The New York Times reports that the states of California and Washington are conducting separate investigations into "whether Amazon abuses its power over sellers on the tech giant’s site."
The California probe is said to be about whether Amazon is using third-party sales data to make decisions about what private label products it will offer an d how it will price them.
The Washington investigation, according to the Times, is into whether "Amazon makes it harder for sellers to list their products on other websites."
Officials in both states did not comment on the investigations.
Meanwhile, CNN reports that "New York Attorney General Letitia James' office has interviewed workers from several New York City Amazon facilities as part of a probe into the company's response to coronavirus … Some Amazon warehouse workers have claimed the company did not do enough to safeguard them from the virus. The Attorney General's office talked to employees about allegations concerning personal protective equipment and other safeguards related to Covid-19, as well as allegations of retaliation in the firing of an Amazon employee based out of Staten Island, the office said."
The Times writes that "the interest in Amazon’s lucrative marketplace is a signal that scrutiny of the company is widening, including criticism of the working conditions in its warehouses and accusations that it boxes out small business and competitors. Liberal politicians have singled out the company and its founder, Jeff Bezos, the wealthiest person in the world, as examples of out-of-control corporate power."
Just last week, the Wall Street Journal reported that "the European Union plans to file formal antitrust charges against Amazon … over the e-commerce company’s treatment of third-party sellers, according to people familiar with the matter."
Amazon's position has been its site actually empowers third-party sellers to the benefit of consumers, and therefore should not be seen as any sort of antitrust violation.
Some context from the Times:
"Amazon is among several tech giants facing antitrust investigations into its market power. The Department of Justice is likely to bring an antitrust suit against Google later this year, and the Federal Trade Commission has been examining Facebook’s acquisition of rival services.
"In the last year, state attorneys general have increasingly joined federal law enforcement in scrutinizing the companies. Texas is leading a multistate inquiry of Google and its sprawling business, while New York has helmed an investigation into Facebook.
But so far, Amazon has avoided the same level of scrutiny. An F.T.C. investigation into its practices has attracted far less attention and state officials have not publicly revealed their inquiries."
- KC's View:
"So far," it seems, will only get you so far.
It is possible that Amazon may find itself in the middle of a perfect storm. Liberals don't like it because the company is so big and so rich and has so much power. Conservatives don't like it because of Bezos' progressive politics and his ownership of the Washington Post. Unions don't like it because it is anti-union (which, when you think about it, isn't the most progressive attitude). Plus, there are questions about how it treats and pays warehouse employees (also not seen as being progressive). Plus there is all the power that it has accumulated via the tentacles that it has into so many businesses - cloud computing, entertainment, sports, etc…
Amazon, in fact, may be in that rarest of positions - ubiquitous, successful and even seeing its power growing with every passing day because of pandemic-related consumer trends toward e-commerce - and yet still hated and/or distrusted by almost everyone.
Almost everyone. Because there remains the matter of all the consumers who love Amazon - love the convenience it offers, see its ubiquity as a positive rather than a negative, and could give a rat's patootie about its politics as long as they get two-day delivery via Amazon Prime.
I would continue to argue that when it comes to private label, Amazon is doing what every retailer does - when it sees a brand that is particularly successful, it decides to knock it off and undercut it on price. Amazon may do this better than anyone else - with more robust data and greater effectiveness - but this is the way the game is played.
While Amazon has to be concerned about the various investigations - it no doubt is increasing its budget lines for both lawyers and lobbyists (see lobbying story below) - the company does not seem to be slowing down.
The Puget Sound Business Journal reports that Amazon is working with Goldman Sachs to develop "a lending program for third-party sellers."
According to the story, "Amazon's third-party sellers will begin receiving invitations on Seller Central, Amazon's hub for third-party sellers. Credit lines could reach up to $1 million and fixed annual interest rates will span 6.99% to 20.99% … The program represents an expansion of Amazon's lending program for third-party sellers. The company already offers a much more modest loan program that gives sellers fast access to cash.
"That program, known as Amazon Lending, is available by invitation only and offers short-term loans to Amazon sellers based on their sales performance. Amazon provides no information about the algorithm it uses to determine who gets the cash, nor can businesses plan around the loans."
One expert tells the Business Journal that "the Goldman program is good news for Amazon's third-party sellers, especially considering most banks don't understand the Fulfilled By Amazon business model. Thomson said most banks want to use inventory as collateral, but Amazon doesn't let banks into its facilities to review a third-party seller's inventory, which makes it difficult for third-party sellers to get loans."
Which suggests that Amazon's argument will in part be that a) we make it possible for third-parties to reach consumers they never had access to before, and b) we're actually lending them money so they can be more viable. In other words, it is putting its money where its mouth is.