It's odd that this is a request for a preliminary injunction considering that the case is almost four years old. Both the 2022 and the new filing are heavily censored[1][2], so I can't know for sure, but I didn't notice any revelation in the latest filing. Amazon requires that anyone selling through their platform not offer lower prices elsewhere online. If a seller does so, they'll be relegated to the "New & pre-owned" offers section below the "Add to cart" & "Buy it now" buttons. This has been the case since at least 2019. (This also means that if you're shopping on Amazon and want a better deal, you should check the other offers section for a cheaper price.)
Lots of retailers (both physical & online) have similar requirements, and many manufacturers have similar requirements for minimum advertised prices (such as Apple). I think the California AG's plan is to argue that the pricing rules combined with Amazon's large market share merit a judgement against them, but it's going to be an uphill battle to single out one company for practices that are common to the industry.
> Lots of retailers (both physical & online) have similar requirements
My understanding (IANAL) is that that is illegal, and those retailers should be prosecuted as well. That is essentially price fixing, because the retailer is enforcing their competitors have the same price, using the supplier as an intermediary.
> many manufacturers have similar requirements
That is a different situation, and is AFAICT legal in the US (but not in many other countries, and IMHO probably shouldn't be legal), at least in some situations, but there are limits.
Is that actually bad for consumers? Wouldn't deranking the "not lowest" price make it easier for customers to find the lowest price (whether that is a different product on the same storefront, or the same product on a different storefront), and hence be good for customers?
In the long run it is bad for consumers. If you sell widgets on amazon for $10, and amazon charges $2 or whatever, you pocket $8. Maybe you also want to sell your widgets on your own site where your overhead is only $1. The "most favored customer" clause prevents you from passing that savings on to the customer and charging $9 on your site (or any marketplace where you might prefer to sell things compared to amazon). It promotes stasis or growth of large sellers and prevents new ones from offering price competition.
> Wouldn't deranking the "not lowest" price make it easier for customers to find the lowest price
The original wording was
>Amazon requires that anyone selling through their platform not offer lower prices elsewhere online.
which means if the seller offers to sell something on amazon for $x, but has a shopify site selling it for < $x, then that seller will get deranked. That's not the same thing as the lowest price, because it's possible that other sellers sell for higher prices, and some people might not find whatever obscure shopify site that has the lowest price.
The wording is admittedly ambiguous, but the fact that there are totally overpriced items available on amazon suggests amazon isn't deranking people just because it's not the best price on the internet.
If amazon was just ranking by price, that would be fine. But the described behaviour implies that they would derank a listing even if it was the cheapest option because it was made available by the same seller for cheaper elsewhere.
This kind of thing is ultimately bad for customers because it reduces competition between sales outlets, by making it very difficult for smaller players to compete on price.
As described in the OP, sellers didn't respond to this pressure by lowering prices on Amazon, they raised praises at other retailers. So the effect is to raise prices overall.
No it prevents businesses from selling directly from their site at a discount, and eliminates any incentive consumers have to purchase a product outside of amazon. It's one of the ways they became a monopoly, in addition to selling at a loss until all the small businesses were forced to close.
If you've ever seen those "Click To Reveal Price" or "Price Only Revealed At Checkout" products online, this here is one reason why. They help businesses keep discounted prices hidden from Amazon's crawlers.
Long-time Amazon seller/brand here, so here's the crux of the case:
1. Amazon is a search engine for product
2. It values being the cheapest destination for products (MFN most favored nation clause to sell on their website), and basically will suppress your listings from search if they can find you selling it cheaper elsewhere.
3. Amazon is def one of the more expensive ecom channels to sell, BUT they've got a huge audience as well due to decades of consumer-first policies, so sellers still go there because even if they have loyal customers with strong brand loyalty, you still end up with at least 30% of customers going to Amazon first after seeing your ads elsewhere + the lure of NTB new-to-brand customers you can acquire there.
So the crux of the case is dependent on whether they can do #2 with impunity -- which Amazon considers "consumer friendly" (but obviously it's win-win for them too).
And what's really stupid about this is that done openly there probably wouldn't be an issue. Insurance companies can demand providers charge them the lowest rate they charge anyone. Would there have been any issue if Amazon had simply said that to get those features you must match any deals you give anyone else?
75 comments
Lots of retailers (both physical & online) have similar requirements, and many manufacturers have similar requirements for minimum advertised prices (such as Apple). I think the California AG's plan is to argue that the pricing rules combined with Amazon's large market share merit a judgement against them, but it's going to be an uphill battle to single out one company for practices that are common to the industry.
1. https://oag.ca.gov/system/files/attachments/press-docs/2022-...
2. https://oag.ca.gov/system/files/attachments/press-docs/REDAC...
> Lots of retailers (both physical & online) have similar requirements
My understanding (IANAL) is that that is illegal, and those retailers should be prosecuted as well. That is essentially price fixing, because the retailer is enforcing their competitors have the same price, using the supplier as an intermediary.
> many manufacturers have similar requirements
That is a different situation, and is AFAICT legal in the US (but not in many other countries, and IMHO probably shouldn't be legal), at least in some situations, but there are limits.
> Wouldn't deranking the "not lowest" price make it easier for customers to find the lowest price
The original wording was
>Amazon requires that anyone selling through their platform not offer lower prices elsewhere online.
which means if the seller offers to sell something on amazon for $x, but has a shopify site selling it for < $x, then that seller will get deranked. That's not the same thing as the lowest price, because it's possible that other sellers sell for higher prices, and some people might not find whatever obscure shopify site that has the lowest price.
The wording is admittedly ambiguous, but the fact that there are totally overpriced items available on amazon suggests amazon isn't deranking people just because it's not the best price on the internet.
This kind of thing is ultimately bad for customers because it reduces competition between sales outlets, by making it very difficult for smaller players to compete on price.
1. Amazon is a search engine for product
2. It values being the cheapest destination for products (MFN most favored nation clause to sell on their website), and basically will suppress your listings from search if they can find you selling it cheaper elsewhere.
3. Amazon is def one of the more expensive ecom channels to sell, BUT they've got a huge audience as well due to decades of consumer-first policies, so sellers still go there because even if they have loyal customers with strong brand loyalty, you still end up with at least 30% of customers going to Amazon first after seeing your ads elsewhere + the lure of NTB new-to-brand customers you can acquire there.
So the crux of the case is dependent on whether they can do #2 with impunity -- which Amazon considers "consumer friendly" (but obviously it's win-win for them too).
- they take a huge cut, making them more expensive. I've heard some folks give 50% to amazon to sell stuff
- they destroy or drive away brands, so you cannot shop for quality
- "customers" are bombarded by ads. I think sponsored links seem to be close to 100% of results until you scroll down a few pages.