3 ms·
>If this suit is resolved in the government’s favor, the remedy could be anything from ending anti-discounting measures to breaking up the firm. There's a bit
by granzymes 3y ago
>If this suit is resolved in the government’s favor, the remedy could be anything from ending anti-discounting measures to breaking up the firm.
There's a bit of an odd remedy issue with this lawsuit. The harm being asserted by the FTC is that Amazon charges more fees than competitors but requires that sellers not charge more on Amazon than on competing sites. Originally Amazon allegedly accomplished this with a Most Favored Nation clause, and today Amazon will kick you out of the "buy box" promotional space if they detect you offering lower prices elsewhere.
First, a breakup doesn't cure this harm. You could go all the way to the extreme of splitting Amazon's third-party marketplace into its own company and yet that company could still charge higher fees than competitors and condition the buy box space on sellers not offering lower prices elsewhere.
Second, no injunction makes sense either. Is a court going to force Amazon to advertise a price in the buy box that Amazon knows is not the lowest price available on the market? That's an absurdly anti-consumer thing for a court to order (and so a court would likely not order it).
So what cures the alleged harm?
- s3p 3y agoBreaking the company up into smaller units that don't have the monopoly power of forcing their sellers to fix prices.
- granzymes 3y agoBut how? The smallest unit of a possible breakup would be a standalone 3rd-party marketplace company, and yet that unit would still have the same market power for 3rd party sellers as Amazon as a whole does today.
- thfuran 3y agoWhy is that the smallest possible unit? It may not be especially practical, but it's certainly possible to break Amazon up by retail product category (one company for books, one for kitchenware, etc).
- granzymes 3y agoBecause you run into the issue of "unscrambling the eggs". If Amazon is not organized by retail product category (and I would assume it is largely not), then it will be very difficult to split the company in that way. Courts really aren't in the business of restructuring companies and the last thing you want is for the new baby companies to fail because the restructuring went poorly. Which employees go where, who gets what IP, what happens to all the underlying website/physical infrastructure? A "3rd party marketplace" unit is already likely smaller than is feasible for a court to oversee. By comparison, it would be a lot easier to split Amazon into "AWS" and "not-AWS" because the company is already organized that way.