fast without cranking a car, riding a bus or walking in this heat.

amazon isn't going away anytime soon.

I haven't accidentally signed up for a Prime trial, but I find it rather deceptive.. it's the only site I've shopped on where it's that easy to unintentionally sign up for a free trial unrelated to what I'm purchasing. They'll have a little box off somewhere, pre-checked, in one case it was even off-screen so I wouldn't have seen it if I hadn't scrolled alllll the way down, in another it was kind of off near the shipping and handling charges, in neither case was it anywhere near the list of what I was purchasing. Not that I think this should have anything to do with them being broken up or not, I do think they should be required to have the free trial UNCHECKED by default though (at which point, they will naturally want to put it somewhere where the customer can see it, not try to hide it.)

 

[lostinlodos]

I use Amazon. I’ve had a prime account almost as long as prime has existed. I love it.
This is not about actual pricing. It’s about assumed pricing.

Take one of my choice categories. VHS.
A 100 minute film recorded in SP, in a “big box” case, can easily weigh over a pound before packaging it.

VHS tapes sit for months, years: so there is a FBA cost to a seller.

With prime shipping the seller sees no shipment cost.
To match the prime speed, shipping starts in the $8 range.

So do they match the Amazon price and ship media mail that shows up in under 30 days; or do you match the sped and ship for $9?

As a buyer and former Amazon seller… I get it.
But… I disagree. For most buyers prime is the way to go. But Amazon isn’t the only choice for sellers.
Is it worth protecting single household sellers to the detriment of the 90%?
That’s a question I won’t get into.

The loss of free prime shipping would definitely be detrimental to a large group of consumers. That’s not deniable.

 

[DEMinSoCal]

"all you have to do is read and not hurriedly click the buy button, key word here is read."
After selecting an item you are faced with a full page of Prime trying to get you to take the free trial offer (with no mention of opting out before it becomes an automatic charged for renewal. Once you get past that one you get to the checkout page where there are a further three chances to slip up and get lumbered with unwanted membership. This can be called nothing less than a high pressure sales tactic. I have discussed this with everyone I know and they all find it irritating and unnecessary. A few say they avoid Amazon because of their distrust.
And don't get me started on their badly designed website with a near useless Search and filter function. Trying to wade through unrelated search results wastes time. Amazon could take a lesson from Ebay in that respect. Give us more filters that actually work.

To take a quote from the pro-Apple people that think Apple's App store isn't a monopoly, I say "if you don't like Amazon, shop elsewhere" and leave those of us that have Prime and appreciate the convenience, fast delivery, and time and gas savings alone.

 

[Loadedaxe]

Consumers made Amazon what it is and now want to complain about it, this world we live in is a lazy world and everyone feeds the machine.

I get it, its easy and a lot of times cheaper to buy on Amazon, but stick to things you cant find in your local stores. All the brick and mortars are closing because of Amazon. Get off your lazy bum and go to the store, soon before they are all gone.

 

[Underdog]

I use Amazon. I’ve had a prime account almost as long as prime has existed. I love it.
This is about actual pricing. It’s about assumed pricing.

Take one of my choice categories. VHS.
A 100 minute film recorded in SP, in a “big box” case, can easily weigh over a pound before packaging it.

VHS tapes sit for months, years: so there is a FBA cost to a seller.

With prime shipping the seller sees no shipment cost.
To match the prime speed, shipping starts in the $8 range.

So do they match the Amazon price and ship media mail that shows up in under 30 days; or do you match the sped and ship for $9?

As a buyer and former Amazon seller… I get it.
But… I disagree. For most buyers prime is the way to go. But Amazon isn’t the only choice for sellers.
Is it worth protecting single household sellers to the detriment of the 90%?
That’s a question I won’t get into.

The loss of free prime shipping would definitely be detrimental to a large group of consumers. That’s not deniable.

Only the buyers that spend over a certain amount regularly. For the rest of us it makes no sense at all and actually costs us rather than save us.