What They Are Saying: Experts Agree The DC AG Lawsuit Against Amazon Is Flawed
Last month’s DC Attorney General (AG) lawsuit mischaracterizes Amazon’s pricing policies, which have long enabled low prices for consumers and a large retail channel for small sellers. Since the lawsuit’s announcement, experts have highlighted three key flaws:
— Pricing policies are a common practice in retail, and ensure the best prices and experiences for consumers.
— The DC AG lawsuit would risk increasing product prices in the Amazon marketplace, harming consumers and small businesses.
— Sellers of all sizes are reaching customers through numerous and diverse retail channels.
Pricing policies are a common practice in retail, and ensure the best prices and experiences for consumers.
Pricing policies do not equate to price-fixing, clarifies Aurelien Portuese, Director of Antitrust and Innovation Policy at the Information Technology and Innovation Foundation. “It’s not a price-fixing instrument in the sense that the platform doesn’t set the price; it just says that if you put a price, it needs to be the cheapest one or the most competitive one you could ever offer”
Pricing policies are “the dead opposite of consumer harm,” says Jessica Melugin, Director at CEI’s Center for Technology and Innovation. “Amazon should be free to set the terms for third-party sellers on its own platform, just as sellers are free to pass on using Amazon’s Marketplace if they don’t like the terms. Amazon is pushing to offer the lowest prices possible and while that may not always please third-party sellers, it’s the dead opposite of consumer harm.”
Pricing policies only incentivize sellers to price products competitively for consumer benefits, notes Adam Kovacevich, Founder and CEO of the Chamber of Progress. “AMZN’s policies say sellers are free to have lower prices elsewhere, but if so their AMZN listing won’t win the ‘Buy Box.’ That keeps prices low for online shoppers, not high. AG’s complaint includes no data at all on this policy raising prices.”
The DC AG lawsuit would risk increasing product prices in the Amazon marketplace, harming consumers and small businesses.
The DC AG lawsuit against Amazon “fails to account for the far greater benefits of Amazon’s platform and marketplace” for consumers and small businesses, reminds Jake Ward, President of the Connected Commerce Council. “Millions of small businesses scale quickly and cost-efficiently by selling on Amazon and using Amazon’s platform services, such as Fulfilled by Amazon. The cost of those benefits—including fair-pricing agreements—are modest in comparison to their extraordinary value to sellers and the benefits that ultimately are enjoyed by consumers.”
— “The innovative, disruptive, and highly competitive e-commerce industry has delivered enormous benefits to consumers and small businesses for nearly a quarter-century. Attacking one piece of a broadly successful ecosystem fails to account for the far greater benefits of Amazon’s platform and marketplace.”
The politicization of this lawsuit could result in “customers seeing higher prices and worse deals,” writes Peter Suderman, Editor at Reason. “The Buy Box is built to show Amazon customers the site’s most appealing deals. It’s a consumer-focused product. Upending that system, as this suit aims to do, would result in customers seeing higher prices and worse deals on the site.”
— “[T]he attorney general for the District of Columbia has launched a major suit over [the Amazon Buy Box button] shows how nitpicky a lot of modern antitrust activism is. Page through last fall’s House antitrust report, and it quickly becomes clear that a faction of big tech-skeptical activists and policymakers on the left has decided that just about every modern business practice in the tech economy, no matter how minor or perfunctory, is an antitrust violation, and needs to be regulated, managed, or outlawed by federal overseers.”
Sellers of all sizes are reaching customers through numerous and diverse retail channels.
Small sellers have many options to list their products, thanks to growing competition in the retail sector, highlights Ryan Young, Senior Fellow at the Competitive Enterprise Institute. “[C]ompetition is already increasing. Other retailers such as Walmart now have their own third-party seller programs that compete with Amazon’s. This is on top of existing online options small sellers can use…”
This lawsuit “takes the narrowest possible view” of the retail sector, warns Patrick Hedger, Vice President of Policy at Taxpayers Protection Alliance. “The DC Attorney General takes the narrowest possible view of the retail market to make Amazon look larger than it is, and the worst he could find is a policy that ensures Amazon’s customers get the best available price. We’re sure there are better uses of the DC taxpayers’ time and resources than this stunt.”
This lawsuit reiterates the faulty marketplace definition in last year’s House Judiciary Committee Democratic staff report that has been widely debunked, remind Chris Marchese and Trace Mitchell, counsels at NetChoice. “As critics point out, Amazon’s Marketplace is very popular with American consumers. But that popularity does not make it a monopoly, in spite of what the Report might suggest. In reality, Amazon is facing an ever-increasing level of competition from all sides. Amazon’s relentless focus on anticipating what customers want has inspired fierce competition and in turn fierce criticism from those who resent its success.”
— “But what critics argue, evidence debunks. Amazon is not a monopoly—it’s not even dominant. Remember that Amazon Marketplace connects buyers and sellers? As buyers, Americans use Amazon to buy products that range from ready-to-assemble furniture and toothpaste to sewing needles and lawnmowers. As sellers, Americans use Amazon to reach larger audiences and distribute their products throughout the country. And while many businesses sell on Amazon, this is typically not their only storefront. Research shows that 80% of Amazon third-party sellers sell their products elsewhere”
This lawsuit is flawed for failing to account for “seller’s actual options on and off Amazon’s third-party marketplace,” reminds Carl Szabo, Vice President and General Counsel at NetChoice. “The DC Attorney General’s Office defines the relevant market for retail too narrowly and ignores how retail has become an all-of-the-above experience…”
— “Consumers price-shop their retail experiences the same way sellers can offer lower prices off Amazon and on other websites and in stores. This complaint fails to differentiate between Amazon’s buy box and seller’s actual options on and off Amazon’s third-party marketplace in a thinly veiled attempt to disadvantage Amazon competitively.”