Mohit Oberoi
US tech companies are no strangers to antitrust complaints. California has now accused Amazon (NYSE: AMZN) of anti-competitive pricing and filed a lawsuit in San Francisco Superior Court.
The complaint, which was filed by California’s attorney general, Rob Bonta, alleges that Amazon prohibits third-party sellers from offering lower prices on other platforms including through their own websites.
The complaint says, “Amazon makes consumers think they are getting the lowest prices possible, when in fact, they cannot get the low prices that would prevail in a freely competitive market because Amazon has coerced and induced its third-party sellers and wholesale suppliers to enter into anti-competitive agreements on price.”
Notably, Amazon holds a nearly 38% market share of the US e-commerce market which is six times that of Walmart, the next biggest player. Also, Amazon’s market share is more than the combined e-commerce market share of Walmart, Best Buy, Apple, Target, and eBay.
While US brick-and-mortar companies have ramped up their e-commerce operations, they still have a long way to go before they challenge Amazon’s dominance. Also, Amazon has built a strong network effect on the platform.
Amazon Raised Prime Prices in the UK
It also has the added advantage of Amazon Prime which not only brings billions of dollars of revenue every quarter but helps build a loyal e-commerce customer base. Prime buyers shop more on the e-commerce platform, thanks to the free deliveries.
Notably, Amazon raised Prime prices in the US earlier this year. It followed up with a price hike in some of the European markets. Now, the e-commerce and cloud giant has announced a price hike in the UK. The monthly subscription price would rise from £7.99 to £8.99 while the yearly price would rise by £20 to £95. Consumers in the UK are anyways battling a terrible cost of living crisis amid rising energy costs.
Coming back to the antitrust allegations, previously, Columbia had also accused Amazon of similar issues. However, the Superior Court of the District of Columbia dismissed the lawsuit.
Amazon Refutes California’s Complaint
Meanwhile, Amazon has refuted California’s complaint. It said, “Similar to the D.C. Attorney General — whose complaint was dismissed by the courts — the California Attorney General has it exactly backward.”
In its response to Yahoo! Finance, Amazon’s spokesperson said, “Sellers set their own prices for the products they offer in our store.” They added, “The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law. We hope that the California court will reach the same conclusion as the D.C. court and dismiss this lawsuit promptly.”
The news of California’s lawsuit against Amazon comes at a time when Google failed to overturn a European Commission antitrust ruling. The company would now pay a record fine of €4.125 which is slightly below the fine that the Commission had originally imposed.
AMZN Allows Sellers to E-mail buyers
Separately, at the Amazon Accelerate conference in Seattle, AMZN announced that it would now let sellers email to shoppers. The company has so far been opposed to direct communication between buyers and sellers. Now, with its growth rates down to single digits, AMZN is looking at different ways to spur its growth.
The company’s sales growth in Q2 2022 was the lowest in two decades. However, analysts were impressed with its guidance. After the Q2 earnings beat several, Wall Street analysts issued bullish notes and advised buying Amazon stock.
US tech stocks have plunged this year amid rising inflation and the Fed’s rate hikes. However, Wall Street is bullish on tech names like Apple, Amazon, and Microsoft which have strong balance sheets. Amazon is now looking at acquisitions to boost its growth and has announced the acquisition of iRobot and One Medical this year.
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This article was written for Business 2 Community by Mohit Oberoi.
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