Editor’s note: The FTC and attorneys general from 17 states, filed suit against Amazon on Tuesday, and the ecommerce giant has fired back, calling the lawsuit misguided.
” We fundamentally disagree with the FTC’s allegations—which are in many cases wrong or misleading—and with their overreaching and misguided approach to antitrust, which would harm consumers, hurt independent businesses, and upend long-standing and well-considered doctrines,” Amazon says. “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.”
Here is Amazon’s reaction as published in a blog post.
Over the last several years, we’ve engaged cooperatively with the U.S. Federal Trade Commission (FTC) during a broad-ranging investigation of our business. It was our hope the agency would recognize that Amazon’s innovations and customer-centric focus have benefited American consumers through low prices and increased competition in the already competitive retail industry.
We respect the role the FTC has historically played in protecting consumers and promoting competition. 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.
The FTC’s complaint alleges that our pricing practices, our Fulfillment by Amazon offering, and Amazon Prime are anticompetitive. In so doing, the lawsuit reveals the Commission’s fundamental misunderstanding of retail.
In order to demonstrate how the Commission’s case could negatively impact consumers and the businesses that sell in our store, we think it’s important to address some key areas of the FTC’s complaint and explain how Amazon’s procompetitive model actually works.
Bringing low prices to customers
We’re proud of the low prices customers find when shopping in our store—we know customers have many options, and that competitive prices are essential if we want customers to choose us. We’ve also enabled third-party businesses to sell their products right alongside the products we sell ourselves, which provides opportunities for those businesses and an even better experience for customers. When setting prices for the products we sell ourselves, we try to match other retailers’ low prices—online and offline. All of the other businesses that sell in our store set their prices independently, but to help them increase sales and make our store more attractive to customers, we also invest in tools and education to help them offer competitive prices. Other retailers also use similar tools and practices to highlight competitive offers and provide customers value in their stores.
Even with those tools, some of the businesses selling on Amazon might still choose to set prices that aren’t competitive. Just like any store owner who wouldn’t want to promote a bad deal to their customers, we don’t highlight or promote offers that are not competitively priced. It’s part of our commitment to featuring low prices to earn and maintain customer trust, which we believe is the right decision for both consumers and sellers in the long run.
The FTC’s case alleges that our practice of only highlighting competitively priced offers and our practice of matching low prices offered by other retailers somehow lead to higher prices. But that’s not how competition works. The FTC has it backwards and if they were successful in this lawsuit, the result would be anticompetitive and anti-consumer because we’d have to stop many of the things we do to offer and highlight low prices—a perverse result that would be directly opposed to the goals of antitrust law.