The US Federal Trade Commission (FTC) originally sued online retail giant Amazon back in September this year (2023), but updated complaint documents posted by the FTC reveal that Amazon has unfairly treated its sellers to compete with Walmart.
The FTC clarified that its complaint against Amazon was not based on the company’s size, but rather on unfair business practices that monopolised ecommerce and treated its sellers unethically.
In its complaint, the FTC states that Amazon has continually hiked its seller fees meaning that it takes almost half of every dollar made by its sellers.
Because of these fees, the FTC allege that sellers find it harder to be profitable on Amazon the longer they stay but also found that Amazon’s sellers increasingly feel tied to the ecommerce platform.
“We have nowhere else to go, and Amazon knows it,” stated one anonymous seller to the FTC.
The FTC’s complaint also lays out Amazon’s ‘Project Nessie’ algorithm, which was tailored to show shoppers less relevant, more expensive items.
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Alongside less relevant search results, Amazon shoppers are now exposed to more advertising than ever before that the FTC describes as “littering” the platform. It’s treatment of sellers to stunt rival growth and its algorithmic engineering to push more expensive items towards shoppers has been stated as a “unlawful monopolistic strategy” which unfairly cements Amazon’s dominance.
“Amazon is a monopolist that uses its power to hike prices on American shoppers and charge sky-high fees on hundreds of thousands of online sellers,” said Deputy Director of the FTC’s Bureau of Competition, John Newman, adding: “seldom in the history of US antitrust law has one case had the potential to do so much good for so many people.”
According to research company GlobalData, the total ecommerce market is set to be worth over $9.3trn globally by 2030.
GlobalData’s 2023 report into the theme, GlobalData describes ecommerce as a “internet supermonopoly”. Platforms like Amazon, Alibaba and Tencent have created such a stronghold that GlobalData brands them as “virtually impossible to dislodge” and much of the sector’s growth will continue to flow to them.