Amazon vs. The FTC ⚖
Analysis of the latest lawsuit
This past Tuesday, in a Seattle federal court, the FTC launched a long-awaited antitrust lawsuit against Amazon. For years now we have called out and urged for investigation into Amazon’s anti competitive practices towards both B2B and B2C sellers on its marketplace. We even made a highlight video! 👀
We’re happy to report that this is the FTC’s most competent attempt at regulating Amazon to date. The FTC has finally acknowledged something we’ve been shouting for years: Amazon’s customers are also its third-party marketplace sellers. See this highlight reel of us talking about this for the past 4-5 years!
Kudos are due to the National Association of Wholesaler- Distributors (NAW) on this. NAW has long worked to secure FTC action to curb Amazon from exploiting its monopoly position in dealing with third party sellers.
The FTC’s lawsuit hits on 5 key points, 4 of which are seller-focused:
Pricing 💵
At the heart of the FTC's legal offensive lies Amazon's pricing policy for third-party sellers, a practice that, according to the agency, casts a long shadow over the digital marketplace by driving up prices across the economy.
Amazon previously required that external vendors maintain price parity across platforms. For example, a seller offering an item for a cent less on Walmart’s marketplace risked expulsion from Amazon’s ecosystem.
While Amazon no longer outright bans sellers for offering a lower price elsewhere, current policy dictates that Amazon will remove the Buy Box from a listing if they find the seller offering a lower price through another channel. The FTC underscores the gravity of this action, asserting that it constitutes nothing less than an existential threat to sellers, as without the Buy Box revenues plummet.
Fulfillment 📦
Another key focus of the FTC centers around Amazon’s warehousing and shipping services, known as Fulfillment by Amazon, or FBA. The FTC argues that Amazon has wielded its influence in a manner that leaves sellers with little choice but to embrace its in-house fulfillment services.
The rationale behind this assertion is simple: Amazon's shoppers exhibit a pronounced preference for items adorned with the Prime badge, rendering it a virtual imperative for sellers to hitch their wagons to Amazon's fulfillment offering.