ICYMI: FTC’s unredacted complaint against Amazon reveals a flawed, misleading case
At the start of November, the FTC filed a substantially unredacted version of its antitrust complaint against Amazon. Since then, experts have pored over the new material. Their verdict? The unredacted material far from proves the FTC’s case and, in fact, divulges the case’s weak and misleading nature.
Here’s what you need to know:
The FTC’s claims lack sound evidence to support them. Supposedly incriminating evidence falters under even the most basic scrutiny.
The FTC’s inaccurate reasoning is indicative of a larger problem with its complaint. The FTC assumes, implies, and insinuates but provides no conclusive evidence that Amazon violated any law or hurt any consumers. In one excerpt from the complaint, the FTC says that ads in Amazon searches promote products with higher prices than unadvertised products. Geoff Manne of the International Center for Law and Economics points out that this fact does not say anything about the main question — whether Amazon hurts consumers. Are these advertised products low-quality items? Can’t consumers judge for themselves whether a product is good for them, regardless of whether it is advertised? The FTC leaves critical questions like these unanswered. They hope that focusing on a few trees will cause the American people to miss the forest.
If the FTC convinces the courts that its insinuations are a good-enough reason to take antitrust action against Amazon, the harm to small business owners will be great. According to Project DisCo, Amazon’s platform supports thousands and thousands of small- and medium-sized sellers. Its services ensure that sellers’ products get to consumers with affordable prices and fast delivery, both reasons that consumers will continue to buy from those sellers. The FTC implies Amazon’s relationship with its sellers is antagonistic, which is simply not true — over 60 percent of the sales in Amazon’s store come from independent sellers, aligning their success with Amazon’s success.
Portions of the unredacted complaints are being misinterpreted, but the fact remains that the FTC is advocating for an outcome that would slow delivery times. As Adam Kovacevich of Chamber of Progress describes, the suit claims sellers in Amazon’s Seller-Fulfilled Prime (i.e., not fulfilled by Amazon) program “met their promised ‘delivery estimate’ requirement set by Amazon more than 95% of the time.” Some in the FTC are publicly misinterpreting this statement to suggest that sellers using SFP met Amazon’s Two-Day delivery standard more than 95% of the time. But the “delivery estimate” only measured whether a product arrived when the seller said it would, not whether SFP sellers delivered products within Amazon Prime’s expected speed of two days. The distinction is crucial, because in fact under 16% of seller-fulfilled orders met the Prime Two-Day delivery promise in 2020, according to Amazon. Kovacevich asserts: “If I send a message to you via tortoise, and I estimate it will arrive in 1 year, it’s not an accomplishment for that estimate to be 100% accurate.” His bottom line: “What’s ultimately so strange about the FTC coming after Fulfillment by Amazon is that consumer protection is a core part of FTC’s mission – yet in this case they are actively arguing for an outcome that would slow delivery times for consumers.”