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.
> 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.
> 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?
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?
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.
>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?
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."
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.
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.
> 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.
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.
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
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).
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.
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.
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.
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.
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
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.