Two stories this morning about Amazon’s legal battles:
• Reuters reports that Amazon has asked a federal judge to dismiss a proposed class action suit accusing it of misleading customers about the benefits of an Amazon Prime subscription.
According to the story, “The lawsuit alleged Amazon’s marketing about Whole Foods deliveries for Prime members is ‘false, misleading and likely to deceive a reasonable consumer.’ Amazon countered that it had not concealed a $9.95 ‘service fee’ during the purchase and checkout process online at Whole Foods.
“Attorneys for the plaintiffs estimated there are hundreds of thousands of members in the class.”
Amazon, on the other hand, argues that “the benefits of Prime membership are subject to change, and that Amazon has ‘sole discretion’ to add or remove perks such as free delivery for online orders from the grocer Whole Foods Market (WFM).
“The company denied violating a Washington state consumer protection law that prohibits deceptive advertising and other unfair practices. Earlier rulings in the case knocked out other claims including fraud and breach of contract. ‘Amazon never guaranteed that free WFM delivery, or any other Prime benefit for that matter, would remain available,’ it told U.S. District Judge Tana Lin. Amazon said Prime’s terms ‘expressly and unequivocally’ state benefits can change.”
• And, from the Seattle Times this morning:
“In the months since the Federal Trade Commission sued Amazon over allegations of anti-competitive and monopolistic behavior, the two parties have debated the schedule, the scope and the rationale of the case itself.
“Amazon asked a federal judge in Seattle to dismiss the case in December, arguing the business practices in question have lowered prices for consumers and are common across the retail industry. Amazon described the FTC’s lawsuit as an ‘attack’ and an ‘effort to hobble one of America’s most consumer-focused businesses.’
“The FTC responded Tuesday, asking U.S. District Judge John Chun to allow the case to proceed. Taken together, Amazon’s conduct creates a self-reinforcing monopoly that edges out competitors and raises prices across the Internet, the FTC argued.
“The case against Amazon is ‘a straightforward story of illegal conduct,’ attorneys for the agency wrote Tuesday. ‘It lays out how Amazon is a monopolist … enriching itself while harming its customers.’
“Acknowledging the immense impact the lawsuit could have if the FTC prevails, attorneys for Amazon wrote that the agency is seeking ‘structural relief that could fundamentally alter Amazon’s business.’
“It’s still not entirely clear what changes the FTC seeks, and it may take years for the case to resolve.”
KC’s View:
Two things here.
I’m intrigued by the proposed class action suit, more so since Amazon changed the terms of service for Prime Video, suddenly charging more if you want the commercial-free version that to that point was available to everybody within the framework of Prime membership. I just thought it would have been better to offer a slightly less expensive Prime membership that would include commercials. Or, to change the terms when customers’ renewals came up. But to just make the change unilaterally? It just left a bad taste.
As for the FTC issue, I would suggest that it is possible to be “one of America’s most consumer-focused businesses,” and still behave in a way that is anticompetitive, hurting vendors and competitors. I’m not saying that this is what happening, but I do think (as I’ve said here ad nauseam) that we deserve a nuanced debate about the nature of competition in 2024 and beyond.
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