FTC Looking Into Deal Between Amazon and Apple
Late last year, we covered the news of a major partnership between Amazon and Apple. At the time, that deal, which saw the Cupertino-based tech giant bring their latest products onto the ecommerce-shop’s website for the first time, seemed like a major win for both parties—and it was.
Apple expanded its retail presence overnight while Amazon added some of the world’s most popular products to its website. And beyond that, the deal allowed Apple to have greater control over the pricing and availability of its products on Amazon. It was a move intended to help Apple snuff out fake products and shoddily refurbished gear that was being sold at fractions of the cost you’d expect.
And the partnership did just that. But according to a report from The Verge, that deal is being scrutinized by the Federal Trade Commission for potential antitrust violations. According to the report, hundreds of legitimate sellers that were offering low-cost and refurbished (albeit outdated) Apple product have been kicked off the Amazon platform.
One seller in particular that was interviewed for The Verge’s report said that he was contacted FTC officials who were interested to learn how his business had been impacted by the Amazon-Apple deal.
“They wanted to know how Amazon works, how eBay works. I went into describing how a listing works on Amazon. Amazon is interesting in that you don’t necessarily create a listing. You just sort of tag on to an existing listing,” John Bumstead, the Minnesota-man who specialized in refurbished Macbook’s, told The Verge. “If that listing gets deleted, chances are you’re not allowed to sell that product. That’s how Amazon did this. They created a bunch of renewed listings from the people who were certified, and they let those people sell on those listings, and they abandoned everyone else.”
Shortly after the deal between Amazon and Apple was announced back in November, Bumstead was served a few months notice that his shop would be forced off of the Amazon Marketplace.
According to experts who commented for the report, the Amazon-Apple deal could easily be grounds for an antitrust complaint on a number of different levels. Among them, the possibility that the deal included “brand gating,” which involves cutting out third-party sellers who may have been selling counterfeit products or simply lower-cost versions of that product. Additionally, it’s possible that there’s price-fixing going on, or illegal market allocation.
“You’re not allowed to agree with another firm to set a floor on your pricing,” Sally Hubbard, an antitrust expert and the director of enforcement strategy at the OpenMarkets Institute, told The Verge. “When you have these brands and a dominant retailer like Amazon, and Amazon says, ‘We’re going to make sure anyone who sells below your prices can’t be authorized to sell on your platform anymore,’ it’s basically a price-fixing agreement between a dominant retailer and a brand. And that’s illegal under Section 1 of the Sherman Antitrust Act.”
Needless to say, this is something we’ll continue to keep an eye on.