Amazon is gearing up for its antitrust lawsuit against the Federal Trade Commission (FTC) by hiring former officials who used to work for the agency amidst accusations of strong-arming third-party sellers.
The move is seen as a strategic way for Amazon to gain intelligence by recruiting individuals from the opposing side.
Why Is the FTC Suing Amazon?
If you need a little bit of a refresher, the FTC is expected to sue the e-commerce giant because of alleged anticompetitive practices for leveraging its dominance in the online marketplace to favor its own private label brands over its selling partners.
Bloomberg reported that the FTC has already filed multiple cases this year against Amazon and has another one in the works. The main allegation surrounding Amazon is around the disadvantages third-party merchants have when selling products on Amazon. For starters, members are required to pay commissions to the company for each sale while having to also pay for services such as warehousing, shipping, and advertising.
Although these fees are technically optional, the FTC alleges that Amazon's algorithm puts merchants who choose not to pay at a competitive disadvantage on their platform and favors those who use Amazon’s logistics system.
Why Have Some FTC Employees Willingly Jumped Ship to Amazon?
Insiders claim that employees leaving the FTC to join Amazon have been deeply influenced by the management style of FTC Chair Lina Khan.
The New York Post reported that Khan's leadership approach has caused dissatisfaction among staff with some employees describing the 34-year-old chair as a “tyrant” with an “abusive” management style.
According to former FTC chairman William Kovacic, industries facing challenges often hire employees from regulatory agencies. He further notes that Khan has not taken steps to make FTC employees feel valued, which may contribute to their inclination to seek opportunities elsewhere. However, employees who previously worked for the FTC who have joined Amazon are prohibited from working on the case and must take a garden leave.
What Other Lawsuits Have the FTC Filed Against Amazon?
The FTC recently sued Amazon over allegations of deceptive practices related to Amazon Prime subscriptions. The FTC claims that Amazon used ‘dark patterns’ to enroll consumers into Prime without their consent and made it challenging for them to cancel their subscriptions.
Some customers were presented with a transaction button that did not clearly indicate it would also automatically enroll them for Prime.
Last June, Amazon reached an agreement to pay a civil penalty of $25 million to resolve accusations of violating a child privacy law. The allegations pertain to the storage of children's voice recordings and location data collected by their widely-used Alexa voice assistant.
In addition, Amazon had also agreed to provide customer refunds of $5.8 million as part of a settlement regarding alleged privacy breaches related to its doorbell camera product, Ring.
With the FTC continuing to add concrete evidence for its antitrust lawsuit, it remains to be seen which areas the agency will put in most of its efforts to force Amazon to make changes. One writer from The Post speculates the FTC will seek changes in either Amazon’s web services unit, their logistic business, or revoke their acquisitions of MGM and Whole Foods.