The big picture: The Federal Trade Commission in recent months has reportedly started questioning some of Amazon’s competitors regarding the company’s business practices. Recode points out that no formal investigation has been launched. What’s more, the FTC’s questioning of competitors doesn’t necessarily mean that these topics would be of interest if the FTC did eventually decide to launch a proper probe.
A source briefed on the discussions told Recode that the FTC is focusing on at least three lines of questioning including whether or not Amazon’s bundling of services as part of its Prime membership allows the company to unfairly undercut the competition.
One line of thinking: If Amazon doesn’t need to profit directly from the annual Prime membership fee — and it’s not clear that it does — how are competitors who have to make money from an individual service supposed to compete on price?
The FTC is also reportedly interested in Amazon’s fulfillment service. Known as Fulfillment by Amazon (FBA), the service lets Amazon sellers store their goods in Amazon warehouses. The e-commerce giant even handles packing, shipping and customer service.
Notably, FBA users can also lean on the service to handle goods sold on other marketplaces like eBay and Etsy. What’s apparently rubbing the FTC the wrong way is the fact that Amazon charges a significantly higher FBA fee for goods sold on other platforms versus goods sold on Amazon.
Regulators are also probing into Amazon competing with third-party sellers with its own brands. Some have specifically wondered if Amazon uses data from other sellers to help it beat out small and mid-sized merchants.
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