One day after the Federal Trade Commission and 17 states sued Amazon for “illegally maintaining monopoly power,” the company sent its online sellers an email about the lawsuit. The email, which was obtained by Motherboard, was sent late Wednesday evening with the subject line, “The FTC’s complaint and what it means for you.”
The email denies allegations brought against Amazon in the lawsuit, which include monopolistically eating up large portions of sellers’ revenue in order to use the company’s in-house fulfillment services, the main way that sellers qualify for a Prime badge. The lawsuit alleges that Amazon has hiked these fees over time, and that sellers are effectively dependent on Amazon.
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“Hello,” the email begins. “Yesterday, the Federal Trade Commission (FTC) filed a lawsuit against Amazon alleging that some of our business practices violate antitrust laws. As your partners, we know that this news may generate questions for you and our business together.”
“This lawsuit does not change anything about our relationship with you or how we operate today,” it continues. “The lawsuit represents the FTC’s allegations, which must be reviewed by a court to determine if any of the claims have merit.”
The FTC alleged in the complaint that Amazon used “anticompetitive conduct” in both its consumer-facing store and its Seller Central, which allows individuals and businesses to sell their products on the site. In a press release, the FTC alleged that Amazon’s conduct included “Charging costly fees on the hundreds of thousands of sellers that currently have no choice but to rely on Amazon to stay in business.”
“These fees range from a monthly fee sellers must pay for each item sold, to advertising fees that have become virtually necessary for sellers to do business,” the release states. “Combined, all of these fees force many sellers to pay close to 50% of their total revenues to Amazon.”
“While we respect the role the FTC has historically played in protecting consumers and promoting competition, we fundamentally disagree with the FTC’s allegations. In order to demonstrate how the FTC’s case could impact consumers and businesses that sell in our store, we published a blog post on AboutAmazon to address some key areas of the FTC’s complaint and explain how Amazon’s pro-competitive model actually works,” Amazon’s email to sellers reads, linking to a post detailing the company’s full response to the lawsuit. “Accordingly, we will contest this lawsuit and we will also continue inventing to put our customers—both consumers and the businesses that sell in our store—first.”
“Our commitment to you and your success is unchanging. We remain focused on innovating and investing in tools and services to grow your business. Thank you for choosing to sell in our store,” the email ends, signing off with “Amazon Selling Partner Services.”
The blog post linked by the email again states that Amazon “respect[s]” the FTC’s history in consumer protection. “Unfortunately, it appears the current FTC is radically departing from that approach, filing a misguided lawsuit against Amazon that would, if successful, force Amazon to engage in practices that actually harm consumers and the many businesses that sell in our store—such as having to feature higher prices, offer slower or less reliable Prime shipping, and make Prime more expensive and less convenient,” it reads.
The post also details how Amazon works with its selling partners. “There are about 500,000 independent businesses of all sizes in the United States who choose to sell on Amazon, and these businesses have created 1.5 million U.S. jobs,” it states. “In the two decades since we took the procompetitive step of opening our store to other businesses and inviting them to sell alongside us, sellers have gone from 0% to over 60% of sales on Amazon. This result is not by accident.”
The blog post states that Amazon does in fact allow sellers using qualified third-party fulfillment services to obtain a Prime badge, although its FAQ page for prospective sellers says, “Yes, you are required to send your products to Amazon’s fulfillment centers and use Amazon Multi-Channel Fulfillment to fulfill your Buy with Prime orders.”
The lawsuit is the largest action the FTC has taken against the company this year, but it is not the first. The Commission sued the company in June over its allegedly “manipulative” Amazon Prime service, which required navigating a “labyrinthine” 15-step cancellation process. The antitrust complaint came on the heels of another major antitrust lawsuit filed against Google by the U.S. Department of Justice in January, arguing that Google has illegally monopolized digital advertising technologies.
