The California Attorney General’s office filed a civil antitrust and anti-competition lawsuit against Amazon while Amazon was having its Accelerate Seller conference in Seattle.
The lawsuit alleges that Amazon artificially keeps prices high on the entire internet by stifling competition in violation of California’s Unfair Competition Law and Cartwright Act.
This is a significant lawsuit with huge implications for sellers.
In episode 10 of the Day 2 Podcast, Shannon and I talked about Buy Box Suppression and how this practice affects sellers wishing to list their products in other marketplaces.
This is exactly what Amazon is being accused of doing in this lawsuit.
In this episode, we dissect the implications of this lawsuit on sellers, consumers, and Amazon.
What the Lawsuit Alleges
The lawsuit says that in a bid to avoid competing with other marketplaces, Amazon coerces sellers not to offer lower prices elsewhere, and if they do, they severely penalize them. The AG alleges that this practice limits the ability of other online retailers to compete, which entrenches Amazon’s dominance.
The effect of this dominance is consumers pay inflated prices for their online purchases. California’s AG, Rob Bonta, contends that if the market forces were not distorted, consumers would enjoy lower prices, and sellers would have the freedom to choose how to sell their products.
“People are willing to pay more for convenience. So let the market decide.” Shannon Roddy
Implications for Sellers
It’s baffling to understand why Amazon does this because they dominate the online retail space and have a far superior service to other eCommerce sites. They can compete with these other marketplaces without resulting in this practice that harms sellers greatly.
There is no single seller who would not love the freedom of choice on where to list their product and how much to sell them.
“If Amazon can no longer do Buy Box suppression, sellers will have the freedom to control their own pricing, and ultimately more diversification in their sales channels, which is so sorely lacking right now.” Jason Boyce
Different online marketplaces have different fee structures, potentially allowing sellers to offer their products at different prices. This increases competition and fosters innovation, creating a win-win scenario for all involved.
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