California’s attorney general filed an antitrust lawsuit against Amazon on Wednesday, claiming that the retailer discourages competition and increases the prices consumers pay on the internet.
The lawsuit is limited to California, where officials say Amazon has about 25 million customers, but if successful, it could have a nationwide impact.
The lawsuit largely focuses on how Amazon penalizes sellers for listing products at lower prices on other sites. If Amazon detects a product is listed for less on a competitor’s website, it will often remove important buttons like “Buy Now” and “Add to Cart” from the product listing page. .
These buttons are a major driver of sales for companies selling through Amazon, and losing them can quickly take a toll on their businesses.
That creates a dilemma for market sellers. They may sometimes offer products at a lower price on sites other than Amazon because the cost of using those sites may be lower. But since Amazon is by far the largest online retailer, sellers would rather raise their prices on other sites than risk losing their sales on Amazon. speakcites interviews with sellers, competitors and industry consultants.
“There is no basic price competition, no different online sites trying to outdo each other by lower prices, artificially stable prices at a higher level than is the case in a competitive market.” complaint said.
The California lawsuit is the latest in a string of increasingly aggressive efforts by states and regulators in Washington and Europe to limit the influence of the biggest companies in the tech industry. Also on Wednesday, a The Court of the European Union has blessed it with record multi-billion dollar fines issued against Google in 2018.
The lawsuit filed by Rob Bonta, the attorney general of California, repeats a case by Karl A. Racine, attorney general of the District of Columbia, that is throw out this spring. Judge Hiram E. Puig-Lugo of the Superior Court of the District of Columbia found Mr. Racine did not provide sufficient evidence Amazon’s policies were anticompetitive. Mr. Racine is appealing the ruling.
Amazon has argued that sellers have control over price, and that including a seller’s offer in the so-called “Buy Box” equates to endorsement of a good deal for customers, so it won’t offer an incentive if it is not priced competitively. It also argues that online sales are still a small part of the broader retail market.
Most of Amazon’s sales – 57% of units last quarter – were products offered by third-party merchants on Amazon’s website. They pay Amazon a referral fee to list their products and typically pay for Amazon’s fulfillment, advertising, and other services. Amazon has collected more than $100 billion in third-party service fees over the past 12 months, according to financial records.
California investigated Amazon for over two years, and the complaint, filed in San Francisco Superior Court, says the practices violate California’s Unfair Competition Act and the Cartwright Act, the state’s primary antitrust law. It requires remedies including cessation of anticompetitive behavior and the payment of fines.
An official in Bonta’s office said the California attorney general hopes to succeed where DC has stumbled by providing more details about how Amazon has hurt consumers and because state law. California offers stronger consumer protections.
The complaint says Amazon may charge sellers more than its competitors because it gets a lot of sales online. The incremental costs for sellers include performing and paying for advertising, which sellers increasingly consider essential to success. The complaint cites many of Amazon’s internal documents that have been redacted.
The result is an “anti-competitive cycle,” the lawsuit says, where sellers have to raise prices on Amazon to cover their costs. But due to Amazon’s pricing regulations, sellers have to charge higher prices on other sites, and “other online stores cannot effectively lure consumers away from Amazon at lower prices.”
Mr. Bonta’s complaint cites emails between a personal care electronics brand and another retailer, asking the retailer to raise the price of a discounted item because Amazon blocked its listing. surname. The brand wants to “eliminate all transactions and inventory through Q1 as this has happened multiple times and is causing major disruption to Amazon’s business,” it wrote. “We simply can’t afford to buy boxes on Amazon anymore.”
The complaint states that the seller is no longer supplying the product to a competitor.
The California lawsuit was brought by the Federal Trade Commission, by Lina Khan, an Amazon reviewer, is investigating whether the company violated antitrust laws. The agency is also reviewing the process by which consumers purchase or cancel Amazon Prime memberships, Somepeople say may be intentionally misleading.
Amazon hit the FTC multiple times during the investigation. It said last year that Ms. Khan, who wrote a Criticize Review Break the Law corporate strength, should reuse yourself from antitrust claims on the company.
Last month, Amazon move to stop The agency requested interviews with Amazon founder Jeff Bezos and its chief executive officer, Andy Jassy, during the Prime investigation on the grounds that the requests “were calculated for no other purpose.” beyond harassing Amazon’s top executives and disrupting its business.”
Lawmakers in Washington have also put Amazon in their sights. The company has vigorously fought a bipartisan antitrust bill that would prevent Amazon from favoring its own products in its online store. Proposed Law not yet pass, and its chances may dim further as lawmakers turn their attention to the midterm elections.
The company has been more diplomatic in other cases. Faced with an investigation into its retail activities in Europe, the company proposed a series of changesincluding limiting the data it collects from rival sellers and allowing them to sell to Prime customers without using Amazon’s logistics program.
