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FTC Reportedly Quizzing Amazon Competitors On Its Practices

Amazon CEO Jeff Bezos (left) and Best Buy CEO Hubert Joly

image: Amazon

Not long after U.S. regulators reportedly split up scrutiny of Google and Amazon, a piece from Vox is reporting that the U.S. Federal Trade Commission (FTC) has already began questioning some of Amazon's competitors on the e-commerce giant's business practices, citing a source briefed on the matter. The report says the FTC is focusing on three key areas: Fulfillment by Amazon's pricing methods, Amazon competing against its own sellers and the way Amazon bundles its Prime services.

But the report from Vox's Recode notes that the FTC's queries does not mean it has launched a formal investigation into Amazon or that the three key areas would be a focus if the FTC eventually opens an investigation into Amazon.

FTC Chairman Joseph Simons

image: U.S. Federal Trade Commission (FTC)

Let's touch on the key areas below:

Fulfillment by Amazon's pricing methods

Fulfillment by Amazon (FBA) is a service offered by Amazon that charges sellers to store their goods in Amazon warehouses and have them handle the delivery process and customer service when customers place orders. According to Vox, the FTC's queries on this area have revolved around Amazon's pricing structure, as Amazon charges sellers more for fulfillment when they're used for orders placed on competing e-commerce websites.

Amazon competing against its own sellers

Amazon Marketplace is a well-known service that drives big sales for Amazon, with $160 billion worth of goods sold in 2018. Third-party sellers generated revenues of $39.7 billion for Amazon last year, including commissions, fulfillment and shipping fees, and other third-party seller services.

But Amazon has launched more than 100 of its own brands that often compete directly with its third-party sellers. There have been questions on if Amazon unfairly leverages data generated from third-party sales to gain pricing advantage over small and midsize merchants.

A statement from an Amazon spokesperson to Vox said the company bars Amazon's own brands from leveraging an individual seller's data to directly compete against the seller, but didn't say whether its brands are able make use of curated data from a group of sellers offering the same product.

FTC Commissioner Noah Joshua Phillips

image: U.S. Federal Trade Commission (FTC)

Bundling of Amazon Prime services

Vox says the FTC has indicated interest in a query into whether the way Amazon bundles the $119 annual Prime subscription allows it to unfairly undercut competitors. Amazon currently has more than 100 million Prime members globally.

Amazon Prime gives customers access to perks like unlimited one-day shipping, access to a huge media library, free online photo storage and more.

The FTC might also be gathering information on other aspects of Amazon beyond the areas outlined above.



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