Culture

Amazon sued for inflating prices across entire online retail market

12 May 2021, Saxony-Anhalt, Sülzetal: A conveyor system transports a package at the Amazon logistics center... The mail-order retailer opened the new location in Saxony-Anhalt in August 2020. Photo: Klaus-Dietmar Gabbert/dpa-Zentralbild/ZB (Photo by Klaus-Dietmar Gabbert/picture alliance via Getty Images)

40%

How much of a third-party seller's item price can be comprised of Amazon fees.

Popular Information

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Amazon’s new, inane ad campaign slogan, in addition to sounding trademark-infringingly familiar, is apparently an extreme overstatement. In fact, “Spend Less. Smile More,” is getting put to the legal test thanks to a new lawsuit filed by the District of Columbia against our Seattle-based consumer overlords, alleging across-the-board online retail market manipulations in its treatment of third-party sellers, or TPSs.

As Judd Legum explains for Popular Information, “Until 2019, TPSs were required to agree to ‘a clause that explicitly prohibited TPSs from offering their products on a competing online retail sales platform, including the TPS’s own website, at a lower price or on better terms than the TPS offered the products on Amazon.’”

The fees Amazon subsequently tacked onto these products (sometimes as much as 40 percent of an item’s total price) would then increase a TPS’s prices throughout the online market ecosystem because of said clause. As such, “Competition and consumers were directly harmed by virtue of higher prices, as well as through the loss of choice, innovation, and competition among online retail sales platforms, as other online retail sales platforms were not able to use lower product prices to lure buyers and sellers to their competing online retail sales platform,” argues DC’s legal filing.

It’s too early to tell how the suit will shake out, of course, but anything that further puts the heat on Amazon’s monopoly in the hopes of letting us “spend less” certainly makes us “smile more.”

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Amazon’s Prime obfuscation — Of course, Amazon sees this whole thing a bit differently. According to them, we’ve got this whole thing wrong, and it’s actually helping out all those small businesses... no, seriously. That’s what the company said in its official response to then-new legal case:

The DC attorney general has it exactly backwards – sellers set their own prices for the products they offer in our store. Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively. The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law.

And yet this is a willful misrepresentation of the suit, since the plaintiffs are seeking to dismantle Amazon’s anticompetitive fine print for its TPSs, not arbitrarily promote higher-priced products... a PR clouding that should surprise no one at this point.