Amazon accused of widespread scheme to inflate prices across the economy
thebignewsletter.com
thebignewsletter.com
The title is a little clickbait-y. As far as I understand it:
1. Think of Amazon as a search engine for products. 2. Amazon wants its site to be the lowest-price destination for products. 3. If Amazon finds your product on another website for lower than its own website, it'll just hide your listing from the search -- this is meant to be pro-consumer (when you go to Amazon you'll get the lowest price).
This is where it gets a bit more complicated: 4. Amazon sells ~40% of its goods under its own purchasing arm, known to sellers as Vendor Central. (These are items shipped and sold by Amazon.com). This purchasing arm wants X% margins from *brands, based on whatever their internal targets. From what I've experienced personally -- their terms are generally better than their competitors (Walmart/Target/Costco/Sams), so it's generally a no-brainer to sell directly to them when I can instead of selling direct.
So when 4 has a conflict of interest with #1-3, you get the systemic effect that in order for the sellers to get their **sweet purchase orders from Amazon, they now need to raise prices elsewhere so the purchasing arm gets their cut. The sellers don't HAVE to sell to Amazon, but then they'd miss out on giant POs from Amazon at good terms.
Designing a system to incentivize sellers to have their lowest prices on Amazon... I'm not sure if calling it a "widespread scheme to inflate prices" is the fairest thing.
*edit: Historically, Amazon VC basically ran at near break-even under Jeff, "your margin is my opportunity" and all that. Since Andy took over there's been a reshuffling of chairs and the different business units have different margin requirements now.
**edit2: the price inflation mostly affects big brands that sell 8+ figs/yr on Amazon, because smaller sellers don't get POs from VC (too small to bother).
> [Amazon's] own purchasing arm
...so we can't think of Amazon as just "a search engine", right?
You might as well hand someone a toy and say "Think of this as a toy gun. But this is where it gets a bit more complicated: 40% of these have a trigger that shoots bullets." Whom are you kidding?
Clearly with the scheme you described, these are morally two separate entities colluding with each other to use each others' huge powers in the market to raise prices and pocket more profit for themselves.
My understanding is they got caught with this in the mid 2010s and as a result had to come very clean on some of this inter-departmental stuff. Most people who've worked at/with Amazon know its fief-like bureaucracy and clean delineation of business units (as both a strength and a weakness), so I'd be curious if there was more to it.
Then the other question would be: if you run a system that has certain emergent behaviors coming from it, without direct collusion -- how much would you be on the hook for various things that do end up happening? It makes sense that Amazon search wants lowest prices on Amazon, and it makes sense that Amazon VC wants margin, so when the two effects result in price inflation is that Amazon's problem.
IANAL
In cases like this I like to suggest to remember Microsoft's case with IE bundling. The mere act of using monopolistic power of one arm of the business is enough to trigger anti-monopoly laws.
Hiding listings that are found cheaper elsewhere would be very much suspect under these laws.
https://www.winston.com/en/blogs-and-podcasts/competition-co...
But that's aside from the ridiculousness of suggesting that BUs are so independent that their actions aren't being viewed in total by the shared management they both report to.
ELT at Amazon is responsible for the outcomes of their BUs, negative ones included, whether the individual BU leaders 'knew' what those outcomes would be or not. In fact, that's literally how it's supposed to work; ELT directs strategic outcomes from the top.
Yeah, no, this is meant to be pro-Amazon, not pro-consumer.
Fellow traveller that gets dark patterned to death once a corporate position of power is established (we are here).
Am I a conspiracy theorist to believe that Amazon is behind Trump’s decision to end the de minimis?
of course it's hard to know what went through the heads at Amazon, the initial tariff news were crazy and Amazon doesn't want a recession, as it's bad for business
On Amazon, they created listings that imitated our copy and images. On AliExpress/Taobao/etc., they ripped off our images and pretended to be us. Deciding which product/listing is the original product is super nontrivial especially when there's international trademarking and IP law (or lack thereof) involved.
Or they're just ideas.
You wouldn't have had an industrial revolution without copyright/patent laws.
In the modern world where we have done most of the low hanging fruit a new novel idea could be even more valuable for society to protect.
If Amazon detected and banned any seller whose product images were gen AI or which didn't match user photos, it'd go a long way towards regaining trust.
Even some Chinese manufacturers have a broader range on Amazon than Aliexpress.
3 days later the package arrived from amazon, complete with packing slip, where I found it cost £16.
Searching the sellers account they had thousands of random listings - where I assume they can leverage a small profit. Items came and went quickly from their inventory, I assume as amazon prices fluctated.
Most favored nation clauses are often considered anti-competitive.
https://www.ftc.gov/news-events/news/press-releases/2023/09/...
> Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.
There’s a great deal of self published fiction posted online for free. Amazon is happy for people to sell bundle that into a book and sell that.
Kindle Unlimited specifically requires authors to remove earlier copies of their own works to become part of kindle unlimited. Thus increasing the minimum price for everyone above what it would otherwise be.
Some authors make the transition and win, but many destroy their audience and thus current and future revenue sources like donations and patron subscribers. It’s a tempting infusion of cash, but the long term consequences can be devastating making the whole thing really predatory.
It also opens the market for cheap knockoffs. If some chi-fi headphones for 60 bucks are almost as good as the big brands and the big US brands are forced for high prices despite the bad build quality by Amazon, another big seller website should emerge. Oh wait, this already happened with AliExpress and temu.
> there's been a reshuffling of chairs
Hmm.. I think those two things are in conflict.
> The title is a little clickbait-y.
The attourney general of California disagrees with you.
Have you not used target.com or walmart.com recently?
That's difficult to do when their search is so atrociously bad. It ignores keywords and places matches well down the page, if it displays them at all.
Plus the classic 'choose a department to enable sorting' prompt. 30 years and their programmers can't work out how to order items from different 'departments'. Why should a customer have to know about their internal taxonomy?
It's probably better to think of Amazon as a product promotion engine. What the customer thinks they want is less important than what Amazon wants to sell.
If it wanted to be pro-consumer, I don't know, it could warn the consumer the price is lower somewhere else, and point them there, like a good search engine of products! Sounds ridiculous? Yeah, because those claims are a bit ridiculous too.
These laws do not prohibit putting up political banners, but Amazon certainly cannot do whatever they want.
There are laws regarding price fixing, abuse of monopoly powers, discrimination on a protected class, product labeling, and making false and misleading statements about drugs.
If they sell Cuban-made cigars made with conventionally grown tobacco, then while they technically can put up a banner claiming "these organic, made in the USA cigars, if smoked twice daily, will cure epilepsy in children - buy now!", they'll have broken several laws.
In the US major firms do not get a free pass simply because they own the platform and the idea that a website constitute "private property" doesn't work as a defence to anticompetitive conduct or to display a political banner expressing support for a political party of candidate without triggering additional rules / limits.
In the EU this is even less the case, as it effectively treats some platform conduct as capable of creating societal/systemic risks and thus needs to be kept in check. Whether is happens like that all the time in reality is subject of another discussion, I think; the point is that the mechanisms exist.
Political spending/advertising is a regulated activity that goes beyond rules that apply to private property. In the UK, for example, spending, donation, reporting etc. if the activity is intended to influence voters, falls under specific regulations: https://www.electoralcommission.org.uk/our-guidance/campaign...
And those were just links to sites, not things to buy...
Elsewhere in this thread we find shock that American households spend a few thousand dollars on average between Whole Foods and Amazon.com.
I assure you that’s a small fraction of household spending on the goods Amazon sells.
> The policy and spirit of the California antitrust laws are to promote the free play of competitive market forces and the lower prices to consumers that result. Amazon, the dominant online retail store in the United States, has violated the policy, spirit, and letter of those laws by imposing agreements at the retail and wholesale level that have prevented effective price competition across a wide swath of online marketplaces and stores.
The linked-to article concerns a possible preliminary injunction related to that antitrust case.
A pure monopoly is one where there is a single seller or provider. The US grants limited-time monopoly power to a new patent holder, and USPS has a monopoly on traditional letter delivery within the United States, for examples. A pure monopoly is therefore not necessarily illegal.
In addition to that definition, quoting https://www.law.cornell.edu/wex/monopoly :
"In a legal context, the term monopoly is also used to describe a variety of market conditions that are not monopolies in the truest sense. For instance, the term monopoly may be referring to instances where: ... There are many buyers or sellers, but one actor has enough market share to dictate prices (near monopolies)"
That use certainly seems appropriate in the context of Amazon's ability to dictate prices, as described in California's complaint, yes?
That word is not used in the injunction request or the original complaint, except in the title of an article cited by the latter.
You asked malfist 'In what sense does Amazon have “near monopoly power”?'
I answered that question. The state of California claims Amazon has enough market share to dictate prices, making it a near monopoly, and it abuses those near monopoly powers in violation of California anti-trust laws. California doesn't need to demonstrate that Amazon is a pure monopoly because that is irrelevant, and not true.
I farther pointed out that even using the term "monopoly" without the "near" qualifier can mean "There are many buyers or sellers, but one actor has enough market share to dictate prices (near monopolies)", with citation.
Which means your statement "Amazon is a monopoly" is a correct summary of the issue, even if those injunction request and complaint don't use those terms.
It seems you think the term "monopoly" can only ever be applied to pure monopolies. You seem to be confusing the economic and legal definitions. Quoting the introduction paragraph from https://en.wikipedia.org/wiki/Monopoly
> In economics, a monopoly is a single seller. In law, a monopoly is a business entity that has significant market power, that is, the power to charge overly high prices, which is associated with unfair price raises.
This thread concerns a lawsuit, so the legal definition is the most relevant.
If we’re using your definition and not anything directly alleged in the CA complaint…
Do you understand what malfist wrote by "near monopoly power", and agree that it's a correct description of California's anti-trust lawsuit?
If not, what do you not understand?
As to your new set of questions, do you mean my personal beliefs, or do you mean the process by which the courts determine if an organization is abusing monopoly power, or to you mean an actual court decision? I'll answer all three.
Personally, yes, these companies abuse their near monopoly power. The failure to enforce the Robinson–Patman Act, the de-fanging of the FTC and consumer protection agencies, and the post-Borkian re-casting of antitrust law to "consumer welfare", has, IMHO, devastated the American free market resulting in a centralized command economy dominated by a handful of megacorporations.
Nor am I alone in this belief. It is not hard to find articles like "Walmart’s Monopolization of Local Grocery Markets" at https://ilsr.org/article/independent-business/walmarts-monop... which, among other things, points out how the Antitrust Division of the Justice Department has, since the 1960s, greatly raised the threshold for what "highly concentrated" market capture means, and WalMart is extreme even by that definition.
The legal process is to identify the relevant market. This can neither be too narrow - the market for "RC Cola" is not "those who buy RC Cola" but also includes other colas - nor too large -- RC Cola is not really interchangeable with milk, even though both are liquids which people drink.
If 99% of the people drink RC Cola, that could be because they love the taste, and are willing to pay more for it. (This is the premise of the Borkian view that monopolies are a direct and visible expression of consumer choice.) The anti-trust case must therefore also show there was abuse of its market position. That is what California's complaint does by describing many cases of third-party sellers unwilling to offer lower prices elsewhere, for fear of retaliation by Amazon. (The "consumer welfare" interpretation wrongly, IMO, rejects the idea that vendor concerns like this are part of antitrust law.)
There's probably more, but I'm a programmer, not a lawyer. I only know about these details because of the Microsoft antitrust lawsuit and commentary about the influence of Lina Khan on the FTC.
As for legal decisions, like I said, the last 40 years or so have chiseled away at antitrust law. So we have the FTC under Lina Kahn bringing up an anti-trust case, https://www.forbes.com/sites/errolschweizer/2025/12/18/how-w... :
"A newly unredacted FTC complaint shows that PepsiCo and Walmart worked together to rig grocery pricing, drive up pricing at competitors and protect Walmart’s dominance. Internal PepsiCo documents reveal a coordinated strategy to give Walmart better wholesale prices, penalize independent and regional grocers that tried to lower their prices and preserve Walmart’s “price gap” by pushing rivals’ shelf prices up."
but then having it dropped voluntarily by the Trump/Ferguson FTC.
Which is why these sorts of things are now taken up on state courts, like California for Amazon, or New York (see Gelbspan v. Pepsico and Walmart at https://fingfx.thomsonreuters.com/gfx/legaldocs/mopabybynva/...). That does use the word "monopoly" and "monopolist", and describes the SSNIP test as the Hypothetical Monopoly Test used to determine if the relevant market is well-defined.
So if you are looking for actual court cases which have determined this, you either haven't been paying attention to the topic (completely understandable!), or you are a willing supporter of the Chicago School and the billionaire class which gain power by promoting it.
It can’t be because 99% of people shop at Amazon to the exclusion of other retailers, because they don’t. Indeed, Amazon’s share of aggregate retail spending is quite low.
The response has been, roughly, “There are a bunch of court cases where these things are hashed out, and Amazon’s name has come up.”
OK, but as I said to begin with, antitrust is not just about monopoly power.
What monopoly powers does Amazon hold? At what point did they acquire them (roughly) looking back to their founding 30 years ago?
Maybe frame this the other way: If Amazon is only a “near monopoly”, what would have to happen to drop the “near”? What weight is that word carrying?
The steps are to identify the relevant market and show abuse of market power - abuse as defined by antitrust law. The relevant market is not "aggregate retail spending". The California complaint goes into details about how online sales are not interchangeable with brick and mortar stores, something I mentioned earlier.
Determining abuse is not a simple plug&chug exercise.
The Walmart complaint I linked to describes the SSNIP test as one such test. The complaint goes into the analysis. See https://en.wikipedia.org/wiki/Small_but_significant_and_non-... for an overview.
It's not "99%", but such levels are a political decision about how what is fair and what is unfair market power. I pointed to the ISLR page, and mentioned how the threshold for concerns about market concentration has increased. Here's the full paragraph:
> Even by the permissive standards of today’s Justice Department, Walmart’s market power is considered extreme. Under guidelines established by the department’s Antitrust Division in 2010, markets in which one corporation captures more than 50 percent of revenue are defined as “highly concentrated.” (The agency has repeatedly raised this threshold since the 1960s, including sharply increasing it in 2010. These guidelines are used to evaluate mergers.)
My response has been "here are complaints which go into the details that you've asked about. You should read them to understand their arguments."
> but as I said to begin with, antitrust is not just about monopoly power.
And I completely agreed with you. However, for this specific case of Amazon, the California complaint can correctly be interpreted as concerning abuse of monopoly power, even if California never used that term. Because they don't need to use that term.
> What monopoly powers does Amazon hold?
Addressed in the complaint.
> At what point did they acquire them (roughly) looking back to their founding 30 years ago?
Why does that matter? When did Standard Oil become a monopoly? I doubt the Supreme Court of Ohio had to determine a rough date before being able to issue a breakup order.
> what would have to happen to drop the “near”?
Why does it matter?
I've already pointed out that economics and law use different definitions of "monopoly". Adding the qualifier "near" ensures that "monopoly" isn't misread as the economics definition of being a (pure) monopoly.
I’m not asking about abuse, I’m asking about monopoly. As I’m sure you’re aware, it’s possible to become a monopoly through legitimate competitive action, and indeed similarly preserve that monopoly without violating anti-trust law.
So again: Why is Amazon a “near monopoly”? You go on for pages and pages through multiple comments that amount to, “Because California alleges that they are”—despite California not using that word, just words about anti-competitive practices that you claim are the same thing. I deny that claim. I believe California is alleging Amazon is engaging in anti-competitive behavior that would be anti-competitive behavior whether they’re a monopoly, near monopoly, or no monopoly at all.
Why am I wrong?
Please do me the honor of remembering that I gave examples of monopolies and near monopolies which are not considered abusive, and linked to https://www.law.cornell.edu/wex/monopoly with more details.
Now I'll quote https://en.wikipedia.org/wiki/Competition_law#Dominance_and_...
"However, the existence of a very high market share does not always mean consumers are paying excessive prices since the threat of new entrants to the market can restrain a high-market-share firm's price increases. Competition law does not make merely having a monopoly illegal, but rather abusing the power that a monopoly may confer, for instance through exclusionary practices"
> Why is Amazon a “near monopoly”?
Again, the lawsuit is that Amazon is abusing their power as a "high-market-share firm". This is widely characterized as Amazon being a monopoly. I have provided many links which support my interpretation.
> I deny that claim.
I can't help but conclude you are being obstinate. https://www.law.cornell.edu/wex/monopoly : "A monopoly is when a single company or entity creates an unreasonable restraint of competition in a market."
If you want to argue over what "unreasonable" means, go ahead. But denying terms which date back to the 1800s[1] is parading your own stubbornness.
What do you define as "monopoly" or "near monopoly", and when should the law step in to restrain a monopolist? Can you demonstrate external support for your interpretation?
Because as it stands, it seems like you don't understand the basics of the topic, but believe you do, and are doubling-down, unwilling to consider that you don't.
> I believe California is alleging Amazon is engaging in anti-competitive behavior that would be anti-competitive behavior whether they’re a monopoly, near monopoly, or no monopoly at all.
I assume you read how California claims Amazon violated the Cartwright Act. This requires an ability to harm market-wide competition, in a properly defined relevant market. That's why the complaint goes through the effort of defining the market, and presents evidence of market-wide harm to that market. This is why I've been careful to insist that being a monopoly isn't the problem - abusing monopoly power is the problem.
If Amazon had no monopoly at all, which I'll interpret as having little market power, then it does not have that ability, so cannot violate the Cartwright Act, so would not be in the complaint, which again tells me that you need to learn more about antitrust law. (Note that I am specifically addressing the part of the complaint which can be regarded as relevant to explaining how "near monopoly" is a correct characterization.)
[1] I'm wrong. That definition dates back to at least the 1600s! Digging around (via the OED) I found Misselden used this definition in "Free Trade" (1622), at https://archive.org/details/bim_early-english-books-1475-164... :
"That is, Monopoly is a kind of Commerce, in buying, selling, changing or bartering, usurped by a few, and sometimes but by one person, and forestalled from all others, to the gaine of the Monopolist, and to the Detriment of other men."
"The parts then of a Monopolie are twaine, The restraint of the liberty of Commerce to some one or few: and the setting of the price at the pleasure of the Monopolian to his private benefit, and the prejudice of the publique. Upon which two Hinges every Monopoly turneth."
California claims that Amazon restrains the liberty of third-party sellers to set prices which do not benefit Amazon, and which prejudice the public, making Amazon a monopolist even when using a 400 year old definition.
Maybe in a different world, one without antitrust law.
But in a sense you're right, they have de facto right to do whatever they want because of the lack of enforcement.
That would be a miracle.
(On 34th Street.)
Section V is on Amazon's market power.
Section VII is on the anti-competitive effects of Amazon's conduct.
You argue the market space includes physical retail competitors, which the complaint rejects. They describe their reasoning, point out how Jeff Bezos also doesn't see them as interchangeable, hence "physical stores and online stores are not reasonably interchangeable substitutes for one another from the standpoint of consumers".
Indeed,"most merchants—even those that sell through both channels—do not consider physical brick-and-mortar stores to be in the same market as online stores".
It also describes the effect on third-party sellers, like how Chewy.com, Wayfair.com, and Newegg.com charge lower fees, so the seller would like to set a lower price there, but Amazon's policies and market power inhibit the seller "because doing so would result in the suppression of the Buy Box for their Amazon listing."
There's a dozen or so examples of sellers raising their prices elsewhere in order to no lose the buy box, affecting also Amazon competitors:
> A major competing online marketplace to Amazon itself confirmed that it has heard from merchants that they would need to raise their prices on its marketplace or decline to participate in a discount/sale event because a lower price on its marketplace had disqualified or could disqualify their offers from the Amazon Buy Box. This rival marketplace operator reported that during a sales event, certain merchants contacted it to pull their items from the event or indicated that they would need to raise their prices because they reported that they had lost the Buy Box on Amazon, believed they would lose the Buy Box on Amazon, or believed that they would be delisted on Amazon because their item prices were lower on this competing website for the event. ...
> one Walmart manager reported to Bloomberg that “Walmart routinely fields requests from merchants to raise prices on its marketplace because they worry a lower price on Walmart will jeopardize their sales on Amazon.”
> Amazon’s coerced price parity agreements with Marketplace sellers constitute unlawful contracts and/or combinations in restraint of trade in violation of the Cartwright Act.
(The Cartwright Act is California's main antitrust law.)
Are you still not convinced, and if not, why not?
On the other hand, don't tell that prices are not personalised anywhere. 4 is destroying the economy with gray area tactics Anyone working there should be ashamed of being part of that
it's pro-Amazon and anti-competition, surely. (Amazon doesn't care about consumers except as profit sources)
> The sellers don't HAVE to sell to Amazon, but then they'd miss out on giant POs from Amazon at good terms.
So they have to sell to Amazon?
> I'm not sure if calling it a "widespread scheme to inflate prices" is the fairest thing.
It's fair if it's true, effectively or otherwise.
"The purpose of a system is what it does" (https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...)
'Designing a sytem' to 'raise prices elsewhere'!
Probably the person's intent was to protect Amazon, but in my eye this is just providing a very strong real evidence against them now.
Stockholm syndrome at its finest -- reinterpreting "punishing a seller if an item is cheaper anywhere else on the internet, even a site they don't directly control" as "pro-consumer".
If Amazon really were a search engine for their own products, they should just give an accurate answer for their own site. If they really wanted to be pro-consumer, they'd say "Available cheaper here: ..."
ETA: Showing competitor's prices could still be a strategic win for Amazon. It conditions users to always first check Amazon; and most of the time if it's cheaper, the ease of one-click ordering and/or batching deliveries should make it worth ordering from Amazon even if it's a few dollars cheaper elsewhere.
Which company does that?
But plenty of companies do things like "If you find a cheaper quote we'll match it."
Instead they claim to be “customer-obsessed “
Obsession is rarely a net-positive for the target of the obsesser.
https://www.amazon.jobs/content/en/our-workplace/leadership-...
The real customer are the third party sellers and those using Amazon platforms.
The problem is that Amazon abuses it's market position as being the search engine for customer products to unfairly prevent anyone from competing with them. Being "better than Amazon" as a seller in the margins is completely impossible, because Amazon demands sellers price match them.
Let's say you're a seller who wants to make 7$ from each sale as revenue (your actual margins from making the product aren't relevant to this estimate). If you list this product on the Amazon store, Amazon is going to take your listed price and apply their own price cut on top of this (although it's usually framed the other way around, so you list the final sale price and Amazon then says how much they take). For simplicity's sake, we'll go with a 30% cut, so they list it for 10$. Now let's say there's a second storefront you want to sell to, we'll call it Bamazon. Bamazon has a lower cut than Amazon does, let's say it's 10%. So the final product would then be listed for 8$ (taking into account customer psychology on price listings), making Bamazon the better seller, right? The smart customer gets a better deal, Amazon is incentivized to improve their margins if they don't want to lose market share and everybody's happy.
Wrong. What happens instead is that Bamazon will now also list the product for 10$ (because if it's listed lower, Amazon screws the seller by delisting them from Amazon, which is unacceptable for the seller because Amazon is the one with the monopoly position, so the seller then can sell absolutely nothing), making the product equally expensive for the customer and making Bamazon's deal only an improvement for the seller, who now gets higher profits from their sales, screwing the customer. Meanwhile Bamazon is rendered unable to compete with Amazon on their better margins since Amazon is the assumed default. Any benefit of a different store having better margins is fully masked by this approach, only benefiting Amazon.
It's a Most Favored Nations clause and their use on online platforms is both ubiquitous, scummy and makes things more expensive for the customer while also entrenching Amazon's monopoly position. This crap is usually couched as pro-customer rethoric, but it really isn't. It mostly serves to entrench monopolies not on their quality, but through their existing market share. (Valve also famously does this by the way.)
Just think about that.
Ironically, a large part of Amazon's rise was on the back of their very pro-consumer policies. Not many companies would tolerate large scale GPU return fraud (among other items) for those many years for example.
Some companies have good intent. Public benefit corporations are a thing. They aren't really relevant, because unscrupulous companies outcompete them.
Your assertion that pro-consumer companies would outcompete unscrupulous ones depends on consumers and regulators holding them accountable. So why are you arguing against being suspicious of companies?
Obviously the best strategy for companies is to appear to be pro-consumer, but "cheat" (meaning price fixing but also things like advertising and buying up competitors) as much as possible. In that context, "all companies are anti-consumer" is a decent shorthand for "you should assume every company is anti-consumer because the regulatory environment favors it, even if there are exceptions."
So if someone needs to adjust the price to accommodate Amazon fees, on Amazon, they're penalized.
Not to mention increasing ad costs, which at this point is another fee.
It's not for the benefit of the consumer, it's for the benefit of Amazon: Amazon wants people to buy on Amazon at the lowest cost for the consumer and at the highest margin for Amazon - they won't sacrifice their fees.
Hahahahaha you lost me
Is not what you conlude, not at all, and is contradicting yourself just two lines up:
| they now need to raise prices elsewhere
Bingo! The claim exactly! And you really say, that this is not a widespread, also as you described intentionally designed systematic effort to infalte prices?! Come on!! : /
Calling this pro-consumer is insane.
It’s not pro-consumer, take two seconds to consider second order effects here. If a producer can sell for lower elsewhere they can’t compete on price with Amazon unless they want to lose amazon sales.
Does anyone know what happened here?
eBay is a better bookstore than Amazon now.
This is a funny idea of pro-consumer, as we all know that the result of this is increased prices.
The seller can not afford to reduce the Amazon price to match other channels and still pay Amazon's margin, or afford to have the product hidden and lose the channel - and so is forced to increase the price elsewhere.
The net result is prices increase across the board, and Amazon gets to tell customers they are getting the 'lowest price', but they did it by increasing the price across the whole market.
This is pro-Amazon both in terms of margin and market share. In many ways, it is also pro-competitor/seller/distributor/agency... but it is very much anti-consumer.
And, as I hope we will soon see proven, illegal.
Edit: including how they protect their margin!
I have stopped going to movies that are made and published by MGM. I have no intent to watch thew new James Bond movies.
1. Average American spends THREE THOUSAND DOLLAR year at Amazon. That’s staggering.
2. As of now the trial is not scheduled to begin until January 2027 (although the discussed injunction is meant to address that). I believe the length of time required to get a decision in court is the single biggest impediment to justice being served. It usually waters down the final judgment, makes costs prohibitive for plaintiffs, and allows perpetrators to continue benefiting from illegal behavior indefinitely. In some cases, the defendant can be elected President in the interim eliminating any chance of facing a court decision.
Is it? That’s by households, not individuals. Is it really crazy to imagine a household spending $200-300/month at Costco, Walmart, Whole Foods—or Amazon?
Frankly, I think a lot of people have lost perspective on just how rich the average American household is: Around $145k annual income.
Not shocking that Amazon is capturing 2% of that gross.
http://www.sellersprite.com/en/blog/most-expensive-thing-on-...
Whole Foods has the food products (produce, dairy, eggs, grains, nuts) that we eat, is cheaper than the competition for this stuff, and unbelievably beats the co-op on labor relations. However, it also ships profit out of the area. For now, it's sort of the best of a bunch of not particularly good choices.
Amazon is not just a US company either.
They also have an ad business. You could rightfully argue that ad spend gets passed on to the consumer.
Though now that I write that, I wonder if Matt divided by the total number of North American households or the number of US ones.
EDIT: Amazon North American segment revenue divided by aggregate North American household count is roughly $2,300. But I’m guessing the real number is closer to Matt’s estimate as US households are wealthier and likely represent a disproportionate fraction of that revenue.
On the particulars of this number, he seems to be close enough, but it’s not nearly as shocking with any context: The average American household Walmart spend is comparable, Apple captures almost half that with a handful of devices and services.
https://www.johndcook.com/blog/2021/01/18/gell-mann-amnesia/
If you can’t trust someone’s analysis about something you know about, why trust him about something you don’t?
Where else would americans be getting home goods like soap, appliances, electronics? Vitamins, perscriptions, etc?
The answer to almost every one of those, for the vast majority of Americans, is one of like 5 megacorps. Target, Walmart, Kroger, CVS, Amazon. Things have largely stopped being available retail because of all this consolidation. If I want to go buy a multivitamin, its no joke like $25 a bottle at my grocery store, and $8 on amazon. It is just kinda... a part of people's lives now, and the alternatives all involve either spending more money or time.
I don't care man. It doesn't matter to the world whether I spend money on books or not. It only matters to me. Or I guess it's more correct to say it matters much more to me than to the rest of the world.
So yeah, I'm not worried about it. I don't tip either, by the way, unless I see a very good reason to. Given the choice, I prefer to keep my money rather than give it away. Couldn't care less what you or anyone else thinks about it.
And for the record I'm not American, we don't have the insane tipping culture you guys do. I know you're American because only an American would say what you just did.
Guess we both assumed.
Also, you're right that the tip comes after, so not tipping is safe... until you go to the same restaurant twice (in America).
I wouldn't say I'm cheap, I'd say I'm frugal. I'll happily spend money on things, just not when I don't need to. And especially not when it's completely unreasonable like ebook prices. I can get it for free so I'll take that deal. You can say it's parasitical, I guess I don't disagree with that. Personally I think there's a lot bigger fish to fry in that department like insanely rich people who hardly pay any taxes, but sure I'm slightly parasitical in some minor and insignificant(to everyone except me) ways.
I also don't really think it matters that much. Most authors don't make enough money to live off it. The ones who do, make a fortune. I generally read books written by those lucky few who make a fortune, and I don't feel the slightest bit guilty about not paying money to Andy Weir, who's worth about $55 million according to a quick Google search. He'll be fine. And all the middle men like Amazon and publishers etc can pound sand as far as I'm concerned.
I just prefer ebooks because an ebook reader is 100 times better. It has backlight so I can read in the dark, it's compact so I can put it in my pocket, it's light and ergonomic so I can easily hold it and flip pages in one hand, and it can fit literally a whole library worth of books in my pocket. It's not even a competition, as far as I'm concerned physical books are furniture at this point.
Used books are exempt from the law entirely, so they're priced by pure market forces.
In countries like the US or UK, a recently-published book might already be 40% off list price, so used copies may not be as much of a bargain.
While they might not be the absolute cheapest options, they're usually a pretty good price and at least with those sources I'm not too concerned with counterfeit or tainted supplements, unlike Amazon [0]
That said, how much of that $3k/year is spent on things they need vs things they bought through Amazon's upselling algorithms? I drive past the giant warehouses and I wonder, how much useful stuff is actually in there? Because when I do find myself on amazon.com most of what I see is just trash wrapped in plastic.
And it proves a point: Things are still available at retail. Sometimes it is a box store but just as often it's a smaller shop. Does it take more time? Sure! But seriously, what is everybody using all that time they saved by shopping at Amazon for? From what I see it's more shopping online.
Such a rort. There's so much margin in them that my grocery store permanently has "buy 1 get 1 free" deals, and occasionally "buy 1 get TWO free".
My relatives use it for ordering office supplies for their business.
https://www.amazon.com/hz/privacy-central/data-requests/prev...
They will send you a bunch of spreadsheets and it's pretty easy to calculate your total expenditures. That showed us we were spending about $5k a year, mostly small stuff with very few purchases over $100. With Prime it was easy to order a little here and a little there. All those littles add up.
We got rid of Prime and now spend about $300 a year on Amazon. Half of that for Kindle books. We do spend a $100 a month more at Costco to make up for it. A nice side effect is that we have a lot less clutter and junk around the house.
Do you realize how generous their return policy is? How convenient it is to order from them, and set up a subscribe-and-save for monthly household items? Also consider how many people set up wedding or baby shower registries on Amazon.
I have been avoiding amazon recently for ethical reasons but i’m genuinely confused by your comment. It sounds like you’ve never shopped at amazon lol. And with inflation…$3k isn’t even that much money in the US. That’s $250 a month.
Why amazon sellers have not opened up a class action lawsuit is beyond me. This case, succeed or fail will surface enough documentation that they may find cause.
The fact that lawsuits are won by whoever has more money and time is so deeply problematic. I have no idea how you’d go about equalizing it. Spending limits with devastating consequences if it can be proven that you broke them?
it works reasonably well.
* More juries, and maybe something jury like for civil suits.
* Simplify the law and legal proceedings to the point where the extra time preparing won’t lead to better outcomes.
Juries are available for civil suits, but most parties prefer not to have them because jury results have high variability. I'm following a case, currently pending appeal, where the jury found against the defendants for breach of contract, but awarded $0 in damages, so there's no actual relief regarding the breach.
This way everyone is on equal footing. Doesn't matter if you're a homeless bum or Jeff Bezos. Both just get an appointed lawyer.
If a suit is found frivolous, you are on the hook for the costs, as long as it's reasonable it's paid for by the state and if a party is found at fault they may also be required to cover the costs.
It's insane that the landlord of the mall is also running the biggest store in the mall
It's led to this scheme, but also just the general enshittification of buying things online. You can never trust what you buy from Amazon because their "marketplace sellers" will send you a counterfeit, and it's hard to find some brand names because they don't want to be in that cesspool
As low rent and lowest common denominator as Walmart was in the 90s, at least I could go in and know that a) I probably was getting the lowest price on that Rubbermaid trash can b) it was legitimately a Rubbermaid trashcan and not someone who ripped off the molds, used plastic that was 50% as good, and sells it under the brand Xyxldk, and c) could reasonably expect to find that trashcan offered for sale in the first place
- Central and Aeon own malls;
- Tesco owns multi-story shopping complexes including banking, retail, fast food, etc;
- and for that matter, Walmart, Target, Costco, and some grocery stores in the US operate multiple smaller businesses inside, eg banks or fast food.
It’s really not that uncommon for a corporation to operate part of their commercial space as a subsidiary marketplace.
This is happening constantly with the private label brands you see in major stores. There is no CFPB needed here, Amazon has no obligation to carry your product and can dump you anytime. Why would CFPB get involved?
Some of you are just ridiculous with “get gubbermint involved” on everything. If you want to combat this then don’t buy from Amazon, we don’t need CFPB.
Companies with as much market power as Amazon simply cannot be allowed to exist. It was a mistake to ever allow it and every response that is not aimed at a total shattering of the company is another mistake. No retail business of any kind can ever be safe when companies like Amazon exist. (And although this article is about Amazon, the same is true of many other companies as well, like Walmart.)
The world knows how to fix this problem the rich pay to not allow it.
First, this is not new. It's been stated policy for years.
Second, manufacturers get around it in a clever way. They always list their items on their own site at the same price as at Amazon... but then magically almost always seem to have a 20% or 25%-off sitewide coupon available, whether it's for first-time customers, or "spinning the wheel" that pops up, etc.
So I don't know how much this is really raising actual prices in the end.
Otherwise, I'm not sure how to feel about it, because pricing contracts are common on both ends. Manufacturers frequently only sell to retailers who promise they won't charge less than the MSRP, and large retailers similarly often require "most-favored-nation" pricing, so they can always claim they have the lowest prices. If you want to end these practices, then it's only fair to have a law prohibiting it across the board, rather than singling out Amazon.
The exact percentages here are just examples, the point is the retailer is selling it on their own site for the same low price in the end.
This is irrelevant.
I.e. this lawsuit isn't taking place because it was just discovered. So a question becomes, why only take action now? Is this actually a case that has a chance of winning, or is it a political stunt?
That's why it's relevant.
At least by paying Amazon I can avoid dealing with all that. While I may pass the price to the consumer for Fulfilled-By-Amazon fees, which tends to be around $5.18 ~ $3.5 (quick google search), it's still a lot cheaper than using something like FedEx where it costs $10-12 per order.
The takeaway here is that Amazon has democratized fast and cheap delivery by building a monopoly. As the scale of things go up, the cost of operations can really go down. Think of meal prepping, when you cook food in bulk vs each meal separately, you're saving costs on power, gas and produce.
The only question is whether we can build a public benefit corporation, just like Amazon.
This is true for other sellers too.
Received several orders that were returned items, with broken open packaging and sometimes the item was something else entirely, purely put there for weight by whoever returned it.
When I went to return some things at a major Amazon distribution center, the return area was closed for the week for some sort of construction or renovation, with no indication of that anywhere on the site. The only messaging was a piece of paper in the window once you got there.
At another separate major distribution center, the return area was a small room with pieces of paper taped to a door with an arrow pointing to the Amazon lockers where the returns are accepted.
Orders are now often so delayed that it makes the Prime subscription pointless. Have had multiple orders over the past year that didn't ship for 3 or 4 days.
Amazon listings are almost half Sponsored listings now, and there are unrelated ads on the side of listings.
Half of the listings are some random made-up brand name, like XIJGNU, which is just a Chinese seller selling low-quality products, and when the reviews get bad enough, they re-list the product under another made-up brand name.
Fake reviews were already rampant before LLMs, but now reviews are effectively useless because they are so easy to fake.
In my experience I've received a box for a different brand than the device inside with the wrong app listed in the box for a different unrelated brand. Fun times we live in. And don't bother getting a refund as the listing and company will be gone by the time you try.
Or ask Gemini what the best deal is, it’s found some good ones.
For smaller stuff, Amazon is usually better than Target or whatever box store nearby.
I just go to Walmart now. And Walmart is no choir boy either but at least I can see what I'm buying.
A product on the shelf, I don't have the slightest idea if it'll break in a month or have a feature that doesn't work right.
When I start browsing Amazon reviews, I feel vastly more confident I know what I'm buying.
Only exception is clothing, since it's next to impossible to judge fit and texture and often even color online.
I hate to break it to you, but a large majority of reviews are fake.
But if you find a ton of negative reviews complaining that the handle breaks after 2 months... then that's probably real. That's the stuff you look for, to see if there's any consistent pattern to the negative reviews.
IMO this old approach suffers from the ubiquitous flooding and washing of bad reviews with sometimes thousands of positive ones that mask real numbers. Without a half-reliable denominator, it's very hard to tell how prevalent a problem is. E.g. if there are 5k reviews, 50 of which are negative (just to use any numbers), on the surface of it that looks like a pretty normal ratio you'll find in any review section. Some handles just do break off on any product, and in the end there's also always some nutjob who tried to jack his car with a pan. But how many of the total reviews are fake? There's 50 real dissatisfied customers - but out of how many? 100, 500 or 5.000? If I'm being really critical at the sight of any kind of negative review, there's really not much left to buy with a good consciousness.
Then there's grouping of very different products on the same page, so reviews get muddled. Those groupings change from time to time, so any amount of reviews on a product page can refer to an item that's no longer available on that page. Strangely, AFAIK Amazon does not provide a possibility to filter those out. So when looking for reviews on, say, a USB cable, I'm made to sift manually through lots and lots of unrelated reviews both good and bad, some of which mention a handle breaking and are obviously not about a cable at all (I'm exaggerating a bit, but the M.O. is real).
And above all, really bad products with an actual ton of negative reviews often don't last long. The listings get deleted, the sellers disappear, come up the next day with a different random letter brand name, and buy good reviews in bulk again.
Taking these (and more) factors into account, assessing reviews has become like solving a single equation with multiple unknowns. To me at least, finding the signal from the noise at this scale just using common sense has become nigh impossible.
I personally don't have any confidence in it at all anymore, let alone a vast one. The mere attempt to wade through reviews has become an incredibly time-consuming and frustrating affair. I increasingly find myself abandoning my research halfway through and question if I really need a product at all, because when I look into it, all the available alternatives seem to be shit. In a way, that's probably a positive.
If you've found a way to better navigate this mess, I'm definitely interested to know! But IMO unless Amazon starts to fight those dark patterns, which they show no inclination to, the fight against the review shadow industry is a losing one for customers.
I understand how all of those could be problems in theory. But when I actually spend a couple minutes reading the reviews with less than 5 stars, it quickly becomes apparent if there are genuine problems with the item, or just people who don't understand why their cast iron pan rusted when they put it in the dishwasher. Finding the signal in the noise is pretty easy?
If you read the reviews with critical thinking and a good bullshit detector, and stick to items with at least 100 reviews (preferably several hundred), it works great for me. It's invaluable really -- don't know what I'd do without Amazon reviews.
> Strangely, AFAIK Amazon does not provide a possibility to filter those out.
You can always limit reviews to the single item/color/size etc. It's the filter option. I do that all the time when I want the reviews e.g. just for the spatula not the masher or ladle. Or when I want photos of the item in just the one particular color.
It was effectively a way to get an excess commission out of amazon if you printed through their printing arm, Createspace/KDP. Not sure if this worked the same for non print on demand books but if you printed through createspace you could set a higher list price and get royalties that were about 100% of the actual sale price.
No idea if the same mechanic is in play with the FBA rules but it seems very plausible to me that the largest impact is has is closing exploits like this.
That doesn't mean it doesn't also entrench market position, raise a few prices at the margin etc but it's very easy to miss the potential for gaming rules, legally, unless you're actively in the system. If an incentive is there the market incentive will be to use it.
Amazon does something similar but with pricing layered on top. Their rec system pushes higher-margin products, sellers notice which items get promoted, then they raise prices knowing Amazon will keep showing them anyway. So it's not just "algorithm adjusts prices" - it's more like the recommendation layer creates conditions where sellers can safely jack up prices without losing visibility.
Basically the algorithm creates artificial scarcity by only showing certain products, which gives sellers pricing power they wouldn't have otherwise.
Amazon is gigantic because they give customers a better experience and people feel safe buying from them without having touched the product.
Give me one example, where consumer behavior really changed anything. Usually what follows from large boycotts is political action or the company succumbing to pressure.
Just stopping to spend your money there might make you feel good but don't kid yourself, it barely does anything if you're not turning it into an organized action.
Amazon has been openly doing this for years. They scrape other competitor websites, even though it’s against their terms of service, and if you sell for less elsewhere they find out and punish you. It’s blatantly anti competitive.
So Apple coordinated the major book publishers to raise their prices in order to secure their margin expectations.
They settled the lawsuit in the end.
[0] https://www.cbsnews.com/boston/news/us-sues-apple-publishers...
> Amazon, vendor [...] fixed prices on [...] This is also an example of Breaking the Price Match, but here, Amazon [...] The plan was memorialized in an email from [...] In other words [...] In response, Amazon insisted on [...] The plan was realized [...] The result of Amazon, [...] price fixing agreement was to increase the retail prices
I don't know how you could even understand what's being alleged without seeing the unredacted version.
That being said, anyone who’s operated a two-sided marketplace knows that one of the biggest problems is consumers using your site as an index, and then seeking to dodge your fee by meeting with the seller on another platform, where they don’t have to pay it. This was a big problem for my startup.
This is a negative externality, because they’re extracting value from your platform (the list of sellers, products, prices, ratings, etc.), without paying for that value. If left unchecked, this could make running the platform financially unviable. One way to prevent this is to paywall your platform, but not every consumer wants to pay a subscription.
I think it’d be fair for Amazon to prohibit sellers advertising other platforms on its own, but prohibiting them from offering lower prices outside of Amazon outright definitely seems anticompetitive.
Sounds great to me!
There is a company that operates an index where people can search for things and doesn't charge the site or the customer for things that rank well in organic search results. I think they're called Google. From what I understand they make quite a bit of money by selling ads next to the listings.
That model seems like it would work pretty well for such a platform, unless there was some major company preventing anyone from offering a lower price than they have on their own site so that everybody goes to their site instead of using a price search engine to find a site with a lower price.
I mean come on. If they're really using your site just to find a product, you think that's a problem?
Meanwhile a platform's fee should be going to things like payment processing, warehousing and shipping, and then if you're offering a competitive price for those services they should want to be paying you because they need those things and can't get a better deal on them somewhere else. If they can get a better deal on them and are only using your site because you're forcing them to with a dirty trick, maybe they're right to object?
Walmart and Pepsi engaged in a blatant decade-long price fixing scheme designed to raised prices and punish small local competitors and were sued for it by Lina Khan's FTC, but - surprise - the case was thrown out the minute Trump took office.
Want a desk fan? There are four types of desk fan in the entire world (per Amazon). Page after page after page of listings of the exact same four designs. Often listed with the same re-used marketing artwork.
Put aside brands, quality, et al. Put aside the fact that Amazon removed almost all product specs from their search facility (and is increasingly deleting specs entirely from product pages). Put aside the fake reviews, no-name Chinese drop-shippers.
Every category is stuffed full of the same few copycat products over and over. It is extremely difficult to merely find actual choices! Wrenches? Small compartment storage boxes? Paper towel holders? If you can find even 20-30 unique products in a category now you're living like a king. It reminds me of AliExpress in that sense. Lack of specs, lack of manuals, lack of details about any product. The same listings from different no-name stores repeated over and over.
I used to think maybe AliExpress & co were actually good if you spoke Chinese but a Chinese coworker kindly informed me that nope, it is just as horrible for everyone living in China using Chinese.
I don't know where we went wrong but this is not the future we were promised. Can any of you remember when Amazon was actually good? When their search was useful? Those were some amazing times and how little did we realize they were fleeting.