The government’s case to break up Amazon, explained
“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.”
https://www.vox.com/technology/2023/9/26/23835959/ftc-amazon-antitrust-lawsuit-prime-lina-khan