Amazon Lawsuit

If you’re selling on Amazon and feel like their rules and policies might be a little stingy, you aren’t alone.

Yet another antitrust lawsuit has been filed against a tech giant. This time, the US government and not one, not two, but 17 states accused Amazon of building a monopoly and actively suppressing the prosperity of other digital marketplaces and businesses.

👇 Here's the deal

The Federal Trade Commission (FTC) believes that Amazon has too many rules and policies in place that work in their favor while sellers and other marketplaces are always dealt the short end of the stick. 

FTC Chair Lina Khan didn't mince her words either, stating that Amazon is exploiting its “monopoly power to enrich itself,” leading to higher prices and a decline in service quality for millions of Americans who rely on the platform.

🤔 So, what's Amazon got to say for itself? 

Well, David Zapolsky, Senior Vice President of the Global Public Policy & General Counsel at Amazon, had some strong words.

According to Zapolsky, the FTC is way off course with this lawsuit and Amazon's actually doing a great job for consumers and businesses. He even accused the FTC of not understanding how retail works. ouch 😬

🚀 Our take

Pilothouse’s Lead Amazon Media Buyer weighed in saying that the FTC’s argument “doesn't have much teeth.” They continue:

“Forced to use prime shipping? - Yes, but that's because it's just better. Amazon also allows seller-fulfilled Prime if you can get a carrier to meet their strict standards.

Forced to price the lowest online? - If [Amazon] were to drop this policy, brands would price 15% higher to cover the platform fee.

Pushing their own brands more? I didn't see a response to this in the big write up from Amazon. This certainly felt like the case a few years back. I see no difference between that and Walmart pushing Great Value branded products in better shelf space.”

👀 But what about…?

In short, there are more pressing issues the FTC could have brought up if they had a better understanding of the platform like:

  • The slowing increasing amount of ad space with less badging to differentiate an ad from an organic listing.
  • The suspected preferential server treatment from AWS.
  • Inconsistent compliance and safety enforcement across the board.

😓 The long road ahead

It looks like the FTC has their work cut out for them as they take on the world’s largest digital marketplace but this case will, at very least, lead to more watchful eyes from sellers and their evolving relationship with Amazon’s ecosystem.

Whether the outcome of the trial, given the FTC’s take, has the potential to make a significant difference in the way Amazon operates is yet to be seen. Stay tuned! 🍿

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