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Comment by thelastgallon | Hacker News Reader

An excerpt from: https://pluralistic.net/2023/04/25/greedflation/

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.

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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.

Does anyone have examples of popular / name brand products that are pushed down in ranking due to this? I would love to see for myself how this looks in practice

Here's one of the examples that the FTC cites in its complaint (at page 27):

https://www.amazon.com/Pilot-Retractable-Rollerball-Extra-Re...

Compare it to this listing for a very similar product:

https://www.amazon.com/Pilot-Retractable-Rollerball-Ultra-0-...

You'll see that in the FTC's example, you need to click to see more buying details and that at the time of this comment the lowest price is $14.28 with free shipping (on October 12th for my location).

In the other example, the "buy box" highlights the best offer of $9.99 with free shipping (on October 5th for my location).

Thanks! I had misunderstood what “buy box” is

As a consumer I definitely avoid products with no buy box. I thought it was only related to Amazon fulfillment (which in turn I use as a proxy for being likely to receive the product on time and undamaged)

That's funny. I _only_ buy things from Amazon that are not shipped by Amazon.

Their logistics are utter garbage for me - part of it is an urban setting with nowhere to leave things, part of it is that they don't give a shit, and leave things.

That first example is eye-opening for me. I always thought that when Amazon doesn't show a buy button on the product page, it's because that product is not currently available to be shipped from Amazon.

That's one possibility! But Amazon also hides the buy box when the only offers are not what Amazon considers "competitive" because it hurts their brand if consumers see shitty deals.

In this example, the pens with the buy box are 50% cheaper and have much faster shipping.

They're not the same pens though (extra fine v. ultra fine).

I can understand why the FTC is concerned. This has the potential to be worse for competition than MFN agreements, because it forces any supplier whose products might end up on Amazon to police its entire distribution network for minimum pricing.* It also forces suppliers to crack down on (legal, authentic) grey market imports, even if those are never sold on Amazon, or risk losing the ability to effectively sell on Amazon.

* Moreover, that minimum pricing has to be sufficiently high to account for Amazon's cost structure, even if other competing vendors are more efficient.

I was offering the comparison because those two pens should be priced within a few cents of eachother (the difference is the tip width and ironically "extra fine" is more expensive). If the products were the same then there would only be one product page and the $9.99 offer would be the highlighted deal.

The fact that one product has the buy box at $9.99 and 1-day shipping and the other product does not have the buy box at $14.28 and 8-day shipping lets us infer that $14.28 is not a competitive price for these pens and there may be a cheaper price elsewhere (likely closer to $9.99).

You seem to be thinking that manufacturing costs alone dictate the product cost. Demand and volume in circulation are also part of what determines costs, though. That is, your first assertion that they should be within cents of each other is clearly wrong.

It doesn't let us infer that there is a cheaper cost somewhere, it lets us infer that Amazon has a low confidence that someone will buy it. That or they have such a low inventory of it that they are not confident showing it on the buy box without more engagement from the users.

To be clear, I'm ok with the idea that this is getting investigated. I have low confidence of finding smoking gun reasons to punish sellers on this. I am far more confident that Amazon is optimizing to convert sales.

Actually, in this case I am cheating because I already know that this SKU is offered for a lower price with faster shipping from Walmart. I suspect that listing is what triggered the loss of the buy box.

But that is a non-sequitur. Literally, in that that doesn't necessarily follow. We literally don't know why the buy box doesn't have it here and I could guess at a few other reasons. Most likely, I'd guess that the cheapest option not being Prime factors in to it more so than external offers being cheaper.

You're right, shipping speed likely also factors into it in addition to cost (that's why I also mentioned the shipping speed). If Amazon can't deliver within its 2-day Prime guarantee it is less likely to promote the offer.

Of course, without access to Amazon's systems I can't say for sure why any individual listing is or is not promoted. I'm just making an educated guess based on what the FTC put in its complaint.

Totally fair, and I think this is the kind of thing they could/should make rules around having a good audit mechanism for regulators to check.

This argument seems sound.

Amazon is not a neutral entity or a public space. It's a private platform with its own interests that are very often in conflict with sellers.

There is this weird cultural expectation of platforms and platform-like applications (social media, multiplayer video games, online stores, proprietary libraries/engines, even entertainment media "universes" and franchises etc.). Participants and consumers seem to think that these platforms are somehow public spaces that they partially own, or at least they act that way.

But you only own what you actually own.

There are legal instruments and structures that actually let you partially own things and/or grant you rights so you can act on these kinds of expectations: coops, open source and other such licenses etc.

When internet culture and commerce wants to mature, then maybe we should start focusing more on building on _legally_ trustworthy foundations.

Except when you corner the entire market and use your position to stifle competition. Then it doesn't matter what you 'own'; you are breaking the law.

That's nice, but the reality is that Amazon has almost 90% control of e-commerce. They have huge monopoly power, and laws exist to protect consumers from that. Is it the ideal way to build a society? No, But the government should still step in when it happens.

90% by what metric?

I actually misread fig. 14 from the article which was the set of top market participants. So it has a 90% share of the ecommerce of those top 5, not the whole market. Honestly feel the article intended that misreading

They have about a 38% market share of e-commerce in the US, far ahead of any competitors, but also far from 90%.

https://www.statista.com/statistics/274255/market-share-of-t...

(The next leading market share is Walmart's 6.3%.)

> Amazon responds that it is within its rights to not promote uncompetitive offers

Sounds to me like Amazon has found a loophole in the law. It agrees to list anything for sale, with no anti competitive conditions, but then only recommends customers buy things that it believes are in the customers best interests.

The FTC will struggle to argue that is illegal. Amazon can't be compelled to recommend stuff. (free speech etc). Also, what they recommend is in the consumers immediate best interests.

It will be hard for the court to argue that amazon should start recommending more expensive items to consumers, just to push consumers into looking for a cheaper platform.

Amazons fees are making the offer uncompetitive thus Amazon is actually not competitive meaning that they’re relying on their monopoly position to maintain market dominance instead of competition which they evidently cannot do.

I haven't studied antitrust policy in ages, but IIRC one aspect of this in the past has been to forbid the monopolist from peeking at their competitors' prices.

Could you explain how this is in the customers' interests?

>It will be hard for the court to argue that amazon should start recommending more expensive items to consumers, just to push consumers into looking for a cheaper platform.

Yes, 100% this. That's why I said that this lawsuit has a major remedy problem. Even if the court agrees this is anticompetitive, how do you fix it?

https://news.ycombinator.com/item?id=37767994

The insurmountable problem is that the practical interests of "consumers shopping on Amazon" don't actually align with the abstract interests of "consumers in general" that the government is purporting to defend. On Amazon we want to find the right item (search, description, reviews), have strong confidence in the inventory and shipping promises (fulfilled by Amazon) and have reasonable confidence we're not getting screwed on price including shipping (Buybox, Prime eligible etc). If you chop those things apart it becomes essentially impossible to offer the overall experience that consumers clearly prefer.

The cause of this is that it should be an anti-trust violation for any wholesaler or manufacturer to dictate retail prices to the retailer. They agree on the wholesale price because that's what they're negotiating with one another, then the retailer chooses the retail price in their store.

Now if Amazon wants the MFN clause, no problem -- but it's the wholesale price they can't sell to someone else below, not the retail price. If Amazon wants the lowest retail price, that's up to them.

Amazon isn’t recommending “more expensive” items to consumers, it’s offering different products. It should be recommending the best product for the user at the price it can offer the product at.

The fact that the product exists $1 cheaper on another site does not make it not the best recommendation for the customer’s need. If I search “tablet” are you saying I should be recommended a cheap off brand tablet promoted to me because Amazon has the cheapest price or an iPad even though I can buy an iPad on apple.com for $10 cheaper?

>The fact that the product exists $1 cheaper on another site does not make it not the best recommendation for the customer’s need. If I search “tablet” are you saying I should be recommended a cheap off brand tablet promoted to me because Amazon has the cheapest price or an iPad even though I can buy an iPad on apple.com for $10 cheaper?

I think you are misunderstanding the issue. Amazon is selectively determining to show the "buy box" on a specific product page based on whether the prices for that SKU on Amazon are competitive with prices for the same SKU on other websites.

In your example, Amazon might not have a buy box for a given iPad model if the same model was available on apple.com for less. The presence of cheaper non-iPad tablets would not impact the iPad buy box.

I was referencing the article which seems to indicate it’s more than just a buy box issue.

> Today, Amazon tells sellers that if it detects a lower price for their products on any other online store, they will be punished, which is to say, their ability to get their products onto a place on the Amazon website where customers click will go away. The net effect, as Amazon itself wrote, is that "prices will go up."

> Sounds to me like Amazon has found a loophole in the law.

No, not necessarily. This is just what companies always do. As long as it looks like they're "trying" to comply, they don't get in big trouble. In the meantime, they get to make microadjustments to their policy and find out exactly how far they have to comply until they're legally in the clear.

Say Amazon offers three items all equivalent: one is priced at $9 and two are priced at $9.50 all are Prime.

If the vendor for the $9 offers it for $8.50 elsewhere and Amazon starts focusing on a $9.50 offer is that "better for the consumer"?

If the $9 doesn't exist and there are two vendors at the $9.50 price and one has a higher review history but offers it lower elsewhere is Amazon making things better by focusing on the other one?

The "buy box" is a product-level feature, not a seller-level feature. On any given product page, there may be multiple sellers with offers (one for $9, two for $9.50). The $9 offer would be prominently displayed in the buy box and the other two would be in the "other offers" section.

If another site starts selling the same product for $8.50 (regardless of who the seller is), Amazon may hide the buy box and put all the offers in the "other offers" section to avoid advertising an offer that isn't the best price available online.

Consumers price compare across sites, and Amazon wants to maintain its reputation for low prices (and in truly egregious cases prevent sellers on Amazon from price gouging).

Except they do the same for non-new products which muddles things tremendously.

If I don't see a price I assume it is out or they only have used ones. Certainly occasionally I have seen scalpers when I double checked anyway to see what the price would be if it returned but generally Amazon caught maybe half the scalpers in my experience.

Having a signal that means "you could get it less elsewhere" be the same signal as "I only have scalpers" isn't exactly good for consumers.

Also this implies that Prime shipping is worthless given they exclude it from the calculation...

The max price filter in the left margin is worth the effort to find the same product selling cheaper but only displayed a few pages later than than the primary search results.

Is buying from the buy box ever to the customers advantage?

> what they recommend is in the consumers immediate best interests.

How? Amazon routinely recommends products to me that are objectively inferior compared to other products. For example, I just searched for "peak design travel tripod" and the number one result, which is also marked with "Overall Pick", is a tripod made by a company with the name of KINGJUEEQUESTER that looks like it's made out of cardboard tubes, but at least comes with a free 21 piece lens filter set and selfie stick for $18.99. And it has 3000+ 5 star reviews that are almost nearly identical. "Edward Von McTavish: The KINGJUEEQUESTER tripod arrived. It is of the most impressive quality. The Leg Lock feature fulfills my needs. I recommend for you."

The thing I'm actually searching for isn't even on the first page of results. It's on page two, under "More Results" and has a title of "Peak Design Travel Tripod (Carbon Fiber)" and is priced at $599.95 (the same price you'll find on Peak Design's site).

How is it that showing me anything other than what I searched for supports me as a consumer?

The Amazon experience in a nutshell. I have yet to see a comment that captured it so comprehensively.

> only recommends customers buy things that it believes are in the customers best interests.

You mean like this outright scam with an "Amazon's choice" label on? https://news.ycombinator.com/item?id=34588734

It’s product placement. Happens in retail and grocery all the time. Sellers pay to have their products at eye level, stores optimize placement to boost spending. Now that it’s digital it’s illegal?

This is a good point and your comment below ( https://news.ycombinator.com/item?id=37768419 ) highlights it well. What people don't realize is that this is in the interest of the consumer. I used to work at Amazon (although not on any of these teams) so that's probably why I know that "see all buying options" means the price is not competitive. As a consumer I value this.

Amazon scours the web to make sure their products are competitively priced. So if a Western Digital external hard drive is $99 on NewEgg, then Amazon wants to sell it for $99 or lower. If it's a 1P product (i.e., Amazon is the seller), they can easily price match in real time. But if it is a 3P (third party seller) product then Amazon cannot take that action unilaterally take that action since it is the seller setting the price. So the best they can do to protect their customer in real time when their crawlers detect a lower price elsewhere is to hide the buy box behind the "see all buying options" button.

I'm sure when this feature was rolled out, Amazon's sales must have dropped. They are taking that short term hit in order to protect customer trust in the long term.

How does an extra click help the customer? Unless the customer used to work at Amazon and specifically knows that "see all buying options" means "scour the internet to find a better price, it should be easy this time".

They aren't hiding the better priced items behind an extra click, they are hiding the worse priced items. If you buy something listed in the "see all buying options" it means that you are spending more than you have to, as you will likely be able to find it for less elsewhere, whereas the normally presented items are the ones Amazon is selling for the same or less than elsewhere.

I wonder if the shrink wrap T&Cs on allowed web usage, combined with lawsuits could help.

“By using this site, you agree you are not an agent of Amazon. You also agree that you will not use pricing information except as allowed herein.”

>uncompetitive offers that make its site look bad for not having the lowest available price.

Those costs are Amazon specific... Way to shoot oneself in the foot.

Why should Amazon get to offload their own uncompetitiveness onto sellers?

Just change the SKU of the product so they are "different". Big box stores do it all the time to reduce the probability of price matching.

Amazon is not a court of law and need not be bound by this technicality.

More than that... there's probably no real recourse. For the same reason you mentioned.

The real solution is an open source Amazon. What happened to Magento? Does it have any traction?

Why sell on Amazon instead of your own site? Can’t competitors to FBA spring up that have great logistics? Are there any? Can anyone link me to them?

Sellers want Amazon’s audience

which is easy to compete with for a government platform.

in a lot of countries it would save a lot of money if the tax office had direct access to the product and purchase database. Thousands of people could move to more useful jobs.

That's the same trap that TikTok influencers and others fall into.

You are sold "the dream" by showing top sellers / influencers / etc. and told you can be like them. Kevin O'Leary became a meme for promoting this bullshit: https://www.youtube.com/watch?v=AuqemytQ5QA

In fact, even the top influencers can be deplatformed in an instant, and their speech is controlled. And same with Amazon. But the thing is that the people you never hear about, the "middle class", are far more controlled and the "long tail" produces all that free content that basically gets almost new views / buys but all that free sharecropper content is then used to train AI models or provide proof of large available inventory / product / content BY THE PLATFORM that pits them all against each other in a zero-sum game.

https://www.reddit.com/r/quotes/comments/117oh1m/the_upper_c...

> Kevin O'Leary became a meme for promoting this bullshit:

The women is Amanda Lang,[1] and the two were a 'duo' for many years with a business/finance reporting show. I'm not sure how she managed to put up with him for so long. :)

[1] https://en.wikipedia.org/wiki/Amanda_Lang

You don’t just “spring” up to owning a nationwide network of distribution centers and 1M+ employees. It takes decades of work.

That's the thing people don't get about making competitors to Facebook, Twitter, and other centralized platforms as well.

You don't need to boil the ocean in order to serve a single community. For example, Facebook started in Harvard and its value to everyone in Harvard was based on how many people in Harvard used it, not how many people in the world used it.

Similarly, if a single product vendor and their customers form a community, then a free market of fulfillment companies can spring up to stock that specific product, and then partner with the delivery companies (who have their own networks) to deliver the package. You might say that the delivery infrastructure is a cartel, but they're open to everyone and Amazon has been relying on them until finally spinning out their own. Same goes for CPU chips that Apple relies on etc.

Look at IPFS for example, competing with AWS for storage. It is growing every year and now powers 1% of all storage worldwide! And there is a free market.

Whereas these platforms are all centrally controlled by some billionaire (Zuck, Musk, Bezos) and his crew. You don't need to have their scale because you don't need to serve ALL COMMUNITIES IN THE WORLD on day one. If you have an open source software like Wordpress or Magento, you can serve your customers with web hosting instead of Shopify or Amazon. Now the only question is, who would do fulfilment.

When Facebook was founded there was no Facebook. Now there is a Facebook.

When there's a better alternative customers are less likely to try out your new, less good idea.

Can you give an example of someone serious using IPFS instead of S3? I don't really get what "all storage worldwide" means.

Except there was a Facebook and it was called MySpace. Facebook won because people enjoyed using it better.

yes, but the bar for better was much lower back then. if you released the original Facebook today it would be so obviously so much worse than the competitors it wouldn't get any traction.

When FB was founded there were:

  MySpace

  Friendster

  Whimit - Russians online (LOL)

and many other small examples. There was still AOL, MSN, etc. There was a time when they ruled.

The only reason that FB, Google and yes Amazon were even able to launch, is because the open permissionless web disrupted AOL, MSN etc. Imagine them allowing Amazon to launch on top of them. They’d cannibalize them just like Amazon cannibalizes sellers.

All of those had 10% of Facebook's current users, at best, and probably 1% of their spare cash.

Scale matters. You seem to be a programmer, you should know that.

Quantity has a quality all its own.

> Similarly, if a single product vendor and their customers form a community, then a free market of fulfillment companies can spring up to stock that specific product, and then partner with the delivery companies (who have their own networks) to deliver the package.

One thing that gets overlooked in this is returns.

One of the big draws of Amazon is easy returns.

Whenever you have decentralized fulfillment centers, returns become a huge pain, because the fulfillment center that is happy to take your money and ship you the product, doesn't want the liability of dealing with returns.

Amazon has also optimized returns (for itself) by making its sellers eat the cost of those returns, one way or another. That's not all that controversial, but when you consider what Amazon recommends people buy, it becomes obvious that they have no problem recommending garbage because they don't care if it gets returned. They won't eat that cost. They get the profit from the sale, then let everyone else work it out.

You are correct, but note that one very key edge that Amazon used to as a competitive edge is no longer available to new entrants in the business. For the first 15 to 20 years of Amazon, they were able to be cheaper than their competitors due to the fact that sales tax only had to be collected in states where they had a nexus.

This gave them a pricing advantage which drove more customers to them which they intelligently plowed back into the business in building out their own network, no small feat of course.

A newer competitor would no longer have access to that simple sales tax advantage, and so would have to find something else to compel customers with. Barring that, Amazon/Walmart/Costco/Target/Home Depot/Lowes/Best Buy are tough to compete with because they already offer rock bottom pricing and they don’t have to invest in a ton of new infrastructure for logistics.

Not to mention the advantage of having investors willing to burn billions for a decade+ until you got into a dominant market position to finally become profitable. Not always easy to get access to that.

Magento was badly designed- infinite levels of directories. Good luck on upgrade. There’s plenty of self hosted online stores. That’s hardly the problem.

I did a single contract for a Magento site and decided never again.

It was like a group of Java developers decided to write PHP code and it was horrific. I would estimate 80% of the classes in that codebase didn't have any implementing code in them.

Literally the only thing I liked about Magento was it's ability to outline everything that was being rendered to make it easier for you to identify the changes to templates you needed to make.

This is a classic programmer response. The problem is not Amazon's software, it's their marketing, distribution network, huge audience that searches for products exclusively via Amazon, "free" and very fast Prime deliveries, etc. That doesn't all happen via simply open sourcing some code.

What does "open source Amazon" even mean?

Every Prime member gets commit access...

Courts also are not bound by technicalities like this typically!

While it may not be as simple as changing a SKU, Amazon is chock full of products made in the same factory, many with identical product images, sold under different brands at different prices, and many of the "brands" are the output of name-generators.

That actually adds to the problem: If you put effort and money into brand recognition you need to provide best prices on amazon, but Amazon is easier to game if your brand is xyxxy12345.

Ought to be bound by an actual court, though.

And also increase the shrinkflation.

What I've commonly seen is that the manufacturer offers a store-wide 20% or 30% off coupon, as a temporary promo and/or for email signup.

So the item price matches Amazon's, but you pay less in the end, if you're even remotely paying attention.

At least for the $200-300 items I've seen (like dehumidifiers, fancy computer accessories).

The weekly sales flyers that stores offer was/is another way around this as well. Some of them have coupons to specific items that are not allowed to have sales prices lower than the MSRP. Very few people are as draconian about their prices as Apple, but others sure wannabe.

> Some of them have coupons to specific items that are not allowed to have sales prices lower than the MSRP.

That's actually kinda disappointing. I'd always assumed those flyers were pieces of trash (at best, something I'd need to put in a recycling bin) which I don't want but now I'll be more tempted to take them when offered on the chance that I otherwise accidentally avoid the sales price.

It's still good to know that such coupons are likely just attempts by the retailer to circumvent the manufacturer's... ahem suggested price.

Coupons are a longstanding price discrimination technique. If somebody doesn't want to pay full price, you might still get their custom with a voucher. You don't want to make the discount too easy to find though, as you will miss out on revenue from people who were willing to pay full price.

ProTip: at some stores, employees are allowed to give discounts as well. i have 2 anecdotes from HomeDepot:

Since none of their lumber should ever be in the same building as the word "straight", I made a joke to a nearby employee that we should get a discount at how warped the wood was. He very seriously told me to separate the warped wood on my cart, and he'd mark them down. Got to the register, and they were marked down 40%.

Second instance was after spending time chatting with an employee in the appliances department, he pulled out a pre-printed, handcut piece of paper from his apron pocket, wrote 10% on it with his sharpie, and i got 10% off at the register.

Oh, and of course the Guitar Center stories of "you're a cool dude, and since I like you, let me knock of X%" are infamous

Big box stores have a lot more leverage than a small seller on Amazon, who'll just get the "that violates our policies, we're nuking your business, no appeals" treatment.

Amazon are notorious among writers for nuking the accounts of Kindle Unlimited authors who have had their book pirated.

Apparently this violates the content monopoly KU is supposed to have.

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.

Not the time or place for whataboutism

Why not? If it’s good enough for the government, why isn’t it good enough for the company they are going after?

It’s bad for both. But this thread is specifically about Amazon.

It isn't "whataboutism". If the government's position is that MFN terms for vendors are fundamentally anti-competitive and bad for consumers, which I agree with, then it raises questions about any organization or sector of the economy that widely requires MFN terms. It discredits the FTC when the US government routinely engages in the same market malpractice that they are accusing Amazon of but are disinterested in changing their own contracting behavior. It doesn't become less bad because it is the government doing it to vendors instead of Amazon.

This "rules for thee but not for me" behavior is why trust in government institutions has been eroding. It is difficult to give good and necessary actions the aura of legitimacy required for democratic institutions to function when the hypocrisy is obvious.

Common law is basically whataboutism. Whataboutism isn't inherently bad, it's not always a deflection. It is reasonable to expect similar treatment for similar actions. If anything, reciprocity is one of the very foundations of society and of our justice system. You can't really discuss a lawsuits without talking about precedent, it's inherent to the discussion

(In a way it's amazing how shouting whataboutism is now more often used to deflect or excuse double standards and unfairness than whatboutism itself.)

There's several problems with that.

It's true that the US government does make those demands, but it's very important to note that the US government organization is not a reseller of goods. It is almost exclusively a consumer. It is not in direct competition in the same marketplace with private industry outside of a few select industries (e.g., USPS, limited healthcare).

Next, MFN tariffs kind of by definition only affect international commerce. For Amazon, a 100% domestic manufacturer producing goods would need to comply.

Finally, MFN is something defined by WTO treaty. If you have to abide by MFN when importing goods into the US, it's almost certainly because your nation is also a WTO member. Because almost all of them are. The General Agreement on Tariffs and Trade requires WTO members to extend MFN treatment to like products of other WTO members. It's literally the the first article of the treaty agreement. [0]

[0]: https://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm

You are confusing unrelated things. As used here, "MFN" refers to a common type of term found in standard business contracts that have nothing to do with the WTO or the government. This discussion is about Amazon's use of MFN terms when contracting with ordinary domestic businesses.

That's not what you used the term for. If there is conflating going on, it started with your post.

Nothing I wrote suggests your interpretation. The US government uses MFN terms in domestic vendor contracts in the same way Amazon does. This was plainly obvious in context, since the term was introduced in relation to Amazon. It has nothing to do with international trade and nothing I wrote implied that, "MFN" is a standard term if art in ordinary vendor contracts.

You are the only person that introduced the notion that this had anything to do with the WTO, international treaties, etc.

> 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

That's one of the main cases of sticker shock in the healthcare industrial complex. Price a cancer treatment that would still be profitable at $10k/month at $125k/mo and offer sweetheart discounts to insurance companies (and treat self-pay patients as charity case writeoffs).

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).

> 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.

Market share => market power => different regulations.

(Of course, I would personally prefer to ban this behavior across the board; I just wanted to also point out that treating Amazon differently could plausibly be reasonable)

Those arrows also flow in reverse just as well. Whatever arbitrary decisions are made will advantage some other entity which may or may not currently exist.

Different regulations => market power => market share.

This writeup has a lot more details: https://www.wired.com/story/amazon-antitrust-lawsuit-cuts-to...

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.

CA AG Rob Bonta filed another lawsuit over the same issue in Sept 2022. Some juicy quotes here (although only one side of the story): https://oag.ca.gov/news/press-releases/attorney-general-bont... The CA lawsuit is set to go to trial in 2026.

I know that sometimes these lawsuits can take awhile but scheduling something 3 years away seems excessive. It feels like discovery can take months, but years feels like a very long time here especially since this is something that is actively still ongoing and damaging to the victims

I'm curious... how far does Amazon's MFN policy extend?

For example, let's say I independently decide to import an item from company X and sell it only on a Shopify site for a lower price than company X's items listed on Amazon. Will Amazon exert pressure on company X to stop shipments to me or impose a minimum sale price policy simply because company X's products are available elsewhere cheaper than on Amazon?

Why rely in a promise. what happened to the lawsuits?

This is explained in the OP article linked here...

Although I guess not everyone actually reads the articles so reiterating in the comments is useful.

> Still, why can’t a third-party seller offer a lower price outside of Amazon? Good question! That’s where the scheme gets very clever. Originally, Amazon imposed contracts, as the FTC noted, “barring all sellers from offering their goods for lower prices anywhere else.” But Europeans, and Senator Richard Blumenthal, complained about these price parity agreements, so Amazon dropped its explicit contractual requirements in 2019.

> However, this change was a farce. The firm simply did through code what it couldn’t do through contract. "Amazon,” claims the FTC, “has implemented an algorithm for the express purpose of deterring other online stores from offering lower prices.

Hasn't WalMart been doing the same thing for decades, but in bricks & mortar retailing?

Yes, which is why searching "most favored nation clause" turns up legal advice on how to set that up in a good way.

Note, there is still a valid question on whether or not companies with enough exposure should be held to higher standards. Consider, we hold pro players to tighter requirements than we do local leagues. They both have basically the same rules, of course, but not fully identical. And enforcement is, of course, largely at the discretion of the agencies enforcing them.

The last is obnoxious, if you view the entire field as a homogeneous thing. And I do get the impression that there is something more going on in this case. That said, it is not abnormal to rank ROI on what gets enforced. I wish it was framed directly in those terms, though.

The US is strong on the doctrine that the law applies equally to people (legal entities) regardless of size / market cap. I don't think we'll ever see something like the EU's law that targets only large internet companies. It might even not fly on equal protection grounds.

I think that in either Finland or Iceland people receive traffic fines that are a percentage of their income. They would never fly in the US.

That is why I didn't say it applies differently. I said it is enforced on a ranking that is based on ROI. And... it really has to be.

There are almost certainly low key levels of bad practices in small shops. But it would cost more and take more out of the economy to enforce them than it is to just not care.

Now, that bar is rising, of course. Things that used to not matter years ago are easily enforced today.

So your view is that we should enforce extremely strict laws arbitrarily and capriciously based on however the particular regulator or prosecutor feels about a given entity?

I can’t imagine how this could be abused.

If you've ever been on the interstate system, then you are basically with me. Literally it would be trivial in today's world to have a hookup on your car to check your speed against the local signage on a somewhat real time basis. Sounds absurd, but there is a pretty good chance every long haul truck you see out there is doing exactly that.

Similarly, mens rea is a thing. Such that statutory enforcement of rules is often a regressive policy that isn't necessarily a good idea.

I think most people who have driven on the interstate are quite aware that police arbitrarily pull people over for many things given the vast number of laws that are continuously broken by all drivers. I do not think a regime where you’re always breaking a law and can be pulled over just for driving while black is a good example when advocating for prosecutorial discretion. I’d prefer a system that doesn’t result in being subject to a regulatory action or prosecution because I was doing business while black.

Ah, agreed. And if you take the worst possible interpretation of my post I can see how you get there.

My point was that many rules get enforced on a cost benefit based system. Especially in business where enforcement is necessarily an expensive undertaking. Ideally, part of enforcement will include evolution of the rules so that people don't grow into a situation where what they are doing is suddenly illegal. That said, many of the rules we are looking at here are more along the lines of "you left interstate driving and are now in a city." That is, the landscape and situation pretty much has to factor into the rules. Is why you would be an asshole for worrying about the kid's lemonade stand down the corner. Any grandstanding on how the rules apply universally is... well, just not useful.

My interpretation isn’t the worst possible interpretation, it’s the realistic interpretation based on how permitting discretionary application of the law actually works in practice. Your view is fine in theory but fails (and not just fails theoretically - it has failed and continues to fail actually) in practice. Advocating for your theoretical ideal when we know it fails in practice is… well, just not useful.

I'm largely acknowledging that that is where we are. And not too concerned about that for many rules. But, and I said so in the initial post, expect that more and more will get enforced both as you get bigger, and as we get better at enforcing them.

That is to say, I also expect clarification and evolution of the rules during this enforcement action. Such that I would be most happy to have some of these arrangement flat out illegal. That said, https://www.ftc.gov/advice-guidance/competition-guidance/gui... was linked on Matt Levine's email today. And... "Our company monitors competitors' ads, and we sometimes offer to match special discounts or sales incentives for consumers. Is this a problem?" is answered with a no. Such that, this is a tough field to litigate right now.

And, what is it you are advocating for? That we only have rules that we can universally enforce? That would require that we know all of the ways that they can be broken from the beginning, so that we can encode those in law.

I think we’re OK with laws like: “don’t form a monopoly,” which applies equally to everyone (but doesn’t come up often for most people!)

The US has a lot of laws that apply differently based on a company's size... the Civil Rights Act, FMLA, GINA, PDA, ACA, etc.

Maybe the US doesn't have a lot of laws that specifically target large organizations, but they have a ton that specifically exempt small ones.

Isn’t this very common among all resellers? For example if you own a hotel and want other websites to sell your availability they will only list you if you don’t list the same availability for less money. They do this in part because people use the service to search for hotels and even they find one they want they go to other places to see if it’s cheaper.

This is an antitrust lawsuit filed by the FTC, not an accusation of specifically illegal conduct.

They're not saying amazon committed a crime by doing this, they're saying that it's evidence of amazon abusing their market position to create a monopoly. "most favoured nation" status is legal, creating a monopoly isn't.

You have that backwards. Monopolies are perfectly legal, it is only establishing and maintaining monopolies by improper conduct (ie specific anti-competitive practices) that is illegal. MFNs are not per se anticompetitive, but by the rule of reason they might be under certain circumstances. The FTC would have to prove that this is one such instance where MFNs are illegal conduct.

I feel like I’ve purchased direct from business at much cheaper rates than what were listed on Amazon.

Is it possible the loophole here is to provide discount codes at checkout for “20% off” on website only, and now magically it’s cheaper than Amazon?

I suppose if ABC LLC makes the devices, and someone sets up ABD LLC to sell them on Amazon and ABE LLC to sell them on Target.com, ABE LLC and ABC LLC aren't bound to ABD LLC's "most favored nation" agreement.

Shell companies are for more than just tax evasion!

> 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.

Tangential, but out of context quotes used in your sentence makes me think you're lying no matter what you're saying. Or else you would have kept it in context and used the whole quote.

Not to defend Amazon in the slightest. Just tired of seeing Breitbert quality clickbait OOC quotes everywhere.

> 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.

Is there a way to get around this by having the list price higher than Amazon but run specials for most weeks of the year that undercut Amazon? Could that only be a viable strategy if Target is the final merchant but not on the manufacturer's website?

I don't see the problem with this. They don't have to sell on Amazon to begin with. Amazon obviously wants their customers to have the best price available. Sellers can just go off Amazon if they don't like it. If sellers end up raising the price on other platforms as a result of this rule, then that says more about them than Amazon.

Demanding the lowest price does not harm consumers. Overstock, Wayfair, Walmart and others do the same thing. The result is the lowest price for a given product on all sites. This is unquestionably good for consumers.

If the price is higher then the fault is simply that of the seller for raising it. All e-commerce sites want the lowest price for their customers. Of course, people don't see nuance and just see BigCompany bad.

From what I understand, it’s not that simple. Sellers need the sheer volume of Amazon to compete. There is also the risk of Amazon duplicating their product and continuing to sell it on their platform… or their competitors filling the void.

So what? That's how e-commerce works. Why should Amazon be obligated to fill their store with higher priced items compared to their competitors? No one is going to visit a store where every item could be purchased cheaper somewhere else. This is exactly why price match is a thing, because they don't want their costumers soliciting different stores to begin with.

The move that Amazon's price be no higher than offered elsewhere is the most pro-consumer move possible. Hilarious people are complaining about it. Any second-order effects of this are on the actual seller, not Amazon.

The market should decide. That’s commerce.

Yes, exactly. These sellers should and can just leave Amazon if they have a problem with it.

No, they should be able to set their own pricing as they see fit.

They are able to do so, but Amazon is not obligated to have them on their platform if they aren't providing the best price to their customers.

Amazon is a product search engine and should be treated as such. Vendors must have the freedom to set pricing on any platform as they see fit. If all product search engines and ecommerce platforms behaved in this anticompetitive behaviour then what would we have? A weird commercial landscape that lacks flexibility… in the end the consumer looses because free market forces are not in play.

Amazon is not a product search engine, so the rest of your post is irrelevant. They are a store and describe themselves as such. You cannot find products on Amazon that are not for sale by them or sellers who agree to their rules, an actual product search engine would allow this.

Good luck with that! Amazon is the most powerful product search engine available. I love it and use it almost every day. Amazon will spend a lot of money trying to convince the feds they are otherwise… no amount of lobbying, PR pieces, paid ops and persistent commenting on boards like this one will stop valid questions being asked in hearings. It’s only a matter of time sorry.

I don't even know where to begin with this comment. Do you know what anticompetitive behavior is? Do you know how markets are supposed to work? Amazon is leveraging their position in the market to unfairly disadvantage their competitors, thereby distorting the market, decreasing its efficiency, and increasing end prices for consumers everywhere. Market-distorting behavior like this is why antitrust regulation is necessary to keep markets functioning efficiently.

Everything you're stating is false. Amazon is trying to do right by its customers, and they are not obligated to let sellers not give their customers the best price available. Sellers are not obligated to sell on Amazon.

Your conclusion that this increases end pries for consumers has nothing to do with Amazon, but the sellers themselves.

Amazon was already told not to do this for anti-trust reasons, and they promised to oblige. Unless the government, Amazon, and the general public are all incorrect about what constitutes monopolistic behavior, you are. The idea that Amazon is openly defying pro-consumer laws to do right by its customers is absurd.

Some would say that the way commerce works is sellers can sell anywhere at any price that a buyer wants to pay.

That's not how commerce works. Commerce works by following the rules of places that you are trying to sell at. You can't sell anything anywhere.

And Amazon needs to follow the rules and laws of the place that IT'S trying to sell at.

And which law dictates a company must allow people or sellers on its platform?

I'm not GP. I didn't make that argument. I agree that Amazon is not obliged to allow just anyone on their platform. Sellers must abide by the rules that Amazon sets in place. At the same time, Amazon must abide by the laws of the locations at which it wants to sell. So if a state says that they cannot force a seller to keep their lowest price on Amazon, then that's the way it is.

> So if a state says that they cannot force a seller to keep their lowest price on Amazon, then that's the way it is.

Yes, but at the end of the day Amazon to remove the seller for any reason, so even if the FTC succeeds here, Amazon will simply purge those sellers who are not offering the best price, even if not explicitly stated.

There is no reality where Amazon allows their site to be inundated with higher priced goods compared to competitors.

Perhaps you are right, and also then again perhaps those companies find that they have cause to file a lawsuit.

with astronomic fines (for the customers to pay)

There has been a a standard of “no duty to deal” forever. No company is forced to do business with anyone.

it would be sensible to require a reason for refusing to do business with someone. Normally it wouldn't be but if you are a repeat offender it seems a sensible requirement

Unless it's a protected class you can refuse to do business with anyone for any reason. Plenty of supreme court cases on this.

certainly, you can write anything on the form. Any reason is not without? I do doubt you can refuse one foo for being fooish but not the other. Now multiply by 10 000 and pretend you are explaining it to the judge in a context where you've been convicted multiple times.

Why not? If I'm willing to pay Amazon $6 for an item I could get for $5 at Walmart, why wouldn't Amazon want to make that sale?

this might come if the shop is large enough

Sure. The rules at the place you're trying to sell.

Dictating how you sell elsewhere is a clear step beyond that.

They are not dictating how they sell elsewhere. They are saying they need to offer the best price on their site. It is easy to detect whether or not they actually are, and sellers are simply being called out.

There is no obligation to sell on Amazon, nor a requirement for them to raise prices on other platforms. They could simply offer the lowest price everywhere. The result? Lower prices for Amazon customers. If they raise the price, then that's the seller's fault, not Amazon.

You...understand how you can't have one without the other, right?

> There is no obligation to sell on Amazon

While true, this ignores the important point that Amazon is only able to do this anti-competitive practice due to their market dominance that effectively forces many sellers to sell on Amazon.

> nor a requirement for them to raise prices on other platforms.

That is what this whole thing is about. Sellers that sell on Amazon aren't allowed to sell for lower prices on other platforms that are cheaper to sell on.

If Amazon was able to offer lower prices for its customers by offering sellers a marketplace with lower costs compared to competitors that would be great. Instead, they abuse their market dominance to prevent any competitors from offering lower prices by being more cost efficient for sellers. This is extremely nasty as it effectively prevents any competitors to Amazon from building a market share since consumers will have no price incentive to switch and sellers will not want to switch due to the smaller market share on those competitors' platforms.

It could not be more clear that this is anti-competitive behavior achieved through abuse of a dominate market position.

rules partially set by government

The move that Amazon's price be no higher than offered elsewhere is the most pro-consumer move possible.

Yet here we are with sellers WANTING to sell their items at a lower price on places other than Amazon, but if they do, they'll go out of business. That doesn't sound pro-consumer.

I'm a consumer. I'd like to be able to buy items for the lowest price the seller wants to offer me. That's not happening in some cases because if they do, Amazon will exclude them and they'll go out of business. Yeah, definitely not pro-consumer. Pro-amazon, sure.

Would Amazon be obligated to list the items regardless? Otherwise just dropping pricing conditions would only help those sellers that Amazon has enough interest to list regardless - for some products the "equilibrium" might not be great.

If your product doesn’t have any value that can be protected by copyright, patent and you haven’t built any type of affinity with customers, isn’t it by definition just another commoditized product?

Well, here's a real example. About a decade ago there was a simple video conferencing system called Nautilus. A simple LCD screen that let you call other people with the device and talk to them, not having to bother with computers or smartphones. The sort of thing that is good for talking with elderly relatives who may not be very computer or phone savvy. I bought one (from Amazon) for myself and my elderly parents. It worked well, but a few years later Amazon came out with their Echo Show products which are basically the same thing, which killed the Nautilus. I'm sure it was covered by patents and what not, but you can't protect the idea. Amazon obviously saw that it sold reasonably well and used its power as both a marketplace and a technology company to undercut their own seller.

Really? That’s your example? Everyone and their mother has a video conferencing solution and the idea has been around as something to aspire to since the 60s with the Jetsons .

Do you agree with the look and feel lawsuit that Apple had against MS? Or think that Roku, Amazon, Google , etc did something untoward because they came after Apple with set top boxes?

Well, for historical accuracy, Roku was first in regard to streaming devices you hooked up to your TV. Apple and the rest copied them. And it is pretty much obvious that Microsoft copied Apple (and yes, you can argue that Apple in turn copied PARC). But what makes Amazon copying things different is that they are a marketplace for other people's products and a maker of products themselves. That has an intrinsic conflict of interest.

The first AppleTV was released in 2007. The first Roku in 2008.

As far as Amazon copying others as a marketplace owner, ever heard of the Kirkland’s brand? Store brands have been around forever.

Fortunately or unfortunately, that is something that is easy to research. ie: Amazon Basics

https://www.reuters.com/legal/litigation/amazon-copied-produ...

> thousands of pages of internal Amazon documents examined by Reuters – including emails, strategy papers and business plans – show the company ran a systematic campaign of creating knockoffs and manipulating search results to boost its own product lines in India, one of the company's largest growth markets.

Again have you heard of the Kirkland’s brand? Have you been to a CVS and seen the knockoffs? Literally every single major retailer has house brands that compete with third parties.

Your "What about Kirkland" -ism is irrelevant.

A big company can stall a copyright lawsuit for as long as it wants. Small companies cannot win against a large compamy like Amazon in court.

https://www.latimes.com/archives/la-xpm-1986-07-14-fi-19337-...

Especially when they can just twist the court system however they wish.

Small victories like the chain wrench lawsuit against Sears happen. But they are rare.

https://www.chicagotribune.com/business/ct-bionic-wrench-sea...

Your response shows that you did no read the article. They specifically show cases where Amazon copied sizes:

> Among the victims of the strategy: a popular shirt brand in India, John Miller, which is owned by a company whose chief executive is Kishore Biyani, known as the country's "retail king." Amazon decided to "follow the measurements of" John Miller shirts down to the neck circumference and sleeve length, the document states.

It’s not whataboutism at all. Only people that don’t know that housebrands have been a thing forever would think that the evil Amazon is doing something unique.

And CVS follows the formula of name brand OTC drugs down to the very ingrediant to make house brands. You can’t copyright a shirt measurement.

And before you call me an “Amazon shill”. I got PIPed from Amazon less than two months ago. I’m the last person who has any love for Amazon. Honestly I don’t have any feeling either way. It was just my 8th job over 25 years, they gave me a nice check and I had a comparable offer within two weeks.

The major difference here is that Amazon has major market power as an online mall.

Like with the sears example, large 'mall' like organizations do outright steal designs and stonewall the original copyright holder.

A random housebrand does not have access to Amazon's statistics, logistics or reach. Amazon is looking at stats that they hide from their providers, to choose who to copy, then out-price the original seller. (Due to inhouse logistics)

They are not even remotely the same thing.

And CVS doesn’t have major power when it comes to selling drugs and knowing which ones it should knock off with home brands? Every single store knows what to knock off based on what it sells.

And Walmart sells a lot more than Amazon.

You don’t think that every store knows how to undercut other products in its own store with house brands?

“A simple LCD screen that let you call other people with the device and talk to them” sounds like a commoditized product to me.

Yes, anyone here can go out and find an ODM from China to anufacturer them, send a custom version of AOSP to the ODM, slap their brand on it and sell it on Amazon.

It is none of Amazons business what prices they put when they list their wares on other services, the only reason they care is that they want to crush the competition.

Dictating how retailers can interact with your competitors is anti-competitive. Dictating what prices they can offer when they put up listings is a part of that, it is anti-competitive.

> It is none of Amazons business what prices they put when they list their wares on other services…

It is literally Amazon’s business to offer pricing at equal to or better than their competitors.

> …the only reason they care is that they want to crush the competition.

Every company wants to beat their competition, and many (most?) want to “crush” their competition. Don’t you think Target wants to crush Amazon? Don’t you think Google wants to crush Apple in smartphone sales? Don’t you think a local retailer would love to crush Amazon for products in their niche?

The only question here is whether Amazon is doing this in an abusive way and/or a way that negatively impacts consumers.

We’ll find out in the trial…

> It is literally Amazon’s business to offer pricing at equal to or better than their competitors.

For their own products they can.

For third-party items, Amazon is free to lower their margin.

Overstock & Wayfair scan + compare identical & similar listings at Amazon and other sites, and will message sellers if their price is not the better price.

It's annoyingly a pretty standard practice. And they will see through the "different SKU" trick simply by comparing the product images.

Isn’t the solution to just ban all of the companies from doing it? More companies than just Amazon can be anti-competitive.

I think that's a good solution in this case (ban it for everyone), but remember that there are different rules for companies who are found to have monopolies in a specific market. Something a monopolist does could be illegal while being completely legal for their competitors (who don't have a monopoly).

To be fair, every single wholesaler operates this way.

I have personalky spoken to wholesalers who sell widgets X (lighters etc) to retail stores.

If the retail stores undercut everyone else and drop the price below MSRP, they will exclude them in the future. There is centralized price control even though the retailers are free to do what they want.

That is done by auto dealers and anyone else who does MSRP. The difference is that they are still competing in that product category. Amazon on the other hand is a platform that stands BEHIND them. This leads to an emergent price cartel, just like in the propu lica piece on NYC real estate:

https://magarshak.com/blog/?p=385

To shine a little more light, what you're referring to is called a minimum advertised price policy, or MAPP.

And as you've stated, it's done by anyone who publishes a MSRP.

https://www.deltafaucet.com/for-professionals/product-resour...

https://assets.ctfassets.net/zlhl2y58oyef/3wENIXr7qvqyOoVD6R...

https://www.pricespider.com/Blog/map-policy-faqs/

It's exactly their business. Amazon is going to use the limited "shelf space" to promote and highlight those products which are most likely to sell (and to generate best margins). If a product is for sale for less elsewhere, it's less likely to do so, so why should Amazon waste the "shelf space"?

This is no different than what non-e-commerce stores (such as Walmart) have been doing for years.

Amazon doesn’t need to promote every single item they sell and it would be meaningless for them to do so. They have a long tail of items which rarely sell and only show up on very specific queries disproving any kind of limited shelf space argument.

As a simple practical manner a small manufacturer can more cheaply sell products at their factory than the overhead of selling through Amazon or anywhere else. You often see this where mid sized brewery offers beer kegs more cheaply on location.

Amazon’s policy simply increases prices without any benefit to consumers or the overall economy.

So, to be clear, you have no problem with Amazon writing their own laws and collecting their own taxes? Because that is what they are effectively doing.

If sellers were obligated to sell on Amazon that would be the case, but it's not, is it? Ironically, people complaining about this are exacerbating the issue. If sellers who actually cared left Amazon it would loosen Amazon's dominance in e-commerce.

They're obligated to by the grip Amazon already has on the e-commerce market. Letting Amazon make anti-competitive moves that increase their grip will only worsen the situation.

This grip you're describing only exists because they don't leave, and nothing is stopping them. Again, no one is forcing people to sell on Amazon. They could use Shopify or sell on eBay.

People act as if you have to sell on Amazon. You don't. That assumption and expectation is why Amazon is dominant to begin with. Sellers should leave if they don't like it, and that will naturally soften Amazon dominance.

> and nothing is stopping them.

Imminent collapse and bankruptcy when they leave due to Amazon's dominant market position. That you can set up a shop anywhere does not mean anything when all of your potential customers are only going to the Amazon digital strip mall.

Listen, maybe you've never heard about antitrust law, but using one's dominant market position to maintain dominance in the market to the injury of consumers is pretty much the exact definition of an antitrust violation in the US. So write your local congressman complaining that antitrust law is restricting your ability to lick Jeff Bezo's boots, or run away to the Rockies somewhere and start a radically laissez faire community where everyone's asking about John Galt, but as the law stands in this country, it's illegal, and that's a good thing.

Just maybe some people don’t think that the government having more power and control is a good thing?

37% is not a monopoly. If you have a differentiate product, you can set up your own website through Shopify or any number of places.

And if you haven’t been paying attention, the FTC has been laughed out of court for the last five years every time it has gone after BigTech

What possible complaint could you have about government overreach that doesn't equally apply to corporations? Antitrust law is the only thing standing between us and a corpohellscape "America, an Alphabet Company".

Government has the power of the state to force their wills on people. Please tell me a scenario where an adtech company will gain the ability to take away my rights and property the way the government can?

The government has a “monopoly on the legal use of force”.

Look no further than Florida to see what an overzealous government can do when you disagree with them or the police that raided a newspaper office because they reported on police corruption.

I’m much more worried about when the police are behind me because “I don’t look like I belong” in my own neighborhood than the Google car mapping my street.

Companies can use anti-competitive behavior to curtail your rights in all sorts of ways. Look at America's storied history with company towns. Free speech doesn't get you very far when being blacklisted from the company store means you starve, or your company scrip that you've been being paid in is no longer accepted to keep you housed, or they pay the Pinkertons to beat you senseless for using the word "Union". The reason we don't have that anymore (well, except for that last one Amazon) is government regulation.

The government at least has the obligation to appear as if it's beholden to your will and rights. Corporations have no such qualms.

So please tell me a realistic scenario where Google goes from an adtech company to one that can take away my freedoms and shoot me with impunity?

Also please tell me a scenario where Amazon takes over all retail?

If you haven’t been paying attention, the justice system and political parties gerrymandering hasn’t even been trying to act like they are behaving fairly.

The governor of Florida has actively been punishing companies both big and small that have been speaking out against him.

It's not the monopoly on force, it's the monopoly on the claim to the legitimate use of violence, from Max Weber:

<https://news.ycombinator.com/item?id=36317559>

There are numerous examples of private corporations or non-governmental actors engaging in violence, with or without state support or sanction. There are the 100 million souls lost, respectively, to the British East India Company's occupation and administration (as a private entity, with military powers) of India, of the transatlantic slave trade by numerous private commercial operators, and of the genocide against the indigenous populations of the Americas, again much by privately-chartered corporations (as the original British colonies were). There are extant mercenary forces such as Constellis (formerly Academi, formerly Xe, formerly Blackwater) in the US, or the Wagner Group presently transacting genocide in Ukraine. There are oil companies who have initiated coups, paramilitary actions, and assassinations throughout the world. There is the Pinkerton Agency, still extant, and with a storied role in violence against labour and civil rights movements. There are railroads, with their own (private) police forces, which are in fact registered as law enforcement despite being nongovernmental.

The truth is that there is no clean distinction between State and Private use of force, lethal or otherwise. What there is in government is, one hopes, legitimacy and accountability to the citizenry rather than to creditors and investors.

I've often seen the complaint that developers think the law is purely strategic, like a computer, and if they can find a technicality then the law must follow through.

But that's not how this works.

It's technically true that fiber has competition if another ISP is offering dialup in the same area. No one in their right mind would agree that's actually a competitor in anything but name.

And so it is here.

If not selling on Amazon is an existential risk for your company, Amazon is effectively a monopoly, and THAT is what the law cares about.

Sellers are in effect obligated to sell on Amazon, because the alternative is “go out of business”. That’s the whole goddamn point of FTC intervention.

Every company has the right to set the terms and fees to use them. A “tax” is something you are mandated to pay. I get plenty of crap advertised to me on FB that you can’t find on Amazon.

It does the opposite - it prevents the price going lower than cost plus Amazon fees.

Amazon is not exactly cheap for sellers, so the price has to go up everywhere.

I read that, on average, Amazon collects 50% of the cost in fees; from sellers.

And how much do you think traditional retail marks up prices from wholesale to retail?

Why is that relevant?

Because Amazon is a retail company and the amount that Amazon charges is not much different than the cost overhead of getting any product through the channel.

so my (theoretical) company that optimizes to keep these costs lower shouldn't be able to compete on those fees?

Sure, if all you care about is money, then you can already go on Amazon and choose alternate vendors that are available at a lower price with slower shipping.

So you don't even know what the article is discussing. Amazon is killing competition and increasing costs to consumers.

I happen to know exactly what I’m talking about - you right now can look for an item on Amazon and see “this product is available at a lower price with <slower shipping>”

You right now can set up a site on Shopify and sell your goods.

If you are selling a differentiate product instead of cheap crap imported (or drop shipped) from China, you can create demand without going through Amazon.

For instance, I was specifically looking for Samsonite zipper less luggage because I trusted that brand and it wasn’t available on Amazon. They chose not to sell on Amazon and I bought it directly

-- I happen to know exactly what I’m talking about - you right now can look for an item on Amazon and see “this product is available at a lower price with <slower shipping>” Sure, on Amazon. Not other platforms.

I'm not going to bother explaining further, but thanks for confirming you don't understand the issue. It's not my job to educate you.

I'll take the charitable interpretation and assume you just don't understand the mechanics of the policy.

Amazon is saying that sellers cannot offer a fair low price to customers on other platforms if the seller can't also offer it on Amazon. This is 1) anticompetitive, 2) anticonsumer, and 3) insane.

Consider this test:

- Seller buys a crappy LED bulb from China for $0.80

- Seller is happy to list the bulb on Walmart, Target, etc, for $2.00. Net of fees and shipping and stuff they make enough money

- Amazon charges $3 in fees. Obviously the seller can't afford to sell for $2 on Amazon. They sell for $5 instead.

- However, now the seller also can't sell for $2 on competing sites. Amazon, leveraging its market share, has dictated that the seller must price Amazon's fees into pricing on non-Amazon sites, so consumers pay $5 to Target for something the seller would have been happy getting $2 for.

This is insane.

I disagree.

Let's use your example. The sellers should stop selling that item on Amazon, and sell their light bulb on Walmart, or where-ever. Customers who really need that will go find it at Walmart, or where-ever. This strengthens the competitors to Amazon, which is bad for Amazon and good for the consumer. The consumer also find the lower price that they wanted. Alternatively, they buy the alternate product on Amazon which would be cheaper than the inflated price (per your example). Again, good for the customer. Everyone wins in every scenario except for the seller, which is how Amazon and every wholesaler operates.

Suppose the FTC wins this case and sellers can put whatever price on whatever site. Amazon, like any store wants the lowest price. Not to mention there are only some many items you can show on the first page of results. They will find some other reason to remove these sellers and/or their items.

Now maybe there's another case to stop that behavior too. The result is that companies are not obligated to let sellers on their site. That is insane.

In summary, there will never be a scenario where Amazon allows sellers to sell the exact same item for more than Amazon's competitors, unless the government forces Amazon to let sellers sell whatever on their site.

You’re just wrong, Amazon controls around 35% of all US e-commerce. Not being able to sell on Amazon instantly removes most of your available customers. The second largest is Walmart and it’s closer to 7%. Walmart, target, whatever, don’t add up to Amazons market.

> Amazon controls around 35% of all US e-commerce. Not being able to sell on Amazon instantly removes most of your available customers

Math doesn't check out. Not to mention that if sellers stopped selling on Amazon they wouldn't control so much. How exactly is making everyone sell on Amazon going to solve anythin?

Sellers should stop using Amazon if they don't like their policies, and the issues will correct themselves.

Or, hear me out here, The Federal Trade Commission orders a study done and the study corroborates the general sentiment here that Amazon is abusing their power in the marketplace. So, the FTC then sues Amazon.

Your 'feelings' about how this works only matters to you. The US branch of oversight for trade has declared (with a lawsuit) that this behavior is unconscionable and either is or will be illegal by the time this suit is finished.

You're welcome to dispute the FTC and the crowd here on HN, but you need to provide some sort of data to back up your claim of: Sellers should just stop using Amazon...the issues will correct themselves.

The FTC's suit alleges the exact opposite of what you allege. The FTC states that there is harm to the entire economy if Amazon is allowed to continue this practice.

Please cite the studies, data, or metrics you used to claim '...will correct themselves."

Thanks @endisneigh.

> The Federal Trade Commission orders a study done

> the study corroborates the general sentiment

Seems fishy ... Good thing that even corporations like Amazon get a day in court.

The math absolutely does check out, lets say, for an addressable market of 100k purchasers:

(and I'll be generous and I'll pretend Walmart has zero fees)

Amazon: ($5 selling price - $3 fees - 0.80 COGS) * (100k * 35%) = $42,000

Walmart: ($2 selling price - $0 fees - 0.80 COGS) * (100k * 7%) = $8,400

And even if they price the same on Walmart as they would on Amazon: ($5 selling price - $0 fees - 0.80 COGS) * (100k * 7%) = $29,400

See the issue? The problem is that one seller on Amazon moving to another platform won't change the fact that Amazon has the majority market share. That's how market momentum works and it's why we have antitrust laws.

Even with exorbitant fees, they are still where sellers need to be. And they are using this market share to force sellers into overpricing on other platforms so that they maintain this unfair position.

Walmart is not all-non amazon customers.

If Amazon's market share is 35%, then the non-amazon customers comprise the other 65% (which, being greater than 50%, constitutes "most").

Amazon: ($5 selling price - $3 fees - 0.80 COGS) * (100k * 35%) = $42,000

Not-Amazon: ($2 selling price - $0 fees - 0.80 COGS) * (100k * 65%) = $78,000

If a seller raises prices to match Amazon, they can be undercut elsewhere by those willing to forgo Amazon for the larger overall market share.

Amazon is convenient to small sellers in that they offer more customers on a single site than any other, and with limited bandwidth sellers logically want to minimize how many different sites they need to interact with, but charging for convenience is not inherently anticompetitive behavior. Amazon may have abused it's position in the particulars of its MFN implementation, but MFNs in general are fine.

There are two reasons why that 65% number is wildly unrealistic:

1. We're ignoring fixed costs associated with onboarding with an ecommerce platform. Selling on one website has significantly lower fixed costs than it is to sell on every ecommerce site on the internet minus one. We're talking thousands upon thousands of retailers, not a handful. If what you were thinking is that they could sell across the next 5 to 10 most popular ecommerce marketplaces, you're somewhere between 15% and 20% marketshare.

A more realistic number for that strategy is:

Not-Amazon: ($2 selling price - $0 fees - 0.80 COGS) * (100k * 17%) = $20,400

https://www.statista.com/statistics/274255/market-share-of-t...

2. Not all ecommerce sites represented in that 65% permit third party sellers. You can't just sign up and sell your stuff. You may have to convince their buyers to stock your product. This is not easy or cheap.

> Not to mention that if sellers stopped selling on Amazon they wouldn't control so much.

This is a problem in terms of organisation. If lots of people stop selling on Amazon this would be true. The problem is individually each seller is motivated to deal with Amazon so long as lots of other sellers are. A mass exodus from Amazon would in short order make the Amazon store far less relevant, but nobody wants to leave before everyone else is doing it because until then it costs them

And if lots of items became available on other sites, but not Amazon (as per the theory being propounded), then Amazon would no longer control 35% of all US e-commerce.

This is a classic coordination problem: you need all the sellers to leave together so that individual merchants don't take a loss. And coordination problems like this are one of the main areas government action can help!

Also, I'd imagine that coordination would probably leave them vulnerable to their own set of anticompetitive allegations (i.e., some variant of cartel behavior/price-fixing). To the extent anyone acts, it would probably have to be government.

There are companies that do not sell on Amazon. I seek them out. They will tell you that if their product appears on Amazon, it's counterfeit.

It's probably an impossiblity if your business model is selling cheap imported Chinese garbage at a profit, but that's the businesess you chose. Others have chosen to sell quality items on their own terms. Those are the businesses I want to reward.

And how much of the stuff that these sellers are just cheap Chinese crap that they wouldn’t be able to sell at all if Amazon didn’t exist?

> They will find some other reason to remove these sellers.

That's be much harder work, though, so regulation might well still have the intended effect.

Either their reason will need to be through their seller terms and conditions, or it'll have to be done on an individual seller basis.

Amazon relies on scale, and therefore standard terms and conditions for all sellers that can be scrutinized by regulators.

If it's done on an individual seller basis, I don't think they'll be able to do it while having the same effect in practice.

> Customers who really need that will go find it at Walmart, or where-ever.

So here's a weird externality. As a decently well off tech-worker, I don't care if I'm paying 5$ or 2$ for lightbulbs, even if I'm re-lighting my whole house. The seller will sell on Amazon, because it is the largest market and will set their prices on other markets to match Amazon. I'll buy on Amazon, because it isn't worth my time to check multiple websites to get the best price (especially when SKUs differ and I have multiple other items I'm buying, etc). And now people who do need to save money, can't also find this lightbulb at a cheaper price on competing marketplaces, even if this lightbulb is actually the best quality.

> And now people who do need to save money, can't also find this lightbulb at a cheaper price on competing marketplaces, even if this lightbulb is actually the best quality

It's the opposite of what you're saying. Sellers not selling particular items on Amazon is good for consumers who are price conscious, because if they need that particular item they will search for it and find it cheaper on another store, strengthening that one and hurting Amazon.

And if they don't care they will find cheaper items on Amazon. Everyone wins except for the seller, which is Amazon's MO.

> It's the opposite of what you're saying. Sellers not selling particular items on Amazon is good for consumers who are price conscious,

Sellers don't just 'not sell this item on Amazon', because it is the largest single market. This is like, the whole issue in question.

> because if they need that particular item they will search for it and find it cheaper on another store, strengthening that one and hurting Amazon.

This is the exact thing that isn't happening, because Amazon is abusing its market position.

But, even if this was the case and the seller chose to sell on a different marketplace and take the Amazon ban, then it still wouldn't be as good as having just having the item listed on both marketplaces at two different prices. Because then I wouldn't be able to buy the best lightbulbs in one convenient location.

So you understand your effect in participating in this system, but life's too good for you to do anything differently. Nice.

A company makes a product - it costs $10 per unit to make. To list and sell with Amazon, they are charged $12 per unit. To make a profit the company adds and additional $1 per unit. They sell the product on Amazon for $23 per unit.

Online retailer Foo also has a store, and provide the same services that Amazon for their online shop at $5 per unit. The online retailer adds a profit of $2 per unit. Total price $17 per unit. Retailer Foo is more $ efficient for those services as a result customers price compare. Foo is rewarded for their effi with higher volume, manufacturer is rewarded with higher profit and consumer is rewarded with lower prices. Enforcing market competition led to all 3 parties involved being rewarded. Retailer Foo over time grows a larger customer base as people learn to price compare with them and forces Amazon to stop rent seeking.

But the above doesn't happen in the real world. Amazon enforces that the retailer lower their price on Amazon to $17, while still collecting $12 per unit. The company now can sell on foo, but only by selling on Amazon at a loss. They can't afford that amount of loss from Amazon and stay in business. So Amazon avoids competition. They can't pull their product from Amazon because not enough customers vist Foo retailer yet to make up the volume.

So in the end Foo retailer is more dollar efficient, but is prevented from growing and benefiting the marketplace. Amazon leverages its outside market size to avoid competition. Market participants preventing competition is against the benefits of capitalism and harms the consumer. So, it benefits the consumer to ensure Amazon has to actually compete with the more efficient competitor and stop rent selling behavior.

> They will find some other reason to remove these sellers.

I think this speaks to the nut of the problem. Unless there is an incentive upstream of the misalignment of parties, then any number of lawsuits after the fact will have a "war on drugs" level of futility.

What to do then? In an alternative universe perhaps the FTC was implemented to improve trade by promoting standards, ontologies and authenticity verification that lead to greater freedom of trade and less gatekeeping.

If a monopoly can't help but follow its incentives to abuse its market power, then you break up the monopoly.

it is about the desire to control things that are non of your business.

> Demanding the lowest price does not harm consumers.

Amazon demands that sellers increase their prices on selling platforms with lower overhead. A demand to increase prices does harm consumers.

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