7 ms·

Amazon faces $1B lawsuit in UK for 'favouring its own products'

arprocter 4y ago
https://web.archive.org/web/20221020121743/https://www.reuters.com/business/retail-consumer/amazon-faces-1-bln-lawsuit-uk-favouring-its-own-products-2022-10-20/ https://web.archive.org/web/20221020121743/https://www.reute...
brudgers 4y ago
Amazon had about 460 billion dollars in revenue per as lazy a google as I could do. This makes a billion dollar fine less than 0.25% of revenue. Except Amazon has been doing this for years. So a cost of doing business on the order of 0.1% at worst. Or rounding error.
- mc32 4y ago
  Personally I think Amazon should have a regular Amazon marketplace and a third party seller marketplace that is more like Ebay. A lot of the third party stuff is untrustworthy and the listings gamed by the sellers. Could be a toggle, a checkbox, a separate searchbox, etc. I do not like having to separate the wheat from chaff myself.
  - dawnerd 4y ago
    Imo they should just be done with third party sellers period.
    - rdtwo 4y ago
      I wish but the money is in 3rd . First party has barely any margins. The first party stuff is just cover for being a alliexpress reseller.
  - culturestate 4y ago
    > Could be a toggle, a checkbox, a separate searchbox, etc. They already have a “seller” filter that lets you choose products sold directly by Amazon, but for reasons I don’t fully understand[1] it’s not shown on the default SERP. You can only get it by drilling down into a specific department. 1. I assume it’s related to the sheer number of sellers that can be present in the first set of results because any one query could include dozens of departments, but this seems like a solvable problem. Maybe it’s just not a revenue priority.
    - garblegarble 4y ago
      >They already have a “seller” filter that lets you choose products sold directly by Amazon, but for reasons I don’t fully understand[1] it’s not shown on the default SERP. You can only get it by drilling down into a specific department. This may have changed (and hopefully somebody will correct me if it has) but as I understand Amazon's Inventory Co-mingling strategy, buying from a given seller (even Amazon) doesn't guarantee you are buying that seller's physical inventory - you could still be shipped fake/defective products in to Amazon's warehouses from third party sellers of that same product.
      - culturestate 4y ago
        Amazon supposedly only allows commingling for FBA now, and anything they sell directly is meant to be inventoried separately. My hearsay understanding of this is that Apple, among others, forced them to make that change as a condition of their vendor contracts.
- sebazzz 4y ago
  Profit or revenue? Because renevue means money moving, profit means more money on the bank account.
  - brudgers 4y ago
    For a sophisticated company, profit is just another number in the ledger. For example, the news of the fine can allow Amazon to take a charge against the value of goodwill in its books and thereby reduce profits. Or increase profits by increasing the value of goodwill.
- tester756 4y ago
  This is the only place where people unironically call billion dollars "rounding error"
- piokoch 4y ago
  Revenue is not telling us much, they have profit 33 billion dollars, so this is 3% of their profit. This is not very much, but something visible for sure. Stakeholders would not be happy.
  - thechao 4y ago
    What percentage of their profit is attributable to these specific placed-items? If placed-item profit is < 1 billion, then it is no longer profitable as a subunit of AMZN.
- legitster 4y ago
  This would also set precedent, Amazon would have to change their practice or risk getting sued nonstop. Both would cost a lot more than just a billion dollars.
  - rdtwo 4y ago
    They will settle
- ahtihn 4y ago
  It's a lawsuit in the UK, so only UK revenue is relevant. There's also the point about profit vs revenue made by someone else. And finally, even if the fine is "low", they still need to change their business practices (assuming they lose the lawsuit).
- throw10920 4y ago
  You're comparing global revenue to a fine in the UK. That's kind of dishonest. In 2021, Amazon's UK profits were £23.2B, or $26.2B - of which $1B is almost 4%. Big difference. To top that off, you're looking at revenue, instead of profit. I completely agree that the fines should be substantially higher, but being dishonest is bad.
  - brudgers 4y ago
    I am not being dishonest at all. Amazon operates globally. The fine is just another cost of doing business for Amazon. From Amazon’s perspective there’s no significance to the fine’s relationship to UK revenue. Because the practice generates revenue globally. To be clear, I don’t have an opinion about the fine or Amazon’s practice because it is not worth having one. (And of course, the practice has been ongoing and the calculation of revenue hit should be amortized over the years since inception and discounted for the time value of money).
    - throw10920 4y ago
      > From Amazon’s perspective there’s no significance to the fine’s relationship to UK revenue. This is false. Amazon has the option to stop doing business in the UK, meaning that they lose the revenue, but are not longer to subject to fines from the UK's court system. Amazon very clearly balances the expected costs of doing business in a particular market with the expected benefits. Similarly, Amazon's use of the practice globally means that they are subject to fines from every market that they operate in. Which you did not count. > the practice has been ongoing and the calculation of revenue hit should be amortized over the years since inception and discounted for the time value of money These fines impact Amazon's decision of whether to continue to do the practice today. If the fines start to eclipse their current revenue, it literally does not matter if they'll still have made more money by doing it in the past - they'll cease the activity. Therefore, taking past revenues into account is irrelevant and dishonest.
  - pbhjpbhj 4y ago
    Is that accounting for dodgy accounting? Selling IP rights to themselves, routing digital goods through the Channel Islands, selling through other countries (Luxembourg?)? I don't know exactly what shenanigans they do, just that they do them.
- pb7 4y ago
  If I sell a thing for $100 that cost me $99 to procure, is a $1 fine a rounding error in that transaction? In any case, the majority of the revenue certainly didn't come from the UK.
legitster 4y ago
> Law firm Hausfeld, which represents Hunter, said on Thursday that Amazon has breached competition law by using “a secretive and self-favouring algorithm” to promote its own products through the “Buy Box” feature on its website. > Hunter said in a statement: “Far from being a recommendation based on price or quality, the Buy Box favours products sold by Amazon itself, or by retailers who pay Amazon for handling their logistics. Other sellers, however good their offers might be, are effectively shut out.” I'm scratching my head and trying to figure out how this is illegal or different than what every other retailer can do. Are store brands not a thing under UK law? Are stores required by law to only promote the lowest price? As a consumer, I certainly don't want Amazon promoting random third party marketplace items over ones actually fulfilled by Amazon. It's also hard to feel sorry for the kind of businesses hurt by this. Amazon's generics are for product categories that are woefully generic - they source from the same manufacturers as everyone else. And it's not the manufacturers that are suing, but other middle men who are reselling their own white-labeled junk from China.
- agd 4y ago
  > I'm scratching my head and trying to figure out how this is illegal or different than what every other retailer can do. I think it’s widely accepted that stronger rules can be applied in the case of monopolies. Amazon marketplace is considered by many to be a monopoly.
- pannSun 4y ago
  > Are store brands not a think under UK law? Store brands should also be looked at critically, yes. Especially for larger store chains.
  - Ylpertnodi 4y ago
    "Welcome to Sainsbury's where our Tesco line undercuts the Morrisons selection, neither of which are better than ours but we have to play nice.". I dunno, when I go on bezos.co.uk I expect them to be pushing their own products. I don't have to shop there, and when I do, I know I don't have to.
par 4y ago
Good, I hope they face more though. Amazon product catalog has become a cesspool of knock offs, imitations and super low quality products that basically go straight to the trash.
mabbo 4y ago
The core problem is that the market owner and operator is also a market competitor. It's just not believable that they wouldn't cheat. They have sales data from all their competitors on this market- numbers, prices, trends, across many different competing companies in many different sectors. They have priority access to consumer eyes by owning the home page, owning the search results, and owning the customer relationship. And all of this wouldn't be that big of a problem if Amazon wasn't the absolutely dominant player in the still-growing e-commerce market. Because at that scale, these problems become societal problems that governments have to address.
- idlehand 4y ago
  Amazon takes a cut of every product sold on their store. They can give their own products a pricing advantage by reducing the platform fee.
  - mabbo 4y ago
    They don't even need to. The money all goes to the same place. They can just "take a loss" in the division making the product where the loss is the fee they paid to the other division of Amazon. Then they can claim they're playing fair.
user3939382 4y ago
So far I see everyone discussing search results. Recall that Amazon has been known to go to their competitor's factories and produce identical products with their brand with an undercut price. In some cases they steal the design of and make crap versions of quality products that are selling well https://www.cnbc.com/2021/03/04/amazon-accused-of-copying-camera-gearmaker-peak-designs-top-selling-item-.html https://www.cnbc.com/2021/03/04/amazon-accused-of-copying-ca... Only they know how many people and companies they've hurt doing this. As far as I'm concerned the whole company is ethically bankrupt and rotten to the core starting with Bezos and can disappear from the Earth.
- sokoloff 4y ago
  In my supermarket, I can walk down an aisle and see 2-liter bottles of Pepsi products, then 2-liter bottles of Poland products, then 2-liter bottles of supermarket-brand products, then 2-liter bottles of Coke products. I strongly suspect the store brand products are manufactured at a bottling facility that also bottles other, name-brand sodas. I think that's all perfectly healthy competition and I'm glad that the super-market offers cut-rate, easily-substituted products on the shelves that they own. If that is good, how is what Amazon doing so different as to be bad?
  - uni_rule 4y ago
    Because they aren't selling commodities/consumables. In the world of technology this is textbook anti competitive behavior. If a Chinese company were skimming R&D in the exact same way (as they have attracted some infamy for doing) the comments here would be pitchforks and fucking torches, what makes Amazon deserving of defense in the same situation?
    - sokoloff 4y ago
      A 2-liter bottle of soda seems to be literally and figuratively a consumable. (Similar to an Amazon Basics alkaline battery, which is a product I frequently buy.) I'm sure the supermarket looks over their sales data to understand which products might be compelling for their shoppers and where the store could introduce a store-branded product with a compelling positioning. I support them doing that as well.
jbverschoor 4y ago
"favoring" you identifying good running products by analyzing merchants sales data, then start competing with their own version for less, AND favoring
LatteLazy 4y ago
Amazon sued for one quadrillion mega-dollars for doing something not illegal... This suit 100% will not silently disappear like the last 100 times you heard of a frivolous suit against a mega corp.

https://web.archive.org/web/20221020121743/https://www.reuters.com/business/retail-consumer/amazon-faces-1-bln-lawsuit-uk-favouring-its-own-products-2022-10-20/ https://web.archive.org/web/20221020121743/https://www.reute...

brudgers 4y ago

Amazon had about 460 billion dollars in revenue per as lazy a google as I could do. This makes a billion dollar fine less than 0.25% of revenue. Except Amazon has been doing this for years. So a cost of doing business on the order of 0.1% at worst. Or rounding error.

mc32 4y ago
Personally I think Amazon should have a regular Amazon marketplace and a third party seller marketplace that is more like Ebay. A lot of the third party stuff is untrustworthy and the listings gamed by the sellers. Could be a toggle, a checkbox, a separate searchbox, etc. I do not like having to separate the wheat from chaff myself.
- dawnerd 4y ago
  Imo they should just be done with third party sellers period.
  - rdtwo 4y ago
    I wish but the money is in 3rd . First party has barely any margins. The first party stuff is just cover for being a alliexpress reseller.
- culturestate 4y ago
  > Could be a toggle, a checkbox, a separate searchbox, etc. They already have a “seller” filter that lets you choose products sold directly by Amazon, but for reasons I don’t fully understand[1] it’s not shown on the default SERP. You can only get it by drilling down into a specific department. 1. I assume it’s related to the sheer number of sellers that can be present in the first set of results because any one query could include dozens of departments, but this seems like a solvable problem. Maybe it’s just not a revenue priority.
  - garblegarble 4y ago
    >They already have a “seller” filter that lets you choose products sold directly by Amazon, but for reasons I don’t fully understand[1] it’s not shown on the default SERP. You can only get it by drilling down into a specific department. This may have changed (and hopefully somebody will correct me if it has) but as I understand Amazon's Inventory Co-mingling strategy, buying from a given seller (even Amazon) doesn't guarantee you are buying that seller's physical inventory - you could still be shipped fake/defective products in to Amazon's warehouses from third party sellers of that same product.
    - culturestate 4y ago
      Amazon supposedly only allows commingling for FBA now, and anything they sell directly is meant to be inventoried separately. My hearsay understanding of this is that Apple, among others, forced them to make that change as a condition of their vendor contracts.
sebazzz 4y ago
Profit or revenue? Because renevue means money moving, profit means more money on the bank account.
- brudgers 4y ago
  For a sophisticated company, profit is just another number in the ledger. For example, the news of the fine can allow Amazon to take a charge against the value of goodwill in its books and thereby reduce profits. Or increase profits by increasing the value of goodwill.
tester756 4y ago
This is the only place where people unironically call billion dollars "rounding error"
piokoch 4y ago
Revenue is not telling us much, they have profit 33 billion dollars, so this is 3% of their profit. This is not very much, but something visible for sure. Stakeholders would not be happy.
- thechao 4y ago
  What percentage of their profit is attributable to these specific placed-items? If placed-item profit is < 1 billion, then it is no longer profitable as a subunit of AMZN.
legitster 4y ago
This would also set precedent, Amazon would have to change their practice or risk getting sued nonstop. Both would cost a lot more than just a billion dollars.
- rdtwo 4y ago
  They will settle
ahtihn 4y ago
It's a lawsuit in the UK, so only UK revenue is relevant. There's also the point about profit vs revenue made by someone else. And finally, even if the fine is "low", they still need to change their business practices (assuming they lose the lawsuit).
throw10920 4y ago
You're comparing global revenue to a fine in the UK. That's kind of dishonest. In 2021, Amazon's UK profits were £23.2B, or $26.2B - of which $1B is almost 4%. Big difference. To top that off, you're looking at revenue, instead of profit. I completely agree that the fines should be substantially higher, but being dishonest is bad.
- brudgers 4y ago
  I am not being dishonest at all. Amazon operates globally. The fine is just another cost of doing business for Amazon. From Amazon’s perspective there’s no significance to the fine’s relationship to UK revenue. Because the practice generates revenue globally. To be clear, I don’t have an opinion about the fine or Amazon’s practice because it is not worth having one. (And of course, the practice has been ongoing and the calculation of revenue hit should be amortized over the years since inception and discounted for the time value of money).
  - throw10920 4y ago
    > From Amazon’s perspective there’s no significance to the fine’s relationship to UK revenue. This is false. Amazon has the option to stop doing business in the UK, meaning that they lose the revenue, but are not longer to subject to fines from the UK's court system. Amazon very clearly balances the expected costs of doing business in a particular market with the expected benefits. Similarly, Amazon's use of the practice globally means that they are subject to fines from every market that they operate in. Which you did not count. > the practice has been ongoing and the calculation of revenue hit should be amortized over the years since inception and discounted for the time value of money These fines impact Amazon's decision of whether to continue to do the practice today. If the fines start to eclipse their current revenue, it literally does not matter if they'll still have made more money by doing it in the past - they'll cease the activity. Therefore, taking past revenues into account is irrelevant and dishonest.
- pbhjpbhj 4y ago
  Is that accounting for dodgy accounting? Selling IP rights to themselves, routing digital goods through the Channel Islands, selling through other countries (Luxembourg?)? I don't know exactly what shenanigans they do, just that they do them.
pb7 4y ago
If I sell a thing for $100 that cost me $99 to procure, is a $1 fine a rounding error in that transaction? In any case, the majority of the revenue certainly didn't come from the UK.

legitster 4y ago

> Law firm Hausfeld, which represents Hunter, said on Thursday that Amazon has breached competition law by using “a secretive and self-favouring algorithm” to promote its own products through the “Buy Box” feature on its website. > Hunter said in a statement: “Far from being a recommendation based on price or quality, the Buy Box favours products sold by Amazon itself, or by retailers who pay Amazon for handling their logistics. Other sellers, however good their offers might be, are effectively shut out.” I'm scratching my head and trying to figure out how this is illegal or different than what every other retailer can do. Are store brands not a thing under UK law? Are stores required by law to only promote the lowest price? As a consumer, I certainly don't want Amazon promoting random third party marketplace items over ones actually fulfilled by Amazon. It's also hard to feel sorry for the kind of businesses hurt by this. Amazon's generics are for product categories that are woefully generic - they source from the same manufacturers as everyone else. And it's not the manufacturers that are suing, but other middle men who are reselling their own white-labeled junk from China.

agd 4y ago
> I'm scratching my head and trying to figure out how this is illegal or different than what every other retailer can do. I think it’s widely accepted that stronger rules can be applied in the case of monopolies. Amazon marketplace is considered by many to be a monopoly.
pannSun 4y ago
> Are store brands not a think under UK law? Store brands should also be looked at critically, yes. Especially for larger store chains.
- Ylpertnodi 4y ago
  "Welcome to Sainsbury's where our Tesco line undercuts the Morrisons selection, neither of which are better than ours but we have to play nice.". I dunno, when I go on bezos.co.uk I expect them to be pushing their own products. I don't have to shop there, and when I do, I know I don't have to.

par 4y ago

Good, I hope they face more though. Amazon product catalog has become a cesspool of knock offs, imitations and super low quality products that basically go straight to the trash.

mabbo 4y ago

The core problem is that the market owner and operator is also a market competitor. It's just not believable that they wouldn't cheat. They have sales data from all their competitors on this market- numbers, prices, trends, across many different competing companies in many different sectors. They have priority access to consumer eyes by owning the home page, owning the search results, and owning the customer relationship. And all of this wouldn't be that big of a problem if Amazon wasn't the absolutely dominant player in the still-growing e-commerce market. Because at that scale, these problems become societal problems that governments have to address.

idlehand 4y ago
Amazon takes a cut of every product sold on their store. They can give their own products a pricing advantage by reducing the platform fee.
- mabbo 4y ago
  They don't even need to. The money all goes to the same place. They can just "take a loss" in the division making the product where the loss is the fee they paid to the other division of Amazon. Then they can claim they're playing fair.

user3939382 4y ago

So far I see everyone discussing search results. Recall that Amazon has been known to go to their competitor's factories and produce identical products with their brand with an undercut price. In some cases they steal the design of and make crap versions of quality products that are selling well https://www.cnbc.com/2021/03/04/amazon-accused-of-copying-camera-gearmaker-peak-designs-top-selling-item-.html https://www.cnbc.com/2021/03/04/amazon-accused-of-copying-ca... Only they know how many people and companies they've hurt doing this. As far as I'm concerned the whole company is ethically bankrupt and rotten to the core starting with Bezos and can disappear from the Earth.

sokoloff 4y ago
In my supermarket, I can walk down an aisle and see 2-liter bottles of Pepsi products, then 2-liter bottles of Poland products, then 2-liter bottles of supermarket-brand products, then 2-liter bottles of Coke products. I strongly suspect the store brand products are manufactured at a bottling facility that also bottles other, name-brand sodas. I think that's all perfectly healthy competition and I'm glad that the super-market offers cut-rate, easily-substituted products on the shelves that they own. If that is good, how is what Amazon doing so different as to be bad?
- uni_rule 4y ago
  Because they aren't selling commodities/consumables. In the world of technology this is textbook anti competitive behavior. If a Chinese company were skimming R&D in the exact same way (as they have attracted some infamy for doing) the comments here would be pitchforks and fucking torches, what makes Amazon deserving of defense in the same situation?
  - sokoloff 4y ago
    A 2-liter bottle of soda seems to be literally and figuratively a consumable. (Similar to an Amazon Basics alkaline battery, which is a product I frequently buy.) I'm sure the supermarket looks over their sales data to understand which products might be compelling for their shoppers and where the store could introduce a store-branded product with a compelling positioning. I support them doing that as well.

jbverschoor 4y ago

"favoring" you identifying good running products by analyzing merchants sales data, then start competing with their own version for less, AND favoring

LatteLazy 4y ago

Amazon sued for one quadrillion mega-dollars for doing something not illegal... This suit 100% will not silently disappear like the last 100 times you heard of a frivolous suit against a mega corp.