Prosecutors asked the court to block Amazon from engaging in the practices that it argued increased prices. They also requested that the court “remove any ability of Amazon to harm competition,” including by changing its structure.
Today in Business
May 25, 2021, 2:46 p.m. ET
Amazon has attracted particular attention from critics because of the sweeping nature of its business. It operates a dominant web hosting operation and a streaming platform that competes with Netflix and Hulu, and it expanded into brick-and-mortar grocery stores with the acquisition of Whole Foods.
But the lawsuit filed by Mr. Racine, a Democrat, concerns the core of its business: the online marketplace for outside merchants, which accounts for more than half of the products it sells.
At issue is how Amazon polices the pricing of products that merchants list on its website. Amazon had required sellers to offer products at the same prices they did on other websites, or lower — what is known as a “most favored nation” policy. Regulators in Europe, and later Senator Richard Blumenthal, Democrat of Connecticut, questioned the policy. In 2019, Amazon dropped it from its service agreement with sellers in the United States.
Mr. Racine’s complaint said Amazon in 2019 replaced the policy with “an effectively identical substitute,” which it called its “Fair Pricing Policy.” That new policy, the complaint said, lets Amazon “impose sanctions” on sellers whose products are offered at lower prices elsewhere, even if it costs them less to list on other platforms, including their own website.
Amazon put in place other measures to limit lower prices elsewhere. More important, it sometimes removed prominent buttons like “Buy Now” and “Add to Cart” from a product listing page, making it more cumbersome for a shopper to buy the item. Sellers say the change reduces sales. The complaint said Amazon could also banish sellers from its website entirely.
“This is a living-in-fear, all-the-time, type of event for any seller on Amazon,” said James Thomson, a former Amazon employee who helped build Amazon’s marketplace business and now advises sellers. He said there were legitimate reasons a product could cost less elsewhere. It may be cheaper to sell on a different website, for example, or a site may be liquidating a product.