Amazon & Apple May Have Pushed Their Luck

August 19, 2019

The Amazon-Apple Partnership Triggers an FTC Antitrust Investigation

While Amazon offers a marketplace for buyers and sellers from around the world to find one another, the company also controls who sells major brands. For example, if you found a new pair of Nike sneakers for less than $100 at a discount store, you could not turn around and sell them on Amazon for a significant profit – unless Amazon “ungates” you. Amazon limits the number of sellers who can sell Nike along with many other brands and “gates” everyone else. Sellers must jump through hoops to make it through this exclusive gate to commerce.

Enter Apple to the Amazon Stage

Apple’s recent partnership with Amazon and the resulting ousting of Apple product refurbishing businesses caught the eye of the Federal Trade Commission. While the stated intention of Apple selling its products directly to consumers via the Amazon site was to prevent counterfeit Apple products from making it onto the marketplace, Amazon has left some Apple product resellers out of the loop. Not only are the Apple product resellers out of an Amazon gig, but consumers who could buy refurbished Apple products at a fraction of the cost of new Apple products no longer have access to these resellers.

Certified by Apple = Priced by Apple

Amazon did give the Apple resellers two months’ notice before forcing them off of the platform. And certified Apple resellers are able to continue selling refurbished Apple products – certified by Apple, no less. Apple along with other big brands on Amazon will only authorize resellers who charge a specified minimum amount, which will be a lot higher than the non-authorized resellers were willing to charge. Consumer payment bridges the difference.

Does this sound like a “restraint of trade” or an “attempted monopolization”? Such wording can be found in our country’s antitrust laws. This is when the FTC started paying attention to how Amazon and Amazon’s partner brands like Apple control who sells what and for how much on the site.

While Amazon didn’t completely ban third-party sellers from Apple reselling, the company did only offer an “Amazon Renewed” option to resellers who purchase $10 million in annual inventory, a barrier to entry for the average Apple refurbished product reseller, including small businesses, as well as individual sellers.

Enter FTC to the Amazon Stage

The FTC is now carrying out an antitrust investigation into the online marketplace giant. In addition to this latest antitrust investigation, the FTC along with European regulators are taking a closer look at Amazon’s practice of using its proprietary sales data against competitors.

Along with the FTC, the Justice Department is also investigating Amazon, and eight states, as well as App Store customers and developers, are suing Amazon.

FTC Tech Task Force

The FTC created a Tech Task Force in February to focus on anti-competitive practices on tech platforms. At least one member of this task force interviewed an Amazon refurbished Apple product reseller who was squeezed off of the platform as a result of the Amazon-Apple initiative launched last fall. 

The FTC is also investigating Facebook’s acquisition of Instagram and WhatsApp. Ultimately, consumers and the general public pay the price of tech giants leveraging their control over the marketplace to increase profits while decreasing competition.

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