Amazon AntiTrust Lawsuit Roundtable with Steve Simonson, Tim Jordan, Adam Hiest, Liran Hirschkorn and Paul Rafelson

 

Today, I am joined by Steve Simonson, Tim Jordan, Adam Hiest, Liran Hirschkorn and Paul Rafelson. The topic of this roundtable is the lawsuit filed by the FTC which has been gaining momentum over the last few days.

 

Key parts of the lawsuit

 

Anti-Discounting Measures: Amazon's fair pricing policy makes it impossible for sellers to offer lower prices on competing platforms. 

 

Prime Eligibility: It's claimed that Amazon conditions a seller's ability to have their products marked as "Prime" on using Amazon's fulfilment service, which can be costly.   

 

Search Result Biases: There are concerns that Amazon might be prioritising its own products in search results, even if other products are of better quality.

 

High Fees for Sellers: The FTC points out that Amazon charges various fees to sellers, which can amount to nearly 50% of their total revenues.

 

Degrading the customer experience by replacing relevant, organic search results with paid advertisements—and deliberately increasing junk ads that worsen search quality and frustrate both shoppers seeking products and sellers who are promised a return on their advertising purchase.

 

Amazon’s surmised response?

 

Amazon is contesting a lawsuit filed by the Federal Trade Commission (FTC), arguing that the lawsuit is misguided and would, if successful, harm consumers and the many businesses that sell on Amazon.

 

1. *Customer-Centric Innovations:*

   - Amazon believes its innovations and customer-centric focus have benefited consumers through low prices and increased competition in the retail industry.

   - The company has cooperated with the FTC in the past and respects its role in protecting consumers and promoting competition.

 

2. *Misguided Lawsuit:*

   - The current lawsuit by the FTC is seen as a radical departure from its role, with Amazon arguing that it is misguided and would force Amazon to engage in practices that actually harm consumers and businesses, such as featuring higher prices and making Prime more expensive and less convenient.

 

3. *Allegations of Anticompetitive Practices:*

   - The FTC alleges that Amazon's pricing practices, Fulfilment by Amazon offering, and Amazon Prime are anticompetitive, revealing a fundamental misunderstanding of retail by the Commission.

   - Amazon argues that its model is pro-competitive, and the lawsuit could negatively impact consumers and businesses selling on Amazon.

 

4. *Low Prices and Competitive Offers:*

   - Amazon is proud of the low prices and competitive offers it provides to customers and has enabled third-party businesses to sell their products alongside Amazon’s.

   - The company invests in tools and education to help third-party businesses offer competitive prices and does not highlight or promote offers that are not competitively priced.

 

5. *Support to Independent Sellers:*

   - Amazon has lots independent businesses selling on its platform and provides support and services to help them succeed.

   - The company has invested billions in resources and services to support sellers at every stage of their journey, providing them with data, insights, and various features to manage their businesses effectively.

 

6. *Fulfilment by Amazon (FBA):*

   - FBA is an optional service where Amazon handles product storage, packaging, shipping, returns, and customer service, allowing sellers to focus on growing their businesses.

   - Amazon argues that FBA is competitively priced and offers significant benefits to independent businesses, contributing to job creation and investments in the economy.

 

7. *Innovation and Amazon Prime:*

   - Amazon continues to innovate to delight customers, with Prime being a prime example, offering more than just free shipping.

   - The company has invested in making Prime better for customers, achieving faster shipping speeds and allowing sellers to offer Prime shipping on their own sites, which has been beneficial to both consumers and sellers.

 

 

8. *Thriving Retail Industry:*

   - Amazon operates in a vibrant and varied retail industry where over 80% of all retail products are still bought in physical stores.

   - The company argues that the FTC’s complaint grossly mischaracterizes the retail industry and ignores the dynamic competition that benefits consumers, with numerous options available to consumers and sellers.

   - Amazon sees itself as a part of a massive and robust retail market and not as a monopolistic entity, with the FTC attempting to narrowly define markets to make Amazon appear more dominant than it is.

 

9. *Commitment to Consumers and Sellers:*

   - Amazon is proud of its role in spurring low prices, innovation, and competition across retail.

   - The company fundamentally disagrees with the FTC’s allegations and approach to antitrust, vowing to contest the lawsuit and continue inventing to put consumers and businesses first.

   - Amazon believes that the FTC’s approach, if successful, would harm consumers, hurt independent businesses, and upend long-standing and well-considered doctrines.

 

Final Summary:

Amazon is defending its practices and innovations, asserting that they have always been in favor of consumers and sellers, providing low prices, options, and competition in the retail market. The company sees the FTC lawsuit as fundamentally flawed, misrepresenting the retail industry and Amazon’s role in it. Amazon is committed to contesting the lawsuit, maintaining that the success of the FTC in this case would result in anti-consumer and anti-competitive outcomes, harming both consumers and the independent businesses selling on Amazon.