Two weeks ago, we reported on the Federal Trade Commission’s plans to file lawsuits against Amazon for alleged anticompetitive practices. This time around, sources who are familiar with the matter say the Commission is almost ready to make its move.
How Will This Affect Amazon Third-Party Sellers?
Based on Politico’s sources, one of the issues the Commission will be focusing on involves antitrust cases relating to the company’s retail operations. This is especially important now since ads and seller services have become two of the company’s main revenue drivers based on its Q4 2022 Earnings Report.
Details have yet to be released, but this may include the alleged practice of Amazon favoring its own products for the Buy Box and search results, the pay-to-play system currently in place, and the fairness in the determination of awarding Amazon badges.
The issue of Amazon using data from its third-party sellers to develop its own private-label products may also come to the fore. There have been investigations conducted on the matter after leaked internal documents showed evidence of such practice.
Because the FTC’s general goal is to protect consumers and small businesses who wish to compete with giants in the industry, these investigations might prove helpful for sellers.
Is the FTC Likely to Succeed?
While the FTC is a powerful organization in itself, a tech giant like Amazon comes with resources and a slew of lawyers who are ready to fight for the company.
The Commission cannot be too hasty with its moves, but it also does not have the convenience of time, especially with elections just less than two years away. One of the reasons why the crackdown on Big Tech is on the level that it is today is because of President Biden’s resolve to rein in huge companies and “prevent big online platforms from giving their own products an unfair advantage.” A new administration might not give as much attention to this issue as Biden does.
There is evidence that the FTC will not be focusing its efforts on possible antitrust cases that are harder to prove. For example, the Commission was expected to take action on Amazon’s $3.9 billion acquisition of One Medical last month, but the FTC decided not the challenge it. According to Politico’s source, while the Commission believed it was anti-competitive, it acknowledged the difficulty of winning the case.
In other words, the FTC will likely focus on low-hanging fruits where evidence is readily available. Fortunately for sellers, this involves some of the company’s retail-related operations.
What Other Aspects Will the FTC Go After?
Sources interviewed by Politico said the Commission will be investigating some of Amazon’s major acquisitions as well as privacy issues involving its products.
In particular, it is studying the possibility of challenging Amazon’s $1.7 billion acquisition of iRobot and the potential privacy violations of Ring and Alexa.
In short, the Commission will be going after transactions and practices that make Amazon bigger and more powerful than it already is.