Shopping on Amazon?
Stop.
Watch this first.
Amazon is the world's biggest online retailer.
This one single giant of a company is responsible
for nearly 40% of all online sales in America.
In an FTC lawsuit,
they're accused of using their mammoth size and consumers’
dependance on them
to artificially jack up prices as high as possible,
while prohibiting sellers on Amazon
from charging lower prices anywhere else.
They're accused of using a secret algorithm, codenamed
“Project Nessie,” to
charge customers an estimated extra $1 billion.
If this isn't an abuse of power that hurts consumers, what is?
So much for all those
“Prime” deals you thought you were getting.
Much of the FTC's antitrust lawsuit
centers around the treatment of independent merchants
who sell items on Amazon's online super stores,
accounting for 60% of Amazon's sales.
Amazon allegedly uses
strong arm tactics that force these sellers
to keep their prices higher than they need to be.
Like barring them from selling products
for significantly less at other stores, or else risk
being hidden in Amazon's search results
or having their sales stopped entirely.
And Amazon is accused of engaging in
pay-to-play schemes
and charging merchants excessive fees that end up
costing you even more.
Independent sellers are effectively
forced to pay Amazon
to advertise their products prominently in search results.
If they don't fork over cash, then their products
get buried underneath products of companies who do.
This hurts sellers, but also harms shoppers who have to parse
through less relevant products
that may be more expensive or lower quality.
And to be eligible for the coveted
Prime badge on their items
— which is considered crucial for competing on the platform —
independent sellers are pushed into paying Amazon
for additional services like warehousing and shipping,
even if they could get those services cheaper elsewhere.
If sellers forgo trying to qualify for Prime,
their goods apparently become
harder for consumers to find.
When all of these extra fees are added up,
Amazon takes around a 50%
cut of each sale made by a third party.
It's projected that Amazon will earn a whopping $125 billion
from collecting these fees in the United States in 2023,
most of which get passed on to you.
And when you combine
Amazon's control of e-commerce
with all of the other industries it has entered
by gobbling up companies
such as Whole Foods, One Medical, and MGM,
you're left with a behemoth that simply has too much power.
This is all part of a much larger problem of growing
corporate dominance in America.
In over 75% of U.S. industries,
fewer companies now control more of their markets
than they did 20 years ago.
The lack of competition and consumer
choice has resulted in all of us paying more for goods.
Because gargantuan companies like Amazon
can raise their prices with impunity.
By one estimate, corporate concentration has cost
the typical American household $5,000 a year
more than they would have spent
if markets were truly competitive.
This power isn't just being used to
siphon more money from you.
A massive corporation can also bust unions,
keep workers wages low,
and funnel money into our political system.
It's a vicious cycle leading to
even more and more power.
But under the Biden administration,
the government is making a strong effort
to revive antitrust law and rein in
big corporations that have grown too powerful.
We must stop the monopolization of America.
This FTC lawsuit against Amazon is a great start.