This article is independent critical journalism advocating for antitrust enforcement against Amazon's monopoly practices. The primary focus is workers' rights—specifically how Amazon's algorithmic price-fixing and fee extraction coerce third-party sellers into unfair conditions—alongside consumer protection through transparency and fair market competition. The content strongly aligns with UDHR provisions on work, property, expression, and standard of living, framing corporate monopoly as a human rights violation.
Fair play to this reporter for shining a light on all this, especially in relation to the redactions. Hopefully the secret court restrictions are lifted.
This has been pretty obvious for a while. Whenever I do product searches on Amazon the prime eligible results are more expensive by exactly the shipping costs of the non prime vendors.
The only reason I keep it is for the video service which I'm guessing is the same for a lot of people.
Though, to be fair, the switching cost for a consumer to start using Target.com (for example) isn't that high. I go to vendors like Target.Com, HomeDepot.Com, BestBuy.com and AliExpress.com for most of the things I used to use Amazon for.
Amazon binds its sellers over to something called Most Favored Nation status. That means that sellers can't offer their goods more cheaply than they do on Amazon – even if it costs them (lots) less to sell in Target or direct from their websites. This means that every time a seller adds a dollar to their Amazon sale price, they have to add a dollar to the price of their goods everywhere else, too.
After a bunch of state AGs filed lawsuits against Amazon over this, the company promised to cut it out.
They lied.
A new filing in California's suit against Amazon reveals that sellers live "in constant fear" of retaliation from Amazon if they allow their goods to be sold more cheaply elsewhere.
This was blatant monopolistic behavior, control over prices outside your platform with the threat of platform access to enforce it is a slam dunk case.
I think this demonstrates a way in which all centralized power becomes, for good or for ill, partially absorbed into state power. A major country's government will always be able to exert lots of leverage against, e.g. tech companies, whether for legitimate or illegitimate reasons, it matters not which. They can always threaten regulatory or legislative actions which would be annoying or devastating to shareholders. Hence, behind-the-scenes conversations will always have an implicit fact of "please censor as we ask, provide data and backdoored access to which servers we ask, please don't take on the wrong political causes, elsewise there will be consequences."
Goodness knows that if the intelligence community or state law enforcement has ever wanted access to anything in AWS, now of all times would be when they have the easiest time asking for it! Anything to curry favor with someone who can speak a word of support to federal agencies and state officials.
I think the general idea across many companies in the U.S. is a good one: breaking up monopolies that are more vulnerable to external, globalized forces. The goal is to fertilize the business landscape with their metaphorical "whale-fall carcasses," enabling a flourishing of smaller, competitive entities. This strategy aims to revitalize and fortify the American economy against the looming tidal wave of foreign competition. Although this approach may be painful on a local level and even humiliating for some individuals, it's ultimately a sound strategy for macroeconomic management.
While they are at it they should also go after the credit card companies. They have managed to extract a 2-3% tax on most retail transactions. There is really no reason why the fees should be that high in the age of electronic transactions.
HotTake: the result of this should be to nationalize Amazon to be the defacto national provider of AWS services, delivery, logistics, and backstopped retail services.
This strategy has been adopted by eBay as well and artificially drives up prices. Let me elaborate.
Recently, eBay has made it so that only the products with paid ads are shown in places where customers click. This drives up the cost of everything by more than 10% which is eBay's ad fee. I refused to buy a paid ad to sell my MacBook. It sat on the site for a month, which is highly unusual for an in-demand and rightly priced product. Finally I lowered the price enough to get it sold.
Most consumers use the default site, which filters by Recommended (i.e. ads) The play for consumers to win at this new payola ad scheme is to always filter by lowest price (or in amazon's case Prime + lowest price)
But really, consumers don't win (and neither do sellers) because now these ads take up space in supposed "search results" for items which don't match the search terms (but are close enough) This creates frustration when you are looking for something to meet a specification, like E26 light bulbs for example. Here, it is pointless to show anything that doesn't meet that specification and yet the site shows them, and the seller has to pay the ad fee.
>If this suit is resolved in the government’s favor, the remedy could be anything from ending anti-discounting measures to breaking up the firm.
There's a bit of an odd remedy issue with this lawsuit. The harm being asserted by the FTC is that Amazon charges more fees than competitors but requires that sellers not charge more on Amazon than on competing sites. Originally Amazon allegedly accomplished this with a Most Favored Nation clause, and today Amazon will kick you out of the "buy box" promotional space if they detect you offering lower prices elsewhere.
First, a breakup doesn't cure this harm. You could go all the way to the extreme of splitting Amazon's third-party marketplace into its own company and yet that company could still charge higher fees than competitors and condition the buy box space on sellers not offering lower prices elsewhere.
Second, no injunction makes sense either. Is a court going to force Amazon to advertise a price in the buy box that Amazon knows is not the lowest price available on the market? That's an absurdly anti-consumer thing for a court to order (and so a court would likely not order it).
I’m not sure I agree with the opening premise that offering “free shipping” is dangling a free lunch that doesn’t exist.
Technically this is true but it makes a lot of sense by creating an analogous experience as with retail.
If I walk to the corner store to pick up something I’m not paying a line item for the logistics that delivered that item from a factory in China, nor a line item for the rent to keep that item sitting on a shelf in walking distance. I just pay the price of the item, and those costs are baked in.
Maybe an economist can argue this isn’t the most efficient way of paying for externalities but it’s hard to argue it’s without reason. It’s clearly a preferred consumer experience. Amazon prime is like a Costco membership. The only difference is Amazon handles last mile from the fulfillment center, Costco expects me to provide last mile fulfillment with my car.
The FTC is going to lose this case like they have lost others.
They are suing someone with the power of a government. Whether it is "right" or not, the legal case needs to be incredibly strong and airtight to make it through court, and a loss looks really bad. It signals that other companies can be even more anticompetitive because they know the FTC will lose against the biggest fish in court.
Legality aside, I'm not sure that Amazon is winning in the long run with this strategy. I mostly buy products direct from the manufacturer these days and virtually all manufacturers have high quality websites with solid ordering experiences. As long as they have the name recognition, they can either sell for higher on Amazon and take the advertising hit or just ignore Amazon altogether.
I continue to buy some stuff on Amazon. Mostly books (they're way cheaper than book stores) and gadgets (I bought a 12 volt car fan recently). The sort of stuff where I don't care who makes it.
In order to effectively break up Amazon someone needs to deliver a trusted e-commerce layer for payments and delivery that rivals it and their delivery side.
People buy from them because it’s incredibly easy to check out, and because it’s incredibly reliable for delivery and most importantly they are the verb for e-commerce on the Internet: they own “buy online” as a brand and that’s a hard thing to compete with even if it gets broken up like ma Bell. Those three elements are very hard side problems you have to overcome to build a competitor.
Shopify is well on their way to delivering an easy checkout experience that could be aggregated to create a competitor of sorts, but delivery remains the hard side problem — the network of warehouses and reliable short term delivery windows you can count on. This aggregates demand and enables centralized payments, but you end up essentially replicating Amazons delivery system eventually to gain efficiency or remaining vulnerable until someone comes and takes you out with shipping rates.
It’s also the Craigslist problem all over again as well, because every small category of Amazon is an ocean to a competitor and each needs to solve all three hard side problems, so peeling off each division and improving the experience to consumers is a colossal task that wouldn’t create the same potential for efficiencies of scale or would end up advancing the possibility of winner take all relocation of the exact same issues.
I really do think Amazon needs to be broken up to create more competition, because the alternative seems like it would look a lot like the Costco scene from Idiocracy. That’s not a healthy end-result.
Also IMO Jet.com was the last upstart of any seriousness and they got taken out by Walmart, and that’s another angle anyone who breaks up Amazon has got to think about.
And then their is their oil and gas pipeline in the form of AWS, which is a strategic barrier all itself and allows Amazon to have insane scale that’s entirely paid for by entirely different customers. They can effectively operate for free on their own cloud.
They have layer upon layer of network type advantages that have to be unbundled if they are to be broken up, and unless it’s done profoundly well, they’re going to remain 1100 lb gorillas.
I could probably organize these thoughts better and more concisely but don’t have time at the moment, but this is what immediately comes to mind.
Much of what Amazon does is what other retailers already do. Amazon just does it more overtly and with smaller businesses. In fact, various aspects of this where pioneered by WalMart and Costco.
1. WalMart determines the expected product and expected price and tells vendors to take it or leave it. The agreement often has a stipulation that the same product can never be cheaper elsewhere which is sometimes easy as WalMart gets specific SKUs.
2. On the other side, Costco makes the majority of its money from memberships. The membership is a significant sunk cost and maintains brand loyalty from a mass affluent customer base (notice the similarity to Amazon Prime). Existing vendors will work closely with Costco to tailor products to this desirable market (see Costco specific SKUs for TVs, routers, etc). Upstart brands will go even further to get their wares in front of an audience with ample disposable income.
The Amazon policy basically says that the vendor must offer free shipping. Coincidentally, nobody can offer shipping for less than what Amazon offers therefore Amazon(FBA) is by default the lowest price. The only other company that can fight this with a logistics network of its own is...WalMart.
Then you have Chinese vendors who sell through networks of dropshippers and resellers at Amazon and other venues. It's why you see many vendors of seemingly the same item.
One thing to note is that it's mostly small and medium vendors of relatively low margin items that are the most hurt by Amazon's policies. Seller's of high margin items just eat into their margins while large vendors push back at Amazon and sometimes win e.g. Toilet Paper that comes directly out of a Georgia Pacific warehouse instead an Amazon warehouse despite being labeled as Prime and sold by Amazon.com, not a third party.
"Fortunately, our work on the secrecy of the Google trial is paying dividends. Here's FTC official Douglas Farrar arguing that the commission will push to get rid of the redactions:
We share the frustration that much of the data and quotes by Amazon executives in the complaint that describe what we allege is monopolistic and illegal behavior is redacted. Amazon has 14 days from the entry of a temporary sealing order to provide legitimate justification for preventing this information from being revealed. We do not believe that there are compelling reasons to keep much of this information secret from the public."
If Amazon has done nothing wrong then why so many redactions. It might succeed in keeping the facts sealed away from public view but it only raises more questions.
It sounds like Amazon is a heavy source of bots on the web if they need to continually scrape millions of websites to monitor pricing. Perhaps someone can explain how that works.
The “hidden tax” described in the article is to sellers, not consumers. Free shipping is subsidy for consumers that costs Amazon billions of dollars. I have personally never seen what you’re describing.
The issue here is that Amazon's behavior makes the switching cost higher than it would otherwise be. You are penalized for the existence of Amazon even if you don't use Amazon.
Here are some possibilities (not claiming these are practical or a solution):
The first is splitting Amazon-retail from their other products (Alexa, Ring, AWS, etc.)
The second is splitting Amazon-logistics out. I'm not exactly sure how this would work, but it could be argued that Amazon logistics could operate standalone.
Amazon marketplace, AWS, Whole Foods, Twitch, Fulfillment by Amazon, and maybe Amazon Studios could all be separate companies. I think Amazon marketplace would also be forced to end some practices like not allowing sellers to have lower prices elsewhere.
You have to add Microsoft to this list unless you live in complete denial about the massive monopoly that they have in office IT. And they are actually the first that should be broken up, splitting the office suite from everything else.
Which products do you observe this for specifically? I buy from Amazon US all the time and I can’t say I’ve ever noticed that discrepancy, so I can only assume we’re looking at different products or from a different region.
I guess this makes me a little demoralized about the utility of "anti-big-tech government actions," because to the extent any of these actions succeed, it's probably just sending a clear message to enhance state influence/access of other tech companies. If I get excited (and I want to) because "Amazon might be broken up!!1!", maybe that just means Google finally got the message and decided to put backdoors into <insert platform here> on behalf of <insert agency>.
Might as well just shut it down in that case. Amazon would be abandoned in mass if it was government run. People groan every time they see that the USPS is handling their delivery. I can't imagine how bad it would be if that same level of government competence was applied to all of Amazon's operations.
Make corporation tax progressive, resulting in it being easier for small companies to compete with big ones, without requiring the government to decide what is and what isn't a monopoly.
While this varies by territory, I'm UK based, I find the main benefits of Prime to be the next-day (even weekend) delivery, Saturday (even if not next day) delivery, and sometimes the locker delivery option.
Even where prime price is the same as other+delivery this wins out. Though at each price rise or other change I have to rethink if I consider I'm getting a good deal.
Amazon Retail (Vendor Central), Amazon Marketplace (Seller Central), and Amazon Brands (Amazon Basics, Pinzon, etc.) probably need to be separate companies. You also have decide where Amazon Ads and Amazon Registry will live.
Currently these four services all exist under the same roof and it gives Amazon basically unlimited power to unilaterally destroy entire companies or brands with zero consequences and no effort.
It is interesting to note that the US government often requires the same kinds of MFN terms, even though it is usually much more expensive to do business with the government than the private sector. There are many ways of constructively working around MFN requirements but it creates collateral damage. For example, the practice of having very high prices that are steeply discounted for most customers is often an artifact of having the US government as one of your customers. For software, it is common to create a new product/service that is trivially different in some way so that you can justify a new SKU that is only sold to the government.
Amazon's practice is bad because it anchors pricing to their mandated cost structure. That the US government engages in similar practices should at least raise questions, because it has the same effect on the marketplace.
DC AG Karl Racine filed a lawsuit over this in May 2021. The judge threw it out, supposedly for lack of evidence that it actually raised prices: https://www.jurist.org/news/2022/03/dc-trial-court-dismisses... I can't find details; it's unclear what the evidence or lack thereof was.
According to the FTC's lawsuit, Amazon no longer binds its sellers with a Most Favored Nation clause. Instead, Amazon now will refuse to promote an offer in its "buy box" space if it detects a lower price for that good on another website.
The FTC alleges that this simply reconstitutes the MFA since most sales on Amazon take place from the buy box. Amazon responds that it is within its rights to not promote uncompetitive offers that make its site look bad for not having the lowest available price.
I think a physical retail analogy would be to imagine that every store charges a variable "restocking fee" based on how much it costs to get a replacement for the item that you are purchasing. You don't know what that fee will be until the clerk is ringing you up. Then one day a store decides to bake the restocking fees into the price, and no longer surprises the consumer with a variable fee at the checkout counter.
This is clearly a win for consumers, who can now shop the aisles knowing exactly what they will pay for the item upfront before they put it in the cart and go to check out.
Offering free shipping is not a problem. The problem is that mandating your suppliers subsidize free shipping and don't sell for cheaper prices elsewhere is blatantly anticompetitive, and has the effect of raising consumer prices on non-Amazon markets.
This sort of practice is not as uncommon as one might assume.
It is extremely common for manufacturers to set a minimum advertised price (MAP) on the products they sell to retailers. This is done to keep the cost of, say, luxury goods above a certain value, or to ensure that even if demand falls off for a product, the product is sold from official channels at a price point that covers the raw-materials-plus-labor cost so the manufacturer isn't fundamentally selling at a loss. These agreements are generally enforced by both contract and tit-for-tat... Sometimes there are contractually-encoded penalties for going under-MAP, but sometimes the agreement is more "off the books..." If Amazon decides those Gucci purses are just taking up warehouse space and slashes their price to clear them, they can do that... If they don't want to have any Gucci purses to sell next year through official channels.
Why is this behavior legal for manufacturers but maybe not for Amazon? I can see no other reason than the law is path-dependent and arbitrary. "Fair trade" is a concept we invent as we go.
(Incidentally... As a consumer, it's useful to remember MAP exists when you hear whispers of "don't buy from unauthorized resellers." Sometimes the goods you get from those channels are shady, but sometimes they're exactly the same as the official-goods channels, shoveled into the back channel by an official retailer to clear warehouse space and reported to the manufacturer as 'damaged, lost' to preserve the MAP kayfabe).
You are touching on a point that Benedict Evans has made quite eloquently in the past:
>There was a joke a few years ago that rent is the new [Customer Acquisition Cost], and that now applies to everything. The [Total Addressable Market] for search ads is not ‘advertising’ (let alone online advertising) but everything that is spent to reach and serve a customer, starting with retail rents. This applies to Amazon, but even more to Google - you can ask whether Google’s ads are ‘advertising’ or ‘marketing’, but also ask whether the TAM for buying placement in Google search results is ‘advertising’, ‘marketing’ or just its customers’ operating margins. How do you reach a consumer? Do you spend your budget on TV ads or search ads, or on retail rents, or on giving retailers a margin versus selling direct, or giving the retailer a better price for better placement, or free shipping, or a better returns policy? Everything below P&G’s COGS line is up for grabs.
There will be no site that does not offer advertising, because advertising allows the site to determine which sellers can afford to pay more while still being profitable. It's a scaled version of the same way a landlord will raise rents on a profitable storefront.
Thats not the only thing I caught, at least with Ebay.
During the pandemic, I decided to sell a bunch of a component I had stockpiled. (Im not a scalper. I got the parts when my dad died.).
I put them for sale with $100 minimum, auction. They ended up selling for $300. I was definitely happy.... until Ebay refused to send me my money, and instead demanded access to a bank account, after the sale was complete. Fuck that.
I found the user who bought it, traced to a business. Cool. I contacted him, explaining what happened. Turns out they did the same to him since he too was a seller. I told him that I'd honor the same price Ebay told me....
Ebay told me (seller) $300. Ebay told the buyer $350......!! Mind you, the fees are taken out of my $300, yet that $50 difference is Ebays scrape off the top.
Obviously, I sold it to them for $300, and provided screenshots of what I was being told, and they did the same. We arranged the sale over Paypal and worked like a charm.
And sure, Ebay's scamming as far as I can tell, everyone. But it's also reminded me to check on websites with a private mode browser and logged in, to see if there's funny games.
Article's primary focus: extensively advocates for fair working conditions by documenting third-party sellers trapped, coerced, and exploited through algorithmic punishment and fee extraction. Central thesis that Amazon blocks alternative markets.
FW Ratio: 57%
Observable Facts
Article states third-party sellers comprise core customer base paying ~$123 billion in fees annually.
Article quotes Amazon executive VP of Pricing telling seller to 'get the hint' about raising prices.
Article describes algorithm that punishes price competition: 'if it detects a lower price for their products on any other online store...their ability to get their products onto a place on the Amazon website where customers click will go away.'
Article includes seller quote: 'We have nowhere else to go and Amazon knows it.'
Inferences
The documented lock-in and coercive fee system directly violates the right to fair working conditions.
Content advocates for restoring seller autonomy and removing algorithmic coercion mechanisms.
The article frames this as systemic economic injustice affecting entire category of workers.
Article is itself an act of critical independent journalism analyzing corporate power. Advocates for transparency against judicial secrecy limiting public information and press freedom.
FW Ratio: 60%
Observable Facts
Article identifies author as Matt Stoller, Research Director for American Economic Liberties Project.
Content is published on open platform with free access tier (Substack).
Article criticizes court redactions preventing journalists from reporting: 'Journalists are getting increasingly angry over these redactions.'
Inferences
The article itself represents independent critical speech about corporate power and government action.
Advocacy against court secrecy directly supports the principle that free expression requires public access to information.
Article documents how Amazon's monopoly practices inflate prices for consumers through hidden fees and 'hidden tax,' directly lowering the standard of living and purchasing power.
FW Ratio: 67%
Observable Facts
Article's central argument: Amazon charges 'hidden tax baked into the price of what you buy' through Prime fees paid by sellers.
Article states the 'hidden tax' is 'estimated at $123 billion in total last year.'
Article notes: 'These third-party sellers in turn raise their prices to consumers, aka you and me.'
Article explains Amazon's net effect is that 'prices will go up.'
Inferences
The hidden cost structure described directly undermines consumer standard of living and purchasing power.
Content advocates for price transparency and removal of monopoly-inflated costs to restore fair standard of living.
Article advocates for government action (FTC enforcement) to restore fair market conditions and consumer/worker protection, supporting democratic participation in market governance.
FW Ratio: 50%
Observable Facts
Article describes FTC lawsuit as legitimate remedy, quoting expert Bill Kovacic calling it 'the most important case that the FTC has brought in its 109-year history.'
Article discusses government action as mechanism to address market failure.
Inferences
Content frames government enforcement as legitimate expression of democratic will to correct corporate excess.
Advocacy for FTC action supports principle of public participation in economic governance.
Article provides extensive education on antitrust law, monopoly economics, and market mechanics, enabling readers to understand complex economic systems and governance.
FW Ratio: 50%
Observable Facts
Article explains antitrust concepts, Amazon's fee structure, algorithmic mechanisms, and legal remedies in accessible language.
Article teaches readers about Prime's hidden subsidy model through detailed explanation.
Inferences
The educational mission supports access to knowledge about economic systems and power structures.
Free publication model enables broad access to information necessary for democratic participation.
Article advocates for fair market order and competition as prerequisite for enabling human rights, arguing that monopoly power disrupts the social order necessary for rights protection.
FW Ratio: 50%
Observable Facts
Article implies functioning competitive markets are necessary: 'If this suit is resolved in the government's favor...there will be lower prices and discounting all over the web, and a lot of new firms will be able to enter the market.'
Article frames antitrust enforcement as restoring legitimate market order.
Inferences
Content advocates for social/market order where fair competition is possible.
The argument implies monopoly disrupts the social conditions enabling rights protection.
Article implicitly critiques Amazon's failure to exercise corporate responsibility, suggesting companies have duties to society beyond profit extraction.
FW Ratio: 50%
Observable Facts
Article describes how Amazon prioritizes profit through fee extraction over seller welfare.
Article frames Amazon's practices as abusive rather than neutral market competition.
Inferences
Content implies corporate duty to operate fairly and not exploit stakeholders.
The critique suggests companies should be accountable to broader community interests.
Schema.org metadata identifies publisher as focused on 'history and politics of monopoly power,' suggesting institutional commitment to economic justice and fair market access.
Editorial Code
—
No explicit editorial standards or code of conduct visible.
Ownership
+0.10
Article 19 Article 20
Author identified as Matt Stoller, Research Director for American Economic Liberties Project, suggesting independent journalism focused on consumer/worker advocacy.
Access & Distribution
Access Model
+0.10
Article 19 Article 26
Schema.org indicates content 'isAccessibleForFree:true', supporting open access to information.
Ad/Tracking
—
No ad tracking mechanisms visible in provided content.
Accessibility
—
No accessibility features or statements visible in provided content.