Amazon Probed by US Antitrust Officials Over Marketplace

A team of Federal Trade Commission (FTC) investigators has begun interviewing small businesses that sell products on Amazon.com to determine whether the e-commerce giant is using its market power to hurt competition. Several attorneys and at least one economist have been conducting interviews, according to three merchants. All were asked what percentage of revenue their businesses derive from Amazon vs. other online marketplaces like Walmart and eBay, suggesting regulators are skeptical about Amazon’s claims that shoppers and suppliers have real alternatives to the Seattle-based company. One merchant, Jaivin Karnani, said he was surprised the FTC returned his call the very next day. The interviews indicate the agency is in the early stages of a sweeping probe to learn how Amazon works, spot practices that break the law, and identify markets dominated by the company.

Total Retail's Take: The growth of Amazon and the power it wields in the e-commerce market has caught the attention of government regulators. The key term there is "e-commerce market." Amazon has contended — and I believe rightfully so — that its competitors extend to offline companies (e.g., Walmart) as well as online. When considering both sectors, Amazon notes that it has a relatively minor 4 percent share of the U.S. retail market. This defense is increasingly viable as Amazon builds out its brick-and-mortar business, primarily in grocery, led by its acquisition of Whole Foods as well as reports that it's planning to launch a new grocery chain. This isn't to say Amazon is above reproach. The company commands roughy 40 percent of all e-commerce sales, and many small businesses rely on its marketplace platform for nearly all of their revenue. That scenario leaves many businesses at the mercy of Amazon's demands and policy changes.

"If merchants are so reliant on Amazon for sales that they're unwilling to offer better prices on other platforms like Walmart and eBay, that can hurt competition," Diana Moss, president of the American Antitrust Institute, a nonprofit that advocates for aggressive antitrust enforcement, told Bloomberg. “That really is the central question in an inquiry like this, and that's why Amazon downplays its market power.”