Amazon's Antitrust Allegations: Breaking The Law?

Amazon has been accused of violating antitrust laws in California, with a lawsuit filed by the state's Attorney General, Rob Bonta, alleging that the company's policies drive up prices for consumers. The lawsuit, filed in San Francisco Superior Court, claims that Amazon's most-favored nation policy penalises third-party sellers for charging lower prices on competing platforms, stifling competition and resulting in higher prices. Amazon, however, denies these claims, stating that sellers set their own prices and that they have the right to avoid highlighting products that are not priced competitively. The outcome of this case will have significant implications for Amazon's business practices and could set a precedent for future antitrust lawsuits.

Amazon's 'most favoured nation' policy

Amazon's "most favoured nation" (MFN) policy has been the subject of antitrust lawsuits in the US, including in California and Washington, DC. The policy is alleged to keep prices artificially high across online marketplaces by penalizing third-party sellers for charging lower prices on competing sites.

The MFN policy effectively prevents third-party sellers from offering their products at lower prices on other online platforms, including their own websites. This creates an artificially high price floor across the online retail market and allows Amazon to maintain its dominance, stifling competition and harming consumers.

The lawsuits argue that Amazon's MFN policy, along with its "fair pricing policy," discourages third-party merchants from offering better terms or lower prices elsewhere, including on their own websites. The policy blocks competition from other platforms that could offer lower merchant fees, which could then be passed on to consumers in the form of lower prices.

Amazon has denied the allegations, stating that sellers set their own prices and that it has the right to avoid highlighting offers that are not priced competitively. However, the lawsuits claim that Amazon's policies and algorithms demote merchants who offer lower prices on rival sites, creating an incentive for merchants to set higher prices across all platforms.

The outcome of these lawsuits remains to be seen, but they highlight the ongoing scrutiny of Amazon's business practices and their potential impact on competition and consumer prices.

Amazon's market power

In 2022, California Attorney General Rob Bonta filed a lawsuit against Amazon, alleging that the company's "most-favored nation policy" kept prices artificially high across online marketplaces. The policy penalizes third-party sellers for charging lower prices on competing sites, effectively barring them from offering better deals elsewhere. This, in turn, harms the ability of other retailers to compete and results in higher prices for consumers.

Amazon, however, denies these claims and states that sellers set their own prices on its platform. The company also argues that it has the right to avoid highlighting products that are not priced competitively. Amazon's Fair Pricing policy is designed to prevent price gouging and ensure customers get the best deals.

Despite Amazon's defence, the company's market power continues to be a subject of concern. There have been calls for stricter antitrust regulations and investigations into Amazon's business practices, including its acquisition of One Medical and the sign-up and cancellation practices of Amazon Prime. Additionally, Amazon has been accused of collecting data on sellers to develop competing products and offering them more prominently on its site. The increasing fees imposed on sellers also makes it more challenging for new merchants to enter the market.

Amazon's acquisition of One Medical

Amazon has been accused of violating antitrust laws in the state of California. The state's attorney general, Rob Bonta, filed an 84-page lawsuit in San Francisco Superior Court in September 2022, alleging that Amazon's policies drive up consumers' prices. The lawsuit claims that Amazon has effectively barred sellers from offering lower prices for products elsewhere, harming the ability of other retailers to compete.

In addition to the antitrust lawsuit, Amazon's acquisition of One Medical for $3.9 billion has also drawn scrutiny from regulators. The Federal Trade Commission (FTC) investigated the deal for at least five months, with concerns about possible harm to competitors and consumers due to Amazon's control of sensitive consumer health information held by One Medical. Despite this, the deal closed without a challenge from regulators, as the FTC missed its window to sue. However, the FTC's probe into the transaction remains open, and they could still challenge the deal.

The acquisition of One Medical is a significant step for Amazon in the healthcare industry, as it adds physical medical clinics to its existing healthcare offerings, including an online pharmacy, telemedicine, and wearables. One Medical has a network of more than 200 medical offices in 27 markets across the US and serves about 815,000 to 836,000 members. Amazon plans to integrate One Medical's services into its operations and build out plans to meet consumers' needs across the care continuum.

To promote the acquisition, Amazon offered One Medical memberships to new customers at a discounted price of $144 for the first year (regularly $199/year), equivalent to $12 per month. Amazon's senior vice president of Amazon Health Services, Neil Lindsay, stated that the company is "on a mission to make it dramatically easier for people to find, choose, afford, and engage with the services, products, and professionals they need to get and stay healthy."

Amazon's Prime sign-up and cancellation practices

Amazon has been accused of violating antitrust laws in California, with a particular focus on its Prime sign-up and cancellation practices. The Federal Trade Commission (FTC) has also sued Amazon, alleging that it illegally signed customers up for its Prime program and then made it difficult for them to cancel their subscriptions.

Amazon Prime Sign-Up and Cancellation Practices

Amazon Prime is a subscription service offered by Amazon that provides customers with benefits such as free two-day shipping, music and video streaming, and other exclusive perks. It costs $14.99 per month or $139 per year. There are an estimated 200 million Amazon Prime members worldwide, with 150 million of those based in the US.

The FTC has alleged that Amazon used deceptive tactics, known as "dark patterns", to push customers to enroll in Amazon Prime without their permission. According to the FTC, the option to purchase items on Amazon without enrolling in Prime was made more difficult than simply purchasing with a subscription. Amazon has also been accused of slowing down or rejecting changes to its interface that would have made it easier for Prime members to cancel their subscriptions.

On the other hand, Amazon has stated that sellers set their own prices on its platform and that it has the right to avoid highlighting products that are not priced competitively. Amazon also claims that it may crack down if a seller's prices are "significantly higher" than recent prices offered on or off Amazon, as stated in its "Fair Pricing" policy.

In terms of cancellation, Amazon's website states that customers can cancel their Prime membership at any time by visiting their account and adjusting their membership settings. If customers cancel within three business days of signing up or converting from a free trial, Amazon will refund their full membership fee. However, if customers cancel at any other time, they will only be eligible for a refund if they have not made any eligible purchases or taken advantage of Prime benefits since their latest membership charge.

Amazon's donations to conservative non-profits

Amazon has been accused of violating antitrust laws by stifling competition and pushing sellers to maintain higher prices on products on other sites. In September 2022, California Attorney General Rob Bonta filed an 84-page lawsuit against Amazon, alleging that the company's policies drive up consumers' prices. The lawsuit claims that Amazon's "most-favoured nation policy" penalises third-party sellers for charging lower prices on competing platforms, resulting in artificially inflated prices across online marketplaces.

Now, to address your specific question about Amazon's donations to conservative non-profits. Amazon's charitable giving program, AmazonSmile, allows customers to donate 0.5% of their eligible purchases to a non-profit organisation of their choice, from a list of over a million eligible charities. AmazonSmile relies on the Southern Poverty Law Center (SPLC) to identify non-profits that "engage in, support, encourage, or promote intolerance [or] hate". This has resulted in several conservative organisations being excluded from the program, as the SPLC has labelled them as "hate groups" due to their stances on gender and sexuality. Amazon has faced criticism and lawsuits from conservative lawmakers and groups for its reliance on the SPLC's "hate map", arguing that it discriminates against conservative views and reinforces allegations of bias against conservatives in Big Tech.

Frequently asked questions