WASHINGTON, DC – Today, the Tech Oversight Project issued the following statement on news that the FTC’s newly filed lawsuit against Amazon contained damning revelations against the tech industry giant that led to higher prices for customers. The new filing makes it clear that Amazon destroyed years’ worth of evidence, showed that Amazon forced sellers to use Prime logistics or face downgraded placement in search results, and that Amazon degraded its product and forced consumers toward higher-priced alternatives. News coverage from Politico Pro can be found below.
“The FTC’s new filing contains smoking gun evidence that proves Amazon has been manipulating its market, private-label brands, and seller community to raise prices for millions of American families that are already stretched too thin,” said Kyle Morse, Deputy Executive Director of the Tech Oversight Project. “The mere fact that Amazon intentionally deleted years worth of evidence paints a damning picture of Jeff Bezos and Amazon. We cannot let Big Tech giants manipulate our economy and break the law without consequences. That’s why we applaud the FTC and Chair Lina Khan for bringing these shady practices to light.”
ICYMI: Politico Pro: Four things we just learned from the (un)redactions in the FTC’s Amazon lawsuit
By Joshua Sisco on 11/2/23
When the FTC filed its sprawling antitrust lawsuit against Amazon in September, more than a third of it was redacted, making the 172-page complaint a quick read. A new version was filed Thursday, with far fewer black lines. Here are some of the things we learned:
- Amazon allegedly destroyed more than two years’ worth of evidence — from June 2019 to early 2022 — by using the ephemeral messaging app Signal.
- As evidence of Amazon’s dominance in online retail, the FTC says the company was able to increase its profit by “litter[ing] its storefront with pay-to-play advertisements” that degrade the service for customers and steer them to higher price products. Amazon founder Jeff Bezos “directed his executives to ‘[a]ccept more defects’ as a way to increase the total number of advertisements shown and drive up Amazon’s advertising profits,” according to the complaint. In one egregious example, ads for “buck urine” showed up in searches for “water bottles.”.
- Amazon in 2021 rejected a proposal to “decouple” Prime by creating separate shipping and streaming services. “But Amazon feared that offering consumers more options would ‘make it easier for customers to substitute components of a bundle outside Amazon,’” such as using Prime shopping and Netflix, or pairing Walmart and Prime streaming.
- A key allegation in the complaint is that Amazon required vendors to use its logistics service, Fulfilled by Amazon, in order to get better placement for sales in search results.
That includes largely shelving an option for merchants to fulfill their own orders and still qualify for the Prime badge in listings. That option, called Seller Fulfilled Prime, proved wildly popular according to the FTC, with a lengthy wait list. Those vendors also satisfied Amazon’s strict delivery requirements, the FTC says. But an unnamed Amazon executive told colleagues “that he had an ‘oh crap moment’ and realized that allowing sellers to receive Prime eligibility without using FBA was ‘fundamentally weakening [Amazon’s] competitive advantage’”.
In a statement, Amazon spokesperson Tim Doyle called the FTC’s characterization of Seller Fulfilled Prime “misleading” and said the original service was “far below the high standards and expectations our customers have for Prime.” The company has since reinstated the option in a way “that can meet our customers’ expectations.”
Amazon has previously said the FTC’s case will lead to higher prices and less consumer choice and it will defend itself in court.
“The unredacted version of the FTC complaint against Amazon reveals the true nature of the company: Amazon is a monopolist that abuses its market power over third-party sellers and other ‘business partners’ to the detriment of both consumers and the millions of captive sellers that rely on the platform,” said Amanda Lewis, with the Responsible Online Commerce Coalition, a business group advocating for antitrust enforcement against Amazon.