State of California announces lawsuit against Amazonaccusing the e-commerce giant of abusing its position of power in the market by signing restrictive agreements with companies that sell on its platform.
The protagonist of this accusation was Rob Bontathe attorney general of California, the most populous state in the US. An action that reveals the real reason why it is often simply impossible to find a better price than the one offered by the e-commerce giant.
Unsustainable demands on traders
As he explained in an investigation by his office, sellers who use the marketplace would lower their prices if it weren’t for Amazon’s agreements. So merchants who don’t agree to their terms could be removed from featured listings and face other penalties, such as account suspension or closure. This highlights its dominant position in the market, allowing the company to make untenable demands on traders.
“For years, California consumers have paid more for their online purchases because of Amazon’s anti-competitive practices,” Bonta said at an event in San Francisco. The lawsuit, which is 84 pages long, was filed in San Francisco Superior Court. It is a reflection of another filed last year by the District of Columbia, which was dismissed earlier this year by a magistrate and is now on appeal.
For hundreds of thousands of merchants, Amazon means 20 or 30% of their sales and they would not be able to recover it through other sales channels if they stop selling on the platform. Their strength is even stronger for small businesses and third parties, who typically make 80-100% of their profits by offering their products there.