Image: Amazon

California attorney general Rob Bonta has filed an antitrust lawsuit against Amazon, alleging that the retail giant stifles competition and increases the prices consumers pay across the internet with tactics that include removing important buttons (e.g., “Buy Now,” “Add to Cart”) from the product listings of companies that offer lower prices on other websites. The suit is limited to the Golden State but could have a broad impact across the country in the event that it’s successful.

“Without basic price competition, without different online sites trying to outdo each other with lower prices, prices artificially stabilize at levels higher than would be the case in a competitive market,” a portion of the complaint reads.

From a New York Times report (alternate link):

The lawsuit largely focuses on the way Amazon penalizes sellers for listing products at lower prices on other websites. If Amazon spots a product listed for cheaper on a competitor’s website, it often will remove important buttons like “Buy Now” and “Add to Cart” from a product listing page.

Those buttons are a major driver of sales for companies selling though Amazon, and losing them can quickly hurt their businesses.

That creates a dilemma for marketplace sellers. At times, they can offer products for lower prices on sites other than Amazon because the cost of using those sites can be lower. But because Amazon is by far the largest online retailer, the sellers would rather raise their prices on other sites than risk losing their sales on Amazon, the complaint said, citing interviews with sellers, competitors and industry consultants.

California has been investigating Amazon for more than two years, the Times noted. The antitrust lawsuit brought against Amazon in San Francisco Superior Court today says that the retailer’s practices violate California’s Unfair Competition Law and the Cartwright Act, with one effect being an “anticompetitive cycle,” in which sellers are forced to raise their prices to recoup costs.

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11 comments

  1. Yeah, it's about time someone cracked down on them.

    Amazon has so much outsized power in this dynamic that they can pretty much force vendors to accept all kinds of ****ty arrangements.
  2. Not really any different than what Walmart did from ~1990-2005

    Not that that makes it right - just that some new thing will come around in a bit and kick Amazon in the newts and take over as the latest 800lb gorilla.
  3. Not really any different than what Walmart did from ~1990-2005

    Not that that makes it right - just that some new thing will come around in a bit and kick Amazon in the newts and take over as the latest 800lb gorilla.

    Walmart is and was huge, and has done lots of ****ty things, but Amazon has WAY more power over sellers than Walmart ever did.

    These days, if you want to sell online, you pretty much have to be on Amazon, or customers simply won't buy. Not us - mind you - but there is a huge portion of the public that won't even consider buying something if it isn't on Amazon, even if it is available at another online retailer.
  4. Walmart is and was huge, and has done lots of ****ty things, but Amazon has WAY more power over sellers than Walmart ever did.
    I will concede that point, but with a caveat:

    Walmart almost exclusively deals with major manufacturers who have the ability to sell in high volume and command large market shares - thus, they have a pretty good amount of leverage in any discussion. But when Walmart comes into a town and muscles out all the competition, you are still going to at least listen to what they have to say, and capitulate somewhat. It's not a total monopoly, but it's a lot of bargaining power on both sides of that table.

    Amazon will let any mom&pop sell on their storefront. If you are a small retailer, you either play by Amazon's rules or gtfo.

    So, I don't think Amazon has a whole lot more sway over the bigger companies than Walmart does - but Amazon lets smaller folks come play to, and yeah, they certainly have a lot more influence over the smaller guys than they really should.
  5. I will concede that point, but with a caveat:

    Walmart almost exclusively deals with major manufacturers who have the ability to sell in high volume and command large market shares - thus, they have a pretty good amount of leverage in any discussion. But when Walmart comes into a town and muscles out all the competition, you are still going to at least listen to what they have to say, and capitulate somewhat. It's not a total monopoly, but it's a lot of bargaining power on both sides of that table.

    Amazon will let any mom&pop sell on their storefront. If you are a small retailer, you either play by Amazon's rules or gtfo.

    So, I don't think Amazon has a whole lot more sway over the bigger companies than Walmart does - but Amazon lets smaller folks come play to, and yeah, they certainly have a lot more influence over the smaller guys than they really should.

    Don't disagree with any of that.

    Side note. It is interesting how much Walmart's dominance changes from region to region.

    Living in New England I've barely ever been in a Walmart. The few times I'm there it's an eye opening experience. I usually call it "the saddest place on earth", running into all the poor downtrodden people you otherwise never see.

    In college in Western Mass there was this girl in my dorm who was from the south somewhere (cant remember where). She had some real stockholm syndrome when it came to Walmart. She couldn't imagine getting her groceries anywhere else, so she would drive 2.5 hours to the closest Walmart just to buy Walmart branded milk... :oops:

    We all thought she was absolutely nuts, but missing home will do that to you I guess.

    When I lived in Sweden we would actually savor the rare moment we got our hands on some Kraft Macaroni and Cheese as if it were some sort of rare delicacy. :LOL:

    I don't think I've even eaten the stuff since moving back to the U.S. almost 25 years ago.
  6. Side note. It is interesting how much Walmart's dominance changes from region to region.
    Where all my relatives live in the South - yeah, Walmart has pretty much kicked out all the retail stores - local grocery, pharmacy, clothing - everything. If a Walmart goes in, everything retail within about 20-30 miles is just destroyed. All my aunts and such get giddy about going to Walmart though - it's like going to the fair or something and they love it.

    Out here in California - it doesn't quite have the same effect, and the town closest to me now doesn't have a Walmart (thank god). In the bigger cities, yeah there are Walmarts, but also still a lot of other competition. I think a lot of it is that the income levels are generally higher, and people aren't forced to go to the lowest priced shop to make ends meat. So folks can afford to be a bit more choosey about where they go. Walmart still gets a lot of traffic, mind you, but it hasn't killed out the local shops or other options.

    I concur. Walmart is the saddest place on earth.
  7. Recently one of our supermarket chains stopped selling certain brands for a while as they were in an impasse with the manufacturer of said brands over the price of the goods. This race to the bottom for prices in supermarkets can't keep going, as it's not the first chain to do so in recent years and I doubt it will be the last.

    Supermarkets seemingly can vote with their wallets moreso then use regular customers.
  8. Recently one of our supermarket chains stopped selling certain brands for a while as they were in an impasse with the manufacturer of said brands over the price of the goods. This race to the bottom for prices in supermarkets can't keep going, as it's not the first chain to do so in recent years and I doubt it will be the last.

    Supermarkets seemingly can vote with their wallets moreso then use regular customers.
    Happens all the time around here. You also see it with cable/satellite providers, when they will just drop a channel if they can't get the contract terms they like. Sometimes that works, sometimes they call your bluff.
  9. In college in Western Mass there was this girl in my dorm who was from the south somewhere (cant remember where). She had some real stockholm syndrome when it came to Walmart. She couldn't imagine getting her groceries anywhere else, so she would drive 2.5 hours to the closest Walmart just to buy Walmart branded milk... :oops:
    WWHHAAAAAAAAAAAAAAAAAAAAAAAAATT
  10. I think a lot of it is that the income levels are generally higher, and people aren't forced to go to the lowest priced shop to make ends meat. So folks can afford to be a bit more choosey about where they go. Walmart still gets a lot of traffic, mind you, but it hasn't killed out the local shops or other options.

    That might be part of it, but part of it is also that their strategy is usually to enter a new area, drop prices to the level where no one can compete, and run at a loss until the competition gives up, then jack up prices again.

    This is much more difficult to do in an area where there are lots of competitors, some of them which might also be quite sizeable. It's much easier to do where there are only a handful of competitors with less deep pockets.
  11. Out here in California - it doesn't quite have the same effect, and the town closest to me now doesn't have a Walmart (thank god). In the bigger cities, yeah there are Walmarts, but also still a lot of other competition.

    It's similar here around Boston. The closest Walmart to the city is ~12 miles out in Saugus. There are three in total inside the The Rt-128/I95 beltway (the others are in Lynn and Salem) but this is an area that encompasses about 4 million people. Walmart is a distinct minority of the brick and mortar shopping options here.

    Other chains like Target has a much larger presence by far, and we have several competing supermarket chains (Stop & Shop, Star Market, Market Basket, Wegmans, Wholefoods, to name a few)

    I can't remember the last time I was in a Walmart here.

    There are some places where Walmart dominates the local shopping. That certainly isn't the case here. They are a foot note at best.

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