“Much of the lawsuit centers around how Amazon essentially forces third-party sellers who use its Marketplace platform — which accounts for about 60 percent of Amazon’s sales — to purchase additional services from Amazon. Amazon’s critics say the company has gotten greedier over the years, resulting in sellers having to cut their profit margins or raise prices to consumers to account for Amazon’s ever-increasing charges and fees. The FTC says that many sellers pay nearly 50 percent of their revenue to Amazon when all of the fees are combined, and those costs can be passed on to the consumer.
One way it does this, the suit says, is through search ads, which allow sellers to have their products placed prominently in customer searches, above products that organically earned a top spot. The lawsuit alleges that Amazon has increased the number of ads in search results over the years, making sellers feel that the only way potential customers will see their products at all is if they pay Amazon for ads. This makes the shopping experience worse for consumers who have to wade through them to find organic results.
“These ads have been enormously lucrative for Amazon, but shoppers face less relevant results and are steered toward more expensive products, while sellers face an additional set of fees,” Khan said.
The lawsuit also addresses Amazon’s “buy box.” When several sellers offer the same product, Amazon picks which one gets the sale when a customer clicks to make a purchase — whether “add to cart” or “buy now.” That’s the buy box. Everyone else is relegated to an “other sellers” section, which is farther down the page. Most customers don’t bother or even know to check it, which makes that buy box placement crucial for sellers.
But Amazon has certain conditions that make it more likely that the seller will get that buy box — or, if they don’t comply with them, make it impossible to get it at all. Those conditions often mean giving Amazon more money.
Qualifying for Prime is one of them, but sellers pretty much have to use Amazon’s “Fulfilled by Amazon” logistics and shipping service in order to be eligible for it. Amazon has technically allowed sellers to use other fulfillment services, but it’s exceedingly difficult for any third-party fulfillment service to meet Amazon’s requirements, and Amazon closed off enrollment to the Seller Fulfilled Prime option years ago.
A few months ago, however, Amazon announced it would re-open enrollment “later this year.” Notably, it has also changed some of these practices in the European Union recently as part of a settlement to end an antitrust case there, including adding a second buy box and allowing seller-fulfilled Prime.”
“Starting your own medical practice is hard. In some states, it’s almost impossible due to the monopoly power of politically connected hospital associations. Independent doctors and patients tried for 10 years in South Carolina before finally scoring a victory last month.
On May 16, South Carolina Gov. Henry McMaster signed legislation to repeal most of the state’s medical certificate of need (CON) laws. A CON is a government permission slip that health care providers must obtain before they can launch or expand services. Spending money to provide safe, affordable care is illegal without this piece of paper.
Big hospitals love the red tape. Instead of competing with would-be rivals on a level playing field, they can claim their turf and defend it using government interference on their behalf. Many states even allow established providers to object to rival CON applications, giving them something like veto power.
If McDonald’s had the same authority, local franchisees could block mom-and-pop burger joints from opening nearby. The Home Depot could block family hardware stores. And LA Fitness could block independent gyms.”
“The thing about excuseflation is it’s sort of grounded in truth. It’s the idea that companies are using these once-in-a-lifetime disruptions. Think about the supply chain hiccups that we’ve had. Think about the Ukraine-Russia war. And they’re using those one-off disruptions as an excuse to raise prices. And that sounds fair enough. You know, companies, they have expenses. If their input costs go up, maybe it makes sense for them to pass some of those on to customers. But where it starts to become insidious is when they’re raising prices so much that they’re seeing their profits go up quite substantially as well.”
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“Sure. So one of my favorite examples, because, you know, I love these personally, but chicken wings. Let’s talk about chicken wings and Wingstop. Wingstop is a very large purveyor of very delicious chicken wings. And what they’ve been saying on their earnings calls is that they have been raising their prices for their delicious chicken wings. And the reason they’ve been doing that is because the wholesale cost of your basic chicken wing went up quite a lot during the pandemic. We had a lot of disruptions at various farms, chicken farms with labor shortages and things like that. So it made sense that chicken wing prices went up and the company started passing those on to consumers.
The issue now, though, is that we have seen a substantial drop in chicken wing prices. And yet the company isn’t saying that it’s going to start dropping its prices. What it’s discovered, much like a lot of other businesses at the moment, is that actually this strategy of making up what you lose in sales volume with higher prices, so you’re selling fewer products, but you’re selling them at higher prices, [is] a viable strategy in the current environment, and it’s working for a lot of companies because profit margins are up.”
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“baker in Chicago kind of laid it out for us. He said: “Whether it’s rye flour or bird flu, that impacts eggs when it makes national news just running a business, it’s an opportunity to increase the prices without getting a whole bunch of complaining from the customers. It’s not that we’re out there price gouging, but, you know, timing can be everything.””
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“think about the reason that we tend not to like monopolies as consumers. We want, you know, a vibrant landscape of lots of smaller businesses that are all competing with each other so that we get a better value for our money. What happens when you have an industry-wide event that gives a group of businesses an excuse to raise prices: They are all effectively, not officially, but effectively acting as a monopoly. They can all say, well, you know, it’s bird flu, so we’re all going to raise the prices of our eggs.”
“You don’t have to believe that the market produces perfect outcomes to understand that government can rarely outperform private enterprise. Political decisions aren’t driven by any market signals, profit motive, or consumer preferences. These decisions are inherently political, suffer from a serious knowledge problem and are mostly untied to any accountability regimes when they fail. Government often proves to be biased against large, successful companies that provide new technology that legislators often don’t understand well but consumers love. This is why government so often fails, and this policy is no exception.”
“Facebook is still a behemoth, and it has a long way to fall before that will cease to be true (if it ever is). I’m not suggesting we start writing eulogies yet. But the U.S. (and European Union) antitrust push against Facebook and other big tech companies assumes—and often explicitly argues—that Facebook’s power is permanent and its market share irreversible. Recent developments and ancient history show that’s very obviously not the case.”