States Considered Next Battleground for Big Tech Antitrust Cases

0

California Attorney General Rob Bonta speaks during a news conference outside an Amazon fulfillment facility on November 15, 2021 in San Francisco.
Credit: Justin Sullivan/Getty Images

State politicians eager to see the pace of the federal move on Big Tech antitrust concerns will likely follow California in using their own laws and resources to act, policy experts said.

While divided federal government bodies often struggle to find consensus on issues such as Big Tech antitrust cases, state governments are in many cases less divided and more able to intervene, experts said. A complaint filed last month by VSAlifornia Attorney General Rob Bonta, for example, alleges Amazon.com Inc. violated two state competition laws by requiring third-party sellers and wholesalers to offer the lowest prices for their products. on Amazon. The California lawsuit further claims that Amazon harms sales of those who do not comply by refusing to promote their Amazon listings.

Amazon said its practices aim to ensure it highlights the lowest prices available to its customers.

“Vendors set their own prices for the products they offer in our store,” a company spokesperson told S&P Global Market Intelligence in an emailed statement. “Amazon prides itself on offering low prices on the widest selection, and like any store, we reserve the right not to push offers to customers that are not price competitive. The relief sought by the GA would force Amazon to offer higher prices to customers, which oddly goes against the fundamental purposes of antitrust law.”

Policy experts said more states with politically ambitious antitrust laws and attorneys general are likely to use state-level legislation to address Big Tech concerns.

“Politics rewards people who show they push to hold Big Tech accountable, making it an attractive question for state attorneys general,” said Matt Perault, director of the Center on Technology Policy at the University of North Carolina, Chapel Hill. and Policy Advisor at New Street Research.

State levers

Perault said states like Texas, New York and Colorado were among the most likely to pursue their own lawsuits against Amazon.

Similarly, William Kovacic, former chairman of the FTC and current law professor at George Washington University, said syouStates such as New York and Maryland that have their own antitrust divisions and laws are likely to consider filing suits against Amazon.

Maryland’s antitrust law, for example, prohibits price fixing and attempts at monopoly. A spokesperson for the Maryland Attorney General said the state does not comment on potential litigation. New York’s Donnelly law prohibits price-fixing and monopolization practices, while Colorado’s antitrust law makes attempted monopolization illegal. The two states’ attorney general’s offices did not respond to inquiries about this story.

District of Columbia Attorney General Karl Racine filed a lawsuit against Amazon similar to the lawsuit filed by California. Although the lawsuit was dismissed this year, the Washington, DC, attorney general’s office is appealing the dismissal.

leader of the pack

California’s state-level regulations give it an enforcement advantage against Big Tech.

California can use its state policy tools to prove a theory of harm that claims Amazon is denying companies that do business with the company the ability to pursue relationships that allow them to reach customers on other websites, Kovacic said. “It’s the request for exclusivity basically saying that if you want to use our great platform, you can’t take advantage of alternatives that give users a better deal than our platform,” Kovacic said.

Developer Epic Games Inc.’s lawsuit against Apple Inc. last year cited California’s unfair competition law in claiming that Apple’s “anti-direction” restrictions were anti-competitive. The restrictions prohibited app developers from informing users about alternative payment mechanisms. A district court judge sided with Epic on this and ordered Apple to allow mobile developers to offer alternative payment options.

“California has a broader range of policy tools it can use, and the Epic case is a good example of a recent application of one of them,” Kovacic said. “It’s a more favorable environment for the AG’s office to pursue the case.”

Pricing company

The California lawsuit against Amazon also cites the impact of the platform charging high fees to third-party sellers. The lawsuit says these fees lead sellers to protect their margins by raising prices, which in turn leads to higher prices on other platforms due to Amazon’s practices of only promoting products with the lowest advertised prices.

Amazon’s third-party seller services, which include fees collected from merchants for each item sold as well as shipping costs, accounted for 22% of Amazon’s total net sales of $469.82 billion in 2021, compared to 17.9% of net sales in 2017.

SNL Picture

Jason Boyce, a former Amazon seller who now serves as a seller brand consultant, described the impact of Amazon’s pricing and promotion practices on one of his former clients. Customers The pill dispenser was one of the best sellers on Amazon.com, but its sales dropped 30% after the dispenser was listed for less on Walmart Inc. The seller ended up delisting the product from Walmart, Boyce said.

Boyce is the Funder from Avenue7Media, which manages third-party brands from private label sellers on Amazon.

Boyce said Amazon’s practices “raise prices on the internet and also suppress competition in the marketplace.”

Boyce said he experienced this first-hand as a seller after posting products on eBay Inc. and Wayfair Inc. He quickly saw sales of posted products drop sharply on Amazon.com. This happened after Amazon removed a price parity clause which prohibited sellers from offering products at lower prices elsewhere.

“I got excited for a minute, I thought I could diversify my sales a bit more with lower prices in lower cost markets,” Boyce said. “I started raising my prices again everywhere else to match Amazon.”

Adam Kovacevich, founder and CEO of the Chamber of Progress tech policy coalition, defended Amazon’s practices, saying consumers benefit from Amazon’s policy of offering products at the lowest prices. The chamber of progress has about 30 members, including Amazon, Meta Platforms Inc., Apple, and Google LLC.

“No merchant is bound to sell their products on Amazon; if they want to sell their products on Amazon, Amazon can decide what offer will be presented,” Kovacevich said.

Share.

Comments are closed.