FTC’s Antitrust Suit: Uncovering What Amazon is Hiding

Amazon.com Inc. is facing a significant antitrust lawsuit from the Federal Trade Commission, which claims that the company has engaged in a wide-ranging monopolistic plan to suppress competition in online marketplaces, ultimately causing harm to both American consumers and businesses.

But anyone looking to immediately delve into the details of Amazon’s operations—for example, details about its Prime subscriber base, profits, and inner workings—will be disappointed. The lawsuit, filed Tuesday in federal court in Seattle, is filled with black redaction bars. This may be typical in the first public version of a case, where evidence is gathered from business documents marked confidential as investigators obtain them.

However, additional information may be seen in the light of day as the trial progresses. The commission has asked the judge to release the redacted portions within 14 days, unless Amazon or another party that provided the documents requests that they be kept secret; the court has not yet approved the schedule.

Douglas Farrar, a spokesman for the commission, said in a statement that officials “share the frustration” about the amount of classified information and do not believe there are “compelling reasons” to keep much of it sealed.

“We’re also eager to see more come to light,” FTC Chairwoman Lina Khan said at a Bloomberg event on Tuesday.

An Amazon spokeswoman declined to comment. The company released a statement calling the case “false on the facts and the law” and vowed to fight back in court.

Below are highlights of what has been kept out of the public eye so far:

“Project Nessie”

Regulators said Amazon had developed a pricing algorithm – codenamed “Project Nessie” – which they claim was a significant part of the alleged monopoly scheme. The commission said in its complaint that Project Nessie went “one step further” than other “anti-discount tactics” that it “disproves” the company’s claim of being “customer-centric” and generating “extra profit.” But the complaint redacted details about the algorithm and what the commission said it “extracted” from U.S. households.

“Unprecedented Scale”

The commission described Amazon’s scale as “unprecedented” and “astounding” and its third-party marketplace as “extremely profitable,” but removed several data points it collected to prove this. It covered the value of all goods sold in 2021, the profits the company earned from those sales, and how much that profit contributed to Amazon’s reported net income for that year. The commission said the sum was greater than the gross domestic product of several countries – but removed the data from this analysis.

Amazon Prime coverage

The commission accused Amazon of forcing sellers to use the company’s delivery services to get Prime’s fast delivery guarantee for their products, even though the sellers wanted to use other services to store and package the goods. Regulators said access to Prime subscribers was “critical” for sellers because the program had “enormous reach” and “covered” US households, but they glossed over certain numbers to demonstrate this. The complaint also removed how much the average Prime subscriber spends per year compared to non-subscribers and how much subscription fees the company earned in 2021 from US customers.

Number of products

The commission wrote that Amazon sold “almost everything” that could fall into “almost every possible category to US consumers,” but it did not say how many “unique products” the company sold in 2020.

Price control

Regulators said tracking prices on the Internet was the “foundation” of the alleged “discount scheme” and accused Amazon of using that data to “punish” sellers who offered lower prices on other platforms. But the sections that describe how the company performed those activities have been blacked out.

Sale of advertisements

The commission argued that forcing sellers to pay for ads to get optimal placement in an online store had been “highly profitable” for Amazon and led to “gambling” of U.S. ad sales revenue, but reduced the number of those sales in 2015 and 2021. The agency reduced the percentage of shoppers who don’t click past the first page of search results , meaning they were more likely to see “sponsored” content than “organic” hits. The complaint also removed how much the combined fees paid by sellers, including advertising, contributed to the total revenue Amazon earns from sellers.

Competitor damage

The Commission argued that the allegations of monopolistic behavior were not hypothetical and that Amazon’s “discounting algorithm” had succeeded in preventing competitors from lowering prices. It included examples of actual harm in the complaint — including Amazon’s alleged attempt to “destroy” price competition in 2019 — but removed the names and details of those competitors.

“Buy the Box” sale

The commission accused the company of punishing sellers who offered goods at lower prices outside of Amazon by excluding them from regulators’ “everything important” shopping box — a feature that prompts a customer to add an item to a cart or add an item immediately. buy it The commission wrote that the feature was important enough that excluding a seller would cause their sales to “come in,” but reduce the percentage of sales that were made with that feature.

Obstructing an investigation

The commission accused Amazon of “extensive attempts to obstruct” its investigation and concealing internal information. It claimed the companies’ executives acted “systematically and purposefully” but removed what it accused of those companies’ operators.

“Behind Closed Doors”

The commission teased evidence of internal conversations among Amazon executives throughout the complaint, but often redacted the content. In one section, regulators wrote that the company valued “maintaining the perception that it has lower prices than competitors,” while “Amazon executives, however, actively [REDACTED] behind closed doors.”