California sues Amazon over domain abuse

According to the investigation conducted by the California Attorney General, the e-commerce giant “severely penalizes” companies if their products sell for less on other platforms.

California’s attorney general on Wednesday filed lawsuits against Amazon, which he accuses of abusing its dominant position to stifle competition and raise prices, a complaint that adds to already numerous attempts by regulators to curb the expansion of the giant.

“Amazon forces merchants to agree to deals that keep prices artificially high, knowing full well they can’t say no,” prosecutor Rob Bonta said in a statement.

“For years, California consumers paid more for online purchases because of Amazon’s anti-competitive practices,” he said.

According to the investigation conducted by the Public Ministry, the e-commerce giant “severely penalizes” companies if their products are sold for less on other platforms.

The other markets, therefore, have no chance of emerging, explains the prosecution, as Amazon dominates online consumption, mainly thanks to its loyalty program, Prime.

According to a study by Feedvisor and cited by the press release, 96% of Prime subscribers are more likely to buy products on the platform than anywhere else, and 74% of all American consumers go directly to Amazon. on the Internet.

As a result, “more and more third-party merchants are adopting Amazon, despite their total costs to sell on this site being significantly higher than those of other online stores”, assures the Public Ministry.

“We have nowhere else to go and Amazon knows that all too well,” said an anonymous seller quoted in the statement.

“The Amazon is proud”

Many US states are investigating the anti-competitive practices of tech giants and have launched lawsuits, including against Google and Meta (Facebook), for violating competition law.

An earlier complaint against Amazon, filed by the attorney general for the city of Washington and similar to the one in California, was dismissed in March by a judge.

“We hope that the Californian justice system reaches the same conclusion as that of Washington and quickly closes these cases”, reacted the Seattle group, contacted by AFP.

“Suppliers set their own prices for the products they offer in our store,” the spokesperson said. “Amazon prides itself on offering low prices on a very wide selection. And like any store, we reserve the right not to present offers that are not competitive.”

He assures that if Rob Bonta won the lawsuit, the platform would be “compelled to display higher prices to customers, which strangely goes against essential principles of competition law”.

Amazon insists in every quarterly earnings release and press release about the positive influence it believes it has on SMEs.

Last July, “Amazon’s partners, who are mostly small and medium-sized businesses, had their best Prime Day,” the company said in a promotional campaign. “Retail sales growth (on the platform) has outpaced that of Amazon products.”

California “Hypocrite”

It will be “extremely difficult to prove that Amazon is raising prices,” said Neil Saunders, director of GlobalData.

According to the analyst, the contracts criticized by the Public Ministry are not unusual, and do not prevent merchants from lowering their prices, provided they also do so elsewhere, which guarantees the best prices for the site’s customers.

“It’s also a little hypocritical for California to feign concern for consumers when the state has policies that keep a lot of prices and taxes, like gasoline, very high,” he added.

The US Congress has been working with him for years to reform competition law.

A series of bills aimed directly at Google, Apple and Amazon were passed by a congressional committee in June 2021, then by the Senate Judiciary Committee last January.

The texts seek to limit the control exercised by these companies over their sales platforms (app stores for Google and Apple), where they are judges and parties.

This involves, for example, preventing them from privileging their own products, interfering with prices set by merchants, or even using non-public data generated by sales from other sellers to their advantage.

But the final vote was delayed several times.

Leave a Comment