Lisa Gilbert
Amazon did not come to dominate retail markets through innovation and fair competition. It leveraged its market power as the go-to online shopping site to bend competitors to its will and deepen its monopoly position.
As a result, the Federal Trade Commission and 17 state attorneys general in September filed an important antitrust lawsuit against Amazon, responding to the online retailer’s exclusionary and unfair business practices that help it maintain its monopoly power.
It’s about time.
Amazon’s monopoly is bad for America — it hurts our economy, society, politics, consumers and workers. The Federal Trade Commission lawsuit is the mark of a government agency doing its job to bolster democracy and economic justice.
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If you want to sell online as a small business, you have little choice but to sell through Amazon. But once you do, you sell at an intense disadvantage. You are subjected to fees and terms that benefit Amazon, diminish innovation and force higher consumer prices.
Third-party Amazon sellers, which account for 60% of all Amazon sales, bear the brunt of this practice. They are charged ruinous prices for placement on Amazon’s platform and are constantly at the whim of Amazon’s inconsistent and unpredictable policy enforcement.
Amazon also punishes sellers who offer lower prices elsewhere and requires them to buy Amazon’s sales fulfillment services to qualify for “Prime” eligibility.
In addition, sellers have no protection against unfair competition by Amazon in its marketplace. With the support of its enormous production and marketing capacity, the company frequently rips off third-party product designs, slaps an “Amazon Basics” label on the packaging, and gives its own products a placement priority on its platform to crush competitors. This practice, which grossly happens in public view, violates the company’s policies.
In 2022, Amazon notified third-party sellers that it would impose a “peak holiday fulfillment fee” of 35 cents per item during the holiday season from mid-October to mid-January. Since third-party margins on some categories, such as books, are measured in pennies, a surprise 35-cent fee abruptly made many sellers’ businesses unsustainable.
Stacy Mitchell, co-director of the Institute for Local Self-Reliance, estimated that this fee generated an additional $300 million in revenue for Amazon. And sellers who raise prices to cover fees like these can be punished by Amazon by having their products appear less often in customer searches.
In another prevalent harm, Amazon has been accused of using deceptive marketing practices to keep Prime members subscribed. The company’s internal documents suggest parts of the subscription process are opaque and deceptive.
Big Tech companies use their endless stream of profits to lobby away any attempt at accountability so they can preserve their monopoly and continue to fleece small businesses and consumers. Amazon spent almost $20 million on lobbying in 2022 alone.
This is a shocking total, and Amazon frequently joins other Big Tech behemoths in influence peddling to fight regulation and sensible oversight. For example, combined with Apple and Meta’s contributions, the three companies collectively spent $95 million in 2022 to derail the American Innovation and Choice Online Act, an attempt by Congress to protect consumers from these practices by fighting corporate concentration.
Amazon also frequently teams up with dark-money groups to squash reform through lobbying, paid ads and dismissive rhetoric.
Amazon’s actions prove it has no interest in promoting or participating in a free and fair market and that the company cannot be trusted to regulate itself. The Federal Trade Commission's lawsuit is necessary to hold an abusive monopoly accountable.
Gilbert is the executive vice president of Public Citizen: citizen.org. She wrote this for InsideSources.com.
