13 ms·

An excerpt from: https://pluralistic.net/2023/04/25/greedflation/ https://pluralistic.net/2023/04/25/greedflation/ Amazon binds its sellers over to something c

An excerpt from: https://pluralistic.net/2023/04/25/greedflation/ https://pluralistic.net/2023/04/25/greedflation/ Amazon binds its sellers over to something called Most Favored Nation status. That means that sellers can't offer their goods more cheaply than they do on Amazon – even if it costs them (lots) less to sell in Target or direct from their websites. This means that every time a seller adds a dollar to their Amazon sale price, they have to add a dollar to the price of their goods everywhere else, too. After a bunch of state AGs filed lawsuits against Amazon over this, the company promised to cut it out. They lied. A new filing in California's suit against Amazon reveals that sellers live "in constant fear" of retaliation from Amazon if they allow their goods to be sold more cheaply elsewhere.

endisneigh 3y ago
I don't see the problem with this. They don't have to sell on Amazon to begin with. Amazon obviously wants their customers to have the best price available. Sellers can just go off Amazon if they don't like it. If sellers end up raising the price on other platforms as a result of this rule, then that says more about them than Amazon. Demanding the lowest price does not harm consumers. Overstock, Wayfair, Walmart and others do the same thing. The result is the lowest price for a given product on all sites. This is unquestionably good for consumers. If the price is higher then the fault is simply that of the seller for raising it. All e-commerce sites want the lowest price for their customers. Of course, people don't see nuance and just see BigCompany bad.
- mjsweet 3y ago
  From what I understand, it’s not that simple. Sellers need the sheer volume of Amazon to compete. There is also the risk of Amazon duplicating their product and continuing to sell it on their platform… or their competitors filling the void.
  - endisneigh 3y ago
    So what? That's how e-commerce works. Why should Amazon be obligated to fill their store with higher priced items compared to their competitors? No one is going to visit a store where every item could be purchased cheaper somewhere else. This is exactly why price match is a thing, because they don't want their costumers soliciting different stores to begin with. The move that Amazon's price be no higher than offered elsewhere is the most pro-consumer move possible. Hilarious people are complaining about it. Any second-order effects of this are on the actual seller, not Amazon.
    - mjsweet 3y ago
      The market should decide. That’s commerce.
      - endisneigh 3y ago
        Yes, exactly. These sellers should and can just leave Amazon if they have a problem with it.
        mjsweet 3y ago
        No, they should be able to set their own pricing as they see fit.
        endisneigh 3y ago
        They are able to do so, but Amazon is not obligated to have them on their platform if they aren't providing the best price to their customers.
        mjsweet 3y ago
        Amazon is a product search engine and should be treated as such. Vendors must have the freedom to set pricing on any platform as they see fit. If all product search engines and ecommerce platforms behaved in this anticompetitive behaviour then what would we have? A weird commercial landscape that lacks flexibility… in the end the consumer looses because free market forces are not in play.
  - scarface_74 3y ago
    If your product doesn’t have any value that can be protected by copyright, patent and you haven’t built any type of affinity with customers, isn’t it by definition just another commoditized product?
    - jhbadger 3y ago
      Well, here's a real example. About a decade ago there was a simple video conferencing system called Nautilus. A simple LCD screen that let you call other people with the device and talk to them, not having to bother with computers or smartphones. The sort of thing that is good for talking with elderly relatives who may not be very computer or phone savvy. I bought one (from Amazon) for myself and my elderly parents. It worked well, but a few years later Amazon came out with their Echo Show products which are basically the same thing, which killed the Nautilus. I'm sure it was covered by patents and what not, but you can't protect the idea. Amazon obviously saw that it sold reasonably well and used its power as both a marketplace and a technology company to undercut their own seller.
      - scarface_74 3y ago
        Really? That’s your example? Everyone and their mother has a video conferencing solution and the idea has been around as something to aspire to since the 60s with the Jetsons . Do you agree with the look and feel lawsuit that Apple had against MS? Or think that Roku, Amazon, Google , etc did something untoward because they came after Apple with set top boxes?
        jhbadger 3y ago
        Well, for historical accuracy, Roku was first in regard to streaming devices you hooked up to your TV. Apple and the rest copied them. And it is pretty much obvious that Microsoft copied Apple (and yes, you can argue that Apple in turn copied PARC). But what makes Amazon copying things different is that they are a marketplace for other people's products and a maker of products themselves. That has an intrinsic conflict of interest.
- Jensson 3y ago
  It is none of Amazons business what prices they put when they list their wares on other services, the only reason they care is that they want to crush the competition. Dictating how retailers can interact with your competitors is anti-competitive. Dictating what prices they can offer when they put up listings is a part of that, it is anti-competitive.
  - endisneigh 3y ago
    [flagged]
    - tartuffe78 3y ago
      Amazon is abusing it's monopoly power to hurt competition, when Amazon is the only place to certain things, consumer cost will go up.
      - endisneigh 3y ago
        > when Amazon is the only place to certain things No seller is obligated to sell on Amazon to begin with, so this entire premise is false.
        smoldesu 3y ago
        "No manufacturer is obligated to buy Standard Oil or Carnegie steel, so this entire premise is false."
        endisneigh 3y ago
        Yes, because there are not literally thousands of e-commerce stores out there. Amazon is the only one. UPS, USPS and FedEx don't exist either. You must use Prime to transport your stuff.
        smoldesu 3y ago
        Look, with this reasoning there is literally no world in which Amazon can be implicated for monopoly abuse of power. Apparently, having any other option (even if it is damaged by monopoly abuse) is good enough for you. Clearly the FTC disagrees with your logic, and I'm glad they do. FedEx, UPS and USPS should be sued too if they did what Amazon is doing.
- kmeisthax 3y ago
  So, to be clear, you have no problem with Amazon writing their own laws and collecting their own taxes? Because that is what they are effectively doing.
  - scarface_74 3y ago
    Every company has the right to set the terms and fees to use them. A “tax” is something you are mandated to pay. I get plenty of crap advertised to me on FB that you can’t find on Amazon.
  - endisneigh 3y ago
    If sellers were obligated to sell on Amazon that would be the case, but it's not, is it? Ironically, people complaining about this are exacerbating the issue. If sellers who actually cared left Amazon it would loosen Amazon's dominance in e-commerce.
    - tartuffe78 3y ago
      They're obligated to by the grip Amazon already has on the e-commerce market. Letting Amazon make anti-competitive moves that increase their grip will only worsen the situation.
      - endisneigh 3y ago
        This grip you're describing only exists because they don't leave, and nothing is stopping them. Again, no one is forcing people to sell on Amazon. They could use Shopify or sell on eBay. People act as if you have to sell on Amazon. You don't. That assumption and expectation is why Amazon is dominant to begin with. Sellers should leave if they don't like it, and that will naturally soften Amazon dominance.
        anonymousab 3y ago
        > and nothing is stopping them. Imminent collapse and bankruptcy when they leave due to Amazon's dominant market position. That you can set up a shop anywhere does not mean anything when all of your potential customers are only going to the Amazon digital strip mall.
- cedilla 3y ago
  It does the opposite - it prevents the price going lower than cost plus Amazon fees. Amazon is not exactly cheap for sellers, so the price has to go up everywhere.
  - pnutjam 3y ago
    I read that, on average, Amazon collects 50% of the cost in fees; from sellers.
    - scarface_74 3y ago
      And how much do you think traditional retail marks up prices from wholesale to retail?
      - pnutjam 3y ago
        Why is that relevant?
        scarface_74 3y ago
        Because Amazon is a retail company and the amount that Amazon charges is not much different than the cost overhead of getting any product through the channel.
        pnutjam 3y ago
        so my (theoretical) company that optimizes to keep these costs lower shouldn't be able to compete on those fees?
        scarface_74 3y ago
        Sure, if all you care about is money, then you can already go on Amazon and choose alternate vendors that are available at a lower price with slower shipping.
- brookst 3y ago
  I'll take the charitable interpretation and assume you just don't understand the mechanics of the policy. Amazon is saying that sellers cannot offer a fair low price to customers on other platforms if the seller can't also offer it on Amazon. This is 1) anticompetitive, 2) anticonsumer, and 3) insane. Consider this test: - Seller buys a crappy LED bulb from China for $0.80 - Seller is happy to list the bulb on Walmart, Target, etc, for $2.00. Net of fees and shipping and stuff they make enough money - Amazon charges $3 in fees. Obviously the seller can't afford to sell for $2 on Amazon. They sell for $5 instead. - However, now the seller also can't sell for $2 on competing sites. Amazon, leveraging its market share, has dictated that the seller must price Amazon's fees into pricing on non-Amazon sites, so consumers pay $5 to Target for something the seller would have been happy getting $2 for. This is insane.
  - endisneigh 3y ago
    I disagree. Let's use your example. The sellers should stop selling that item on Amazon, and sell their light bulb on Walmart, or where-ever. Customers who really need that will go find it at Walmart, or where-ever. This strengthens the competitors to Amazon, which is bad for Amazon and good for the consumer. The consumer also find the lower price that they wanted. Alternatively, they buy the alternate product on Amazon which would be cheaper than the inflated price (per your example). Again, good for the customer. Everyone wins in every scenario except for the seller, which is how Amazon and every wholesaler operates. Suppose the FTC wins this case and sellers can put whatever price on whatever site. Amazon, like any store wants the lowest price. Not to mention there are only some many items you can show on the first page of results. They will find some other reason to remove these sellers and/or their items. Now maybe there's another case to stop that behavior too. The result is that companies are not obligated to let sellers on their site. That is insane. In summary, there will never be a scenario where Amazon allows sellers to sell the exact same item for more than Amazon's competitors, unless the government forces Amazon to let sellers sell whatever on their site.
    - jbluepolarbear 3y ago
      You’re just wrong, Amazon controls around 35% of all US e-commerce. Not being able to sell on Amazon instantly removes most of your available customers. The second largest is Walmart and it’s closer to 7%. Walmart, target, whatever, don’t add up to Amazons market.
- throwaway14356 3y ago
  it is about the desire to control things that are non of your business.
- Buttons840 3y ago
  > Demanding the lowest price does not harm consumers. Amazon demands that sellers increase their prices on selling platforms with lower overhead. A demand to increase prices does harm consumers.
ct0 3y ago
Just change the SKU of the product so they are "different". Big box stores do it all the time to reduce the probability of price matching.
- jprete 3y ago
  Amazon is not a court of law and need not be bound by this technicality.
  - oblio 3y ago
    More than that... there's probably no real recourse. For the same reason you mentioned.
    - EGreg 3y ago
      The real solution is an open source Amazon. What happened to Magento? Does it have any traction? Why sell on Amazon instead of your own site? Can’t competitors to FBA spring up that have great logistics? Are there any? Can anyone link me to them?
      - endisneigh 3y ago
        Sellers want Amazon’s audience
        throwaway14356 3y ago
        which is easy to compete with for a government platform. in a lot of countries it would save a lot of money if the tax office had direct access to the product and purchase database. Thousands of people could move to more useful jobs.
        EGreg 3y ago
        That's the same trap that TikTok influencers and others fall into. You are sold "the dream" by showing top sellers / influencers / etc. and told you can be like them. Kevin O'Leary became a meme for promoting this bullshit: https://www.youtube.com/watch?v=AuqemytQ5QA https://www.youtube.com/watch?v=AuqemytQ5QA In fact, even the top influencers can be deplatformed in an instant, and their speech is controlled. And same with Amazon. But the thing is that the people you never hear about, the "middle class", are far more controlled and the "long tail" produces all that free content that basically gets almost new views / buys but all that free sharecropper content is then used to train AI models or provide proof of large available inventory / product / content BY THE PLATFORM that pits them all against each other in a zero-sum game. https://www.reddit.com/r/quotes/comments/117oh1m/the_upper_class_keeps_all_of_the_money_pays_none/ https://www.reddit.com/r/quotes/comments/117oh1m/the_upper_c...
platz 3y ago
Why rely in a promise. what happened to the lawsuits?
cmrdporcupine 3y ago
Hasn't WalMart been doing the same thing for decades, but in bricks & mortar retailing?
- taeric 3y ago
  Yes, which is why searching "most favored nation clause" turns up legal advice on how to set that up in a good way. Note, there is still a valid question on whether or not companies with enough exposure should be held to higher standards. Consider, we hold pro players to tighter requirements than we do local leagues. They both have basically the same rules, of course, but not fully identical. And enforcement is, of course, largely at the discretion of the agencies enforcing them. The last is obnoxious, if you view the entire field as a homogeneous thing. And I do get the impression that there is something more going on in this case. That said, it is not abnormal to rank ROI on what gets enforced. I wish it was framed directly in those terms, though.
  - golemotron 3y ago
    The US is strong on the doctrine that the law applies equally to people (legal entities) regardless of size / market cap. I don't think we'll ever see something like the EU's law that targets only large internet companies. It might even not fly on equal protection grounds. I think that in either Finland or Iceland people receive traffic fines that are a percentage of their income. They would never fly in the US.
    - taeric 3y ago
      That is why I didn't say it applies differently. I said it is enforced on a ranking that is based on ROI. And... it really has to be. There are almost certainly low key levels of bad practices in small shops. But it would cost more and take more out of the economy to enforce them than it is to just not care. Now, that bar is rising, of course. Things that used to not matter years ago are easily enforced today.
      - abduhl 3y ago
AlanYx 3y ago
I'm curious... how far does Amazon's MFN policy extend? For example, let's say I independently decide to import an item from company X and sell it only on a Shopify site for a lower price than company X's items listed on Amazon. Will Amazon exert pressure on company X to stop shipments to me or impose a minimum sale price policy simply because company X's products are available elsewhere cheaper than on Amazon?
nemo44x 3y ago
Isn’t this very common among all resellers? For example if you own a hotel and want other websites to sell your availability they will only list you if you don’t list the same availability for less money. They do this in part because people use the service to search for hotels and even they find one they want they go to other places to see if it’s cheaper.
- notatoad 3y ago
  This is an antitrust lawsuit filed by the FTC, not an accusation of specifically illegal conduct. They're not saying amazon committed a crime by doing this, they're saying that it's evidence of amazon abusing their market position to create a monopoly. "most favoured nation" status is legal, creating a monopoly isn't.
  - jjk166 3y ago
    You have that backwards. Monopolies are perfectly legal, it is only establishing and maintaining monopolies by improper conduct (ie specific anti-competitive practices) that is illegal. MFNs are not per se anticompetitive, but by the rule of reason they might be under certain circumstances. The FTC would have to prove that this is one such instance where MFNs are illegal conduct.
jandrewrogers 3y ago
It is interesting to note that the US government often requires the same kinds of MFN terms, even though it is usually much more expensive to do business with the government than the private sector. There are many ways of constructively working around MFN requirements but it creates collateral damage. For example, the practice of having very high prices that are steeply discounted for most customers is often an artifact of having the US government as one of your customers. For software, it is common to create a new product/service that is trivially different in some way so that you can justify a new SKU that is only sold to the government. Amazon's practice is bad because it anchors pricing to their mandated cost structure. That the US government engages in similar practices should at least raise questions, because it has the same effect on the marketplace.
- jfghi 3y ago
  Not the time or place for whataboutism
  - scarface_74 3y ago
    Why not? If it’s good enough for the government, why isn’t it good enough for the company they are going after?
    - zeroonetwothree 3y ago
      It’s bad for both. But this thread is specifically about Amazon.
  - jandrewrogers 3y ago
    It isn't "whataboutism". If the government's position is that MFN terms for vendors are fundamentally anti-competitive and bad for consumers, which I agree with, then it raises questions about any organization or sector of the economy that widely requires MFN terms. It discredits the FTC when the US government routinely engages in the same market malpractice that they are accusing Amazon of but are disinterested in changing their own contracting behavior. It doesn't become less bad because it is the government doing it to vendors instead of Amazon. This "rules for thee but not for me" behavior is why trust in government institutions has been eroding. It is difficult to give good and necessary actions the aura of legitimacy required for democratic institutions to function when the hypocrisy is obvious.
traviswingo 3y ago
I feel like I’ve purchased direct from business at much cheaper rates than what were listed on Amazon. Is it possible the loophole here is to provide discount codes at checkout for “20% off” on website only, and now magically it’s cheaper than Amazon?
- jrockway 3y ago
  I suppose if ABC LLC makes the devices, and someone sets up ABD LLC to sell them on Amazon and ABE LLC to sell them on Target.com, ABE LLC and ABC LLC aren't bound to ABD LLC's "most favored nation" agreement. Shell companies are for more than just tax evasion!
timmaxw 3y ago
This writeup has a lot more details: https://www.wired.com/story/amazon-antitrust-lawsuit-cuts-to-core-of-identity/ https://www.wired.com/story/amazon-antitrust-lawsuit-cuts-to... DC AG Karl Racine filed a lawsuit over this in May 2021. The judge threw it out, supposedly for lack of evidence that it actually raised prices: https://www.jurist.org/news/2022/03/dc-trial-court-dismisses-amazon-antitrust-lawsuit/ https://www.jurist.org/news/2022/03/dc-trial-court-dismisses... I can't find details; it's unclear what the evidence or lack thereof was. CA AG Rob Bonta filed another lawsuit over the same issue in Sept 2022. Some juicy quotes here (although only one side of the story): https://oag.ca.gov/news/press-releases/attorney-general-bonta-reveals-additional-evidence-antitrust-violations-lawsuit https://oag.ca.gov/news/press-releases/attorney-general-bont... The CA lawsuit is set to go to trial in 2026.
- SOLAR_FIELDS 3y ago
  I know that sometimes these lawsuits can take awhile but scheduling something 3 years away seems excessive. It feels like discovery can take months, but years feels like a very long time here especially since this is something that is actively still ongoing and damaging to the victims
granzymes 3y ago
According to the FTC's lawsuit, Amazon no longer binds its sellers with a Most Favored Nation clause. Instead, Amazon now will refuse to promote an offer in its "buy box" space if it detects a lower price for that good on another website. The FTC alleges that this simply reconstitutes the MFA since most sales on Amazon take place from the buy box. Amazon responds that it is within its rights to not promote uncompetitive offers that make its site look bad for not having the lowest available price.
- helen___keller 3y ago
  Does anyone have examples of popular / name brand products that are pushed down in ranking due to this? I would love to see for myself how this looks in practice
  - granzymes 3y ago
    Here's one of the examples that the FTC cites in its complaint (at page 27): https://www.amazon.com/Pilot-Retractable-Rollerball-Extra-Refillable/dp/B00MBL5BX2/ref=sr_1_11?crid=91VWVLCUB2PI&keywords=pilot+g2+red+retractable+rollerball+pens&qid=1696439775&s=office-products&sprefix=pilot+g2+red+retractable+rollerball+pens%2Coffice-products%2C152&sr=1-11 https://www.amazon.com/Pilot-Retractable-Rollerball-Extra-Re... Compare it to this listing for a very similar product: https://www.amazon.com/Pilot-Retractable-Rollerball-Ultra-0-38mm/dp/B09R86PMNX/ref=sr_1_4?crid=91VWVLCUB2PI&keywords=pilot+g2+red+retractable+rollerball+pens&qid=1696439900&s=office-products&sprefix=pilot+g2+red+retractable+rollerball+pens%2Coffice-products%2C152&sr=1-4 https://www.amazon.com/Pilot-Retractable-Rollerball-Ultra-0-... You'll see that in the FTC's example, you need to click to see more buying details and that at the time of this comment the lowest price is $14.28 with free shipping (on October 12th for my location). In the other example, the "buy box" highlights the best offer of $9.99 with free shipping (on October 5th for my location).
    - helen___keller 3y ago
      Thanks! I had misunderstood what “buy box” is As a consumer I definitely avoid products with no buy box. I thought it was only related to Amazon fulfillment (which in turn I use as a proxy for being likely to receive the product on time and undamaged)
shadowgovt 3y ago
This sort of practice is not as uncommon as one might assume. It is extremely common for manufacturers to set a minimum advertised price (MAP) on the products they sell to retailers. This is done to keep the cost of, say, luxury goods above a certain value, or to ensure that even if demand falls off for a product, the product is sold from official channels at a price point that covers the raw-materials-plus-labor cost so the manufacturer isn't fundamentally selling at a loss. These agreements are generally enforced by both contract and tit-for-tat... Sometimes there are contractually-encoded penalties for going under-MAP, but sometimes the agreement is more "off the books..." If Amazon decides those Gucci purses are just taking up warehouse space and slashes their price to clear them, they can do that... If they don't want to have any Gucci purses to sell next year through official channels. Why is this behavior legal for manufacturers but maybe not for Amazon? I can see no other reason than the law is path-dependent and arbitrary. "Fair trade" is a concept we invent as we go. (Incidentally... As a consumer, it's useful to remember MAP exists when you hear whispers of "don't buy from unauthorized resellers." Sometimes the goods you get from those channels are shady, but sometimes they're exactly the same as the official-goods channels, shoveled into the back channel by an official retailer to clear warehouse space and reported to the manufacturer as 'damaged, lost' to preserve the MAP kayfabe).
- yjftsjthsd-h 3y ago
  > Why is this behavior legal for manufacturers but maybe not for Amazon? I can see no other reason than the law is path-dependent and arbitrary. Market share => market power => different regulations. (Of course, I would personally prefer to ban this behavior across the board; I just wanted to also point out that treating Amazon differently could plausibly be reasonable)
  - Nasrudith 3y ago
    Those arrows also flow in reverse just as well. Whatever arbitrary decisions are made will advantage some other entity which may or may not currently exist. Different regulations => market power => market share.
dmix 3y ago
This is explained in the OP article linked here... Although I guess not everyone actually reads the articles so reiterating in the comments is useful. > Still, why can’t a third-party seller offer a lower price outside of Amazon? Good question! That’s where the scheme gets very clever. Originally, Amazon imposed contracts, as the FTC noted, “barring all sellers from offering their goods for lower prices anywhere else.” But Europeans, and Senator Richard Blumenthal, complained about these price parity agreements, so Amazon dropped its explicit contractual requirements in 2019. > However, this change was a farce. The firm simply did through code what it couldn’t do through contract. "Amazon,” claims the FTC, “has implemented an algorithm for the express purpose of deterring other online stores from offering lower prices. > Today, Amazon tells sellers that if it detects a lower price for their products on any other online store, they will be punished, which is to say, their ability to get their products onto a place on the Amazon website where customers click will go away. The net effect, as Amazon itself wrote, is that "prices will go up."
lanza 3y ago
> A new filing in California's suit against Amazon reveals that sellers live "in constant fear" of retaliation from Amazon if they allow their goods to be sold more cheaply elsewhere. Tangential, but out of context quotes used in your sentence makes me think you're lying no matter what you're saying. Or else you would have kept it in context and used the whole quote. Not to defend Amazon in the slightest. Just tired of seeing Breitbert quality clickbait OOC quotes everywhere.
BeFlatXIII 3y ago
> That means that sellers can't offer their goods more cheaply than they do on Amazon – even if it costs them (lots) less to sell in Target or direct from their websites. Is there a way to get around this by having the list price higher than Amazon but run specials for most weeks of the year that undercut Amazon? Could that only be a viable strategy if Target is the final merchant but not on the manufacturer's website?

endisneigh 3y ago

I don't see the problem with this. They don't have to sell on Amazon to begin with. Amazon obviously wants their customers to have the best price available. Sellers can just go off Amazon if they don't like it. If sellers end up raising the price on other platforms as a result of this rule, then that says more about them than Amazon. Demanding the lowest price does not harm consumers. Overstock, Wayfair, Walmart and others do the same thing. The result is the lowest price for a given product on all sites. This is unquestionably good for consumers. If the price is higher then the fault is simply that of the seller for raising it. All e-commerce sites want the lowest price for their customers. Of course, people don't see nuance and just see BigCompany bad.

mjsweet 3y ago
From what I understand, it’s not that simple. Sellers need the sheer volume of Amazon to compete. There is also the risk of Amazon duplicating their product and continuing to sell it on their platform… or their competitors filling the void.
- endisneigh 3y ago
  So what? That's how e-commerce works. Why should Amazon be obligated to fill their store with higher priced items compared to their competitors? No one is going to visit a store where every item could be purchased cheaper somewhere else. This is exactly why price match is a thing, because they don't want their costumers soliciting different stores to begin with. The move that Amazon's price be no higher than offered elsewhere is the most pro-consumer move possible. Hilarious people are complaining about it. Any second-order effects of this are on the actual seller, not Amazon.
  - mjsweet 3y ago
    The market should decide. That’s commerce.
    - endisneigh 3y ago
      Yes, exactly. These sellers should and can just leave Amazon if they have a problem with it.
      - mjsweet 3y ago
        No, they should be able to set their own pricing as they see fit.
        endisneigh 3y ago
        They are able to do so, but Amazon is not obligated to have them on their platform if they aren't providing the best price to their customers.
        mjsweet 3y ago
        Amazon is a product search engine and should be treated as such. Vendors must have the freedom to set pricing on any platform as they see fit. If all product search engines and ecommerce platforms behaved in this anticompetitive behaviour then what would we have? A weird commercial landscape that lacks flexibility… in the end the consumer looses because free market forces are not in play.
- scarface_74 3y ago
  If your product doesn’t have any value that can be protected by copyright, patent and you haven’t built any type of affinity with customers, isn’t it by definition just another commoditized product?
  - jhbadger 3y ago
    Well, here's a real example. About a decade ago there was a simple video conferencing system called Nautilus. A simple LCD screen that let you call other people with the device and talk to them, not having to bother with computers or smartphones. The sort of thing that is good for talking with elderly relatives who may not be very computer or phone savvy. I bought one (from Amazon) for myself and my elderly parents. It worked well, but a few years later Amazon came out with their Echo Show products which are basically the same thing, which killed the Nautilus. I'm sure it was covered by patents and what not, but you can't protect the idea. Amazon obviously saw that it sold reasonably well and used its power as both a marketplace and a technology company to undercut their own seller.
    - scarface_74 3y ago
      Really? That’s your example? Everyone and their mother has a video conferencing solution and the idea has been around as something to aspire to since the 60s with the Jetsons . Do you agree with the look and feel lawsuit that Apple had against MS? Or think that Roku, Amazon, Google , etc did something untoward because they came after Apple with set top boxes?
      - jhbadger 3y ago
        Well, for historical accuracy, Roku was first in regard to streaming devices you hooked up to your TV. Apple and the rest copied them. And it is pretty much obvious that Microsoft copied Apple (and yes, you can argue that Apple in turn copied PARC). But what makes Amazon copying things different is that they are a marketplace for other people's products and a maker of products themselves. That has an intrinsic conflict of interest.
Jensson 3y ago
It is none of Amazons business what prices they put when they list their wares on other services, the only reason they care is that they want to crush the competition. Dictating how retailers can interact with your competitors is anti-competitive. Dictating what prices they can offer when they put up listings is a part of that, it is anti-competitive.
- endisneigh 3y ago
  [flagged]
  - tartuffe78 3y ago
    Amazon is abusing it's monopoly power to hurt competition, when Amazon is the only place to certain things, consumer cost will go up.
    - endisneigh 3y ago
      > when Amazon is the only place to certain things No seller is obligated to sell on Amazon to begin with, so this entire premise is false.
      - smoldesu 3y ago
        "No manufacturer is obligated to buy Standard Oil or Carnegie steel, so this entire premise is false."
        endisneigh 3y ago
        Yes, because there are not literally thousands of e-commerce stores out there. Amazon is the only one. UPS, USPS and FedEx don't exist either. You must use Prime to transport your stuff.
        smoldesu 3y ago
        Look, with this reasoning there is literally no world in which Amazon can be implicated for monopoly abuse of power. Apparently, having any other option (even if it is damaged by monopoly abuse) is good enough for you. Clearly the FTC disagrees with your logic, and I'm glad they do. FedEx, UPS and USPS should be sued too if they did what Amazon is doing.
kmeisthax 3y ago
So, to be clear, you have no problem with Amazon writing their own laws and collecting their own taxes? Because that is what they are effectively doing.
- scarface_74 3y ago
  Every company has the right to set the terms and fees to use them. A “tax” is something you are mandated to pay. I get plenty of crap advertised to me on FB that you can’t find on Amazon.
- endisneigh 3y ago
  If sellers were obligated to sell on Amazon that would be the case, but it's not, is it? Ironically, people complaining about this are exacerbating the issue. If sellers who actually cared left Amazon it would loosen Amazon's dominance in e-commerce.
  - tartuffe78 3y ago
    They're obligated to by the grip Amazon already has on the e-commerce market. Letting Amazon make anti-competitive moves that increase their grip will only worsen the situation.
    - endisneigh 3y ago
      This grip you're describing only exists because they don't leave, and nothing is stopping them. Again, no one is forcing people to sell on Amazon. They could use Shopify or sell on eBay. People act as if you have to sell on Amazon. You don't. That assumption and expectation is why Amazon is dominant to begin with. Sellers should leave if they don't like it, and that will naturally soften Amazon dominance.
      - anonymousab 3y ago
        > and nothing is stopping them. Imminent collapse and bankruptcy when they leave due to Amazon's dominant market position. That you can set up a shop anywhere does not mean anything when all of your potential customers are only going to the Amazon digital strip mall.
cedilla 3y ago
It does the opposite - it prevents the price going lower than cost plus Amazon fees. Amazon is not exactly cheap for sellers, so the price has to go up everywhere.
- pnutjam 3y ago
  I read that, on average, Amazon collects 50% of the cost in fees; from sellers.
  - scarface_74 3y ago
    And how much do you think traditional retail marks up prices from wholesale to retail?
    - pnutjam 3y ago
      Why is that relevant?
      - scarface_74 3y ago
        Because Amazon is a retail company and the amount that Amazon charges is not much different than the cost overhead of getting any product through the channel.
        pnutjam 3y ago
        so my (theoretical) company that optimizes to keep these costs lower shouldn't be able to compete on those fees?
        scarface_74 3y ago
        Sure, if all you care about is money, then you can already go on Amazon and choose alternate vendors that are available at a lower price with slower shipping.
brookst 3y ago
I'll take the charitable interpretation and assume you just don't understand the mechanics of the policy. Amazon is saying that sellers cannot offer a fair low price to customers on other platforms if the seller can't also offer it on Amazon. This is 1) anticompetitive, 2) anticonsumer, and 3) insane. Consider this test: - Seller buys a crappy LED bulb from China for $0.80 - Seller is happy to list the bulb on Walmart, Target, etc, for $2.00. Net of fees and shipping and stuff they make enough money - Amazon charges $3 in fees. Obviously the seller can't afford to sell for $2 on Amazon. They sell for $5 instead. - However, now the seller also can't sell for $2 on competing sites. Amazon, leveraging its market share, has dictated that the seller must price Amazon's fees into pricing on non-Amazon sites, so consumers pay $5 to Target for something the seller would have been happy getting $2 for. This is insane.
- endisneigh 3y ago
  I disagree. Let's use your example. The sellers should stop selling that item on Amazon, and sell their light bulb on Walmart, or where-ever. Customers who really need that will go find it at Walmart, or where-ever. This strengthens the competitors to Amazon, which is bad for Amazon and good for the consumer. The consumer also find the lower price that they wanted. Alternatively, they buy the alternate product on Amazon which would be cheaper than the inflated price (per your example). Again, good for the customer. Everyone wins in every scenario except for the seller, which is how Amazon and every wholesaler operates. Suppose the FTC wins this case and sellers can put whatever price on whatever site. Amazon, like any store wants the lowest price. Not to mention there are only some many items you can show on the first page of results. They will find some other reason to remove these sellers and/or their items. Now maybe there's another case to stop that behavior too. The result is that companies are not obligated to let sellers on their site. That is insane. In summary, there will never be a scenario where Amazon allows sellers to sell the exact same item for more than Amazon's competitors, unless the government forces Amazon to let sellers sell whatever on their site.
  - jbluepolarbear 3y ago
    You’re just wrong, Amazon controls around 35% of all US e-commerce. Not being able to sell on Amazon instantly removes most of your available customers. The second largest is Walmart and it’s closer to 7%. Walmart, target, whatever, don’t add up to Amazons market.
throwaway14356 3y ago
it is about the desire to control things that are non of your business.
Buttons840 3y ago
> Demanding the lowest price does not harm consumers. Amazon demands that sellers increase their prices on selling platforms with lower overhead. A demand to increase prices does harm consumers.

ct0 3y ago

Just change the SKU of the product so they are "different". Big box stores do it all the time to reduce the probability of price matching.

jprete 3y ago
Amazon is not a court of law and need not be bound by this technicality.
- oblio 3y ago
  More than that... there's probably no real recourse. For the same reason you mentioned.
  - EGreg 3y ago
    The real solution is an open source Amazon. What happened to Magento? Does it have any traction? Why sell on Amazon instead of your own site? Can’t competitors to FBA spring up that have great logistics? Are there any? Can anyone link me to them?
    - endisneigh 3y ago
      Sellers want Amazon’s audience
      - throwaway14356 3y ago
        which is easy to compete with for a government platform. in a lot of countries it would save a lot of money if the tax office had direct access to the product and purchase database. Thousands of people could move to more useful jobs.
      - EGreg 3y ago
        That's the same trap that TikTok influencers and others fall into. You are sold "the dream" by showing top sellers / influencers / etc. and told you can be like them. Kevin O'Leary became a meme for promoting this bullshit: https://www.youtube.com/watch?v=AuqemytQ5QA https://www.youtube.com/watch?v=AuqemytQ5QA In fact, even the top influencers can be deplatformed in an instant, and their speech is controlled. And same with Amazon. But the thing is that the people you never hear about, the "middle class", are far more controlled and the "long tail" produces all that free content that basically gets almost new views / buys but all that free sharecropper content is then used to train AI models or provide proof of large available inventory / product / content BY THE PLATFORM that pits them all against each other in a zero-sum game. https://www.reddit.com/r/quotes/comments/117oh1m/the_upper_class_keeps_all_of_the_money_pays_none/ https://www.reddit.com/r/quotes/comments/117oh1m/the_upper_c...

platz 3y ago

Why rely in a promise. what happened to the lawsuits?

cmrdporcupine 3y ago

Hasn't WalMart been doing the same thing for decades, but in bricks & mortar retailing?

taeric 3y ago
Yes, which is why searching "most favored nation clause" turns up legal advice on how to set that up in a good way. Note, there is still a valid question on whether or not companies with enough exposure should be held to higher standards. Consider, we hold pro players to tighter requirements than we do local leagues. They both have basically the same rules, of course, but not fully identical. And enforcement is, of course, largely at the discretion of the agencies enforcing them. The last is obnoxious, if you view the entire field as a homogeneous thing. And I do get the impression that there is something more going on in this case. That said, it is not abnormal to rank ROI on what gets enforced. I wish it was framed directly in those terms, though.
- golemotron 3y ago
  The US is strong on the doctrine that the law applies equally to people (legal entities) regardless of size / market cap. I don't think we'll ever see something like the EU's law that targets only large internet companies. It might even not fly on equal protection grounds. I think that in either Finland or Iceland people receive traffic fines that are a percentage of their income. They would never fly in the US.
  - taeric 3y ago
    That is why I didn't say it applies differently. I said it is enforced on a ranking that is based on ROI. And... it really has to be. There are almost certainly low key levels of bad practices in small shops. But it would cost more and take more out of the economy to enforce them than it is to just not care. Now, that bar is rising, of course. Things that used to not matter years ago are easily enforced today.
    - abduhl 3y ago

AlanYx 3y ago

I'm curious... how far does Amazon's MFN policy extend? For example, let's say I independently decide to import an item from company X and sell it only on a Shopify site for a lower price than company X's items listed on Amazon. Will Amazon exert pressure on company X to stop shipments to me or impose a minimum sale price policy simply because company X's products are available elsewhere cheaper than on Amazon?

nemo44x 3y ago

Isn’t this very common among all resellers? For example if you own a hotel and want other websites to sell your availability they will only list you if you don’t list the same availability for less money. They do this in part because people use the service to search for hotels and even they find one they want they go to other places to see if it’s cheaper.

notatoad 3y ago
This is an antitrust lawsuit filed by the FTC, not an accusation of specifically illegal conduct. They're not saying amazon committed a crime by doing this, they're saying that it's evidence of amazon abusing their market position to create a monopoly. "most favoured nation" status is legal, creating a monopoly isn't.
- jjk166 3y ago
  You have that backwards. Monopolies are perfectly legal, it is only establishing and maintaining monopolies by improper conduct (ie specific anti-competitive practices) that is illegal. MFNs are not per se anticompetitive, but by the rule of reason they might be under certain circumstances. The FTC would have to prove that this is one such instance where MFNs are illegal conduct.

jandrewrogers 3y ago

It is interesting to note that the US government often requires the same kinds of MFN terms, even though it is usually much more expensive to do business with the government than the private sector. There are many ways of constructively working around MFN requirements but it creates collateral damage. For example, the practice of having very high prices that are steeply discounted for most customers is often an artifact of having the US government as one of your customers. For software, it is common to create a new product/service that is trivially different in some way so that you can justify a new SKU that is only sold to the government. Amazon's practice is bad because it anchors pricing to their mandated cost structure. That the US government engages in similar practices should at least raise questions, because it has the same effect on the marketplace.

jfghi 3y ago
Not the time or place for whataboutism
- scarface_74 3y ago
  Why not? If it’s good enough for the government, why isn’t it good enough for the company they are going after?
  - zeroonetwothree 3y ago
    It’s bad for both. But this thread is specifically about Amazon.
- jandrewrogers 3y ago
  It isn't "whataboutism". If the government's position is that MFN terms for vendors are fundamentally anti-competitive and bad for consumers, which I agree with, then it raises questions about any organization or sector of the economy that widely requires MFN terms. It discredits the FTC when the US government routinely engages in the same market malpractice that they are accusing Amazon of but are disinterested in changing their own contracting behavior. It doesn't become less bad because it is the government doing it to vendors instead of Amazon. This "rules for thee but not for me" behavior is why trust in government institutions has been eroding. It is difficult to give good and necessary actions the aura of legitimacy required for democratic institutions to function when the hypocrisy is obvious.

traviswingo 3y ago

I feel like I’ve purchased direct from business at much cheaper rates than what were listed on Amazon. Is it possible the loophole here is to provide discount codes at checkout for “20% off” on website only, and now magically it’s cheaper than Amazon?

jrockway 3y ago
I suppose if ABC LLC makes the devices, and someone sets up ABD LLC to sell them on Amazon and ABE LLC to sell them on Target.com, ABE LLC and ABC LLC aren't bound to ABD LLC's "most favored nation" agreement. Shell companies are for more than just tax evasion!

timmaxw 3y ago

This writeup has a lot more details: https://www.wired.com/story/amazon-antitrust-lawsuit-cuts-to-core-of-identity/ https://www.wired.com/story/amazon-antitrust-lawsuit-cuts-to... DC AG Karl Racine filed a lawsuit over this in May 2021. The judge threw it out, supposedly for lack of evidence that it actually raised prices: https://www.jurist.org/news/2022/03/dc-trial-court-dismisses-amazon-antitrust-lawsuit/ https://www.jurist.org/news/2022/03/dc-trial-court-dismisses... I can't find details; it's unclear what the evidence or lack thereof was. CA AG Rob Bonta filed another lawsuit over the same issue in Sept 2022. Some juicy quotes here (although only one side of the story): https://oag.ca.gov/news/press-releases/attorney-general-bonta-reveals-additional-evidence-antitrust-violations-lawsuit https://oag.ca.gov/news/press-releases/attorney-general-bont... The CA lawsuit is set to go to trial in 2026.

SOLAR_FIELDS 3y ago
I know that sometimes these lawsuits can take awhile but scheduling something 3 years away seems excessive. It feels like discovery can take months, but years feels like a very long time here especially since this is something that is actively still ongoing and damaging to the victims

granzymes 3y ago

According to the FTC's lawsuit, Amazon no longer binds its sellers with a Most Favored Nation clause. Instead, Amazon now will refuse to promote an offer in its "buy box" space if it detects a lower price for that good on another website. The FTC alleges that this simply reconstitutes the MFA since most sales on Amazon take place from the buy box. Amazon responds that it is within its rights to not promote uncompetitive offers that make its site look bad for not having the lowest available price.

helen___keller 3y ago
Does anyone have examples of popular / name brand products that are pushed down in ranking due to this? I would love to see for myself how this looks in practice
- granzymes 3y ago
  Here's one of the examples that the FTC cites in its complaint (at page 27): https://www.amazon.com/Pilot-Retractable-Rollerball-Extra-Refillable/dp/B00MBL5BX2/ref=sr_1_11?crid=91VWVLCUB2PI&keywords=pilot+g2+red+retractable+rollerball+pens&qid=1696439775&s=office-products&sprefix=pilot+g2+red+retractable+rollerball+pens%2Coffice-products%2C152&sr=1-11 https://www.amazon.com/Pilot-Retractable-Rollerball-Extra-Re... Compare it to this listing for a very similar product: https://www.amazon.com/Pilot-Retractable-Rollerball-Ultra-0-38mm/dp/B09R86PMNX/ref=sr_1_4?crid=91VWVLCUB2PI&keywords=pilot+g2+red+retractable+rollerball+pens&qid=1696439900&s=office-products&sprefix=pilot+g2+red+retractable+rollerball+pens%2Coffice-products%2C152&sr=1-4 https://www.amazon.com/Pilot-Retractable-Rollerball-Ultra-0-... You'll see that in the FTC's example, you need to click to see more buying details and that at the time of this comment the lowest price is $14.28 with free shipping (on October 12th for my location). In the other example, the "buy box" highlights the best offer of $9.99 with free shipping (on October 5th for my location).
  - helen___keller 3y ago
    Thanks! I had misunderstood what “buy box” is As a consumer I definitely avoid products with no buy box. I thought it was only related to Amazon fulfillment (which in turn I use as a proxy for being likely to receive the product on time and undamaged)

shadowgovt 3y ago

This sort of practice is not as uncommon as one might assume. It is extremely common for manufacturers to set a minimum advertised price (MAP) on the products they sell to retailers. This is done to keep the cost of, say, luxury goods above a certain value, or to ensure that even if demand falls off for a product, the product is sold from official channels at a price point that covers the raw-materials-plus-labor cost so the manufacturer isn't fundamentally selling at a loss. These agreements are generally enforced by both contract and tit-for-tat... Sometimes there are contractually-encoded penalties for going under-MAP, but sometimes the agreement is more "off the books..." If Amazon decides those Gucci purses are just taking up warehouse space and slashes their price to clear them, they can do that... If they don't want to have any Gucci purses to sell next year through official channels. Why is this behavior legal for manufacturers but maybe not for Amazon? I can see no other reason than the law is path-dependent and arbitrary. "Fair trade" is a concept we invent as we go. (Incidentally... As a consumer, it's useful to remember MAP exists when you hear whispers of "don't buy from unauthorized resellers." Sometimes the goods you get from those channels are shady, but sometimes they're exactly the same as the official-goods channels, shoveled into the back channel by an official retailer to clear warehouse space and reported to the manufacturer as 'damaged, lost' to preserve the MAP kayfabe).

yjftsjthsd-h 3y ago
> Why is this behavior legal for manufacturers but maybe not for Amazon? I can see no other reason than the law is path-dependent and arbitrary. Market share => market power => different regulations. (Of course, I would personally prefer to ban this behavior across the board; I just wanted to also point out that treating Amazon differently could plausibly be reasonable)
- Nasrudith 3y ago
  Those arrows also flow in reverse just as well. Whatever arbitrary decisions are made will advantage some other entity which may or may not currently exist. Different regulations => market power => market share.

dmix 3y ago

This is explained in the OP article linked here... Although I guess not everyone actually reads the articles so reiterating in the comments is useful. > Still, why can’t a third-party seller offer a lower price outside of Amazon? Good question! That’s where the scheme gets very clever. Originally, Amazon imposed contracts, as the FTC noted, “barring all sellers from offering their goods for lower prices anywhere else.” But Europeans, and Senator Richard Blumenthal, complained about these price parity agreements, so Amazon dropped its explicit contractual requirements in 2019. > However, this change was a farce. The firm simply did through code what it couldn’t do through contract. "Amazon,” claims the FTC, “has implemented an algorithm for the express purpose of deterring other online stores from offering lower prices. > Today, Amazon tells sellers that if it detects a lower price for their products on any other online store, they will be punished, which is to say, their ability to get their products onto a place on the Amazon website where customers click will go away. The net effect, as Amazon itself wrote, is that "prices will go up."

lanza 3y ago

> A new filing in California's suit against Amazon reveals that sellers live "in constant fear" of retaliation from Amazon if they allow their goods to be sold more cheaply elsewhere. Tangential, but out of context quotes used in your sentence makes me think you're lying no matter what you're saying. Or else you would have kept it in context and used the whole quote. Not to defend Amazon in the slightest. Just tired of seeing Breitbert quality clickbait OOC quotes everywhere.

BeFlatXIII 3y ago

> That means that sellers can't offer their goods more cheaply than they do on Amazon – even if it costs them (lots) less to sell in Target or direct from their websites. Is there a way to get around this by having the list price higher than Amazon but run specials for most weeks of the year that undercut Amazon? Could that only be a viable strategy if Target is the final merchant but not on the manufacturer's website?