California sues Amazon, alleging its policies cause higher prices everywhere

[Hydrogen]

California sued Amazon on Wednesday, accusing the company of pushing sellers and suppliers into anticompetitive deals that lead to higher prices, including at rival online stores.

The lawsuit, filed by state Attorney General Rob Bonta, focuses on the way Amazon — the largest online retailer — deals with third-party merchants, who account for most of the sales on the platform.

California alleges that Amazon penalizes sellers and suppliers that offer cheaper prices elsewhere on the internet, including Walmart and Target, for example by displaying their items lower or less prominently or outright blocking their new postings.

"Amazon makes consumers think they are getting the lowest prices possible," the lawsuit alleges, "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 anticompetitive agreements on price."

California's antitrust lawsuit is among the biggest legal challenges to Amazon in recent years, as lawmakers and regulators in the U.S. and abroad have investigated the retail giant for potential anticompetitive practices.

An Amazon spokesperson denied any antitrust violations, pointed out that a similar case in the District of Columbia was dismissed, and said the California Attorney General has it backwards.

"Sellers set their own prices for the products they offer in our store," the company said in a statement. "Like any store we reserve the right not to highlight offers to customers that are not priced competitively."

California also accuses Amazon of creating a "vicious anticompetitive cycle": Sellers view Amazon as a must; Amazon charges them higher fees to be able to sell on its platform; Sellers, in turn, raise their Amazon prices. And, even though it costs them less to sell on other websites, Amazon's policies push sellers to raise prices on those sites, too.

"Through its illegal actions, the, quote, "everything store" has effectively set a price floor, costing Californians more for just about everything," Bonta said at a press conference on Wednesday.

Earlier this year, a judge dismissed a similar lawsuit that was filed in Washington, D.C., though the city's attorney general has appealed.

In that case, Amazon argued its deals with merchants were meant to prevent shoppers from being overcharged, and punishing Amazon would hurt consumers.

Amazon has separately proposed a settlement with European antitrust regulators, who charged the company with violating competition laws. Their key allegations accused the company of using data it collected from third-party sellers to its own benefit.

https://www.npr.org/2022/09/14/1122995430/california-sues-amazon

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For many years, consumers were encouraged to by local. Pay higher prices for locally produced products. Rather than shop on amazon for rock bottom prices.

Now it appears california is making the inverse opposite case. They're claiming that amazon pushes prices higher. Rather than lower. And that there are illegal business practices in the form of market collusion and price gouging. Which are pushing prices higher in stores across the board.

These are interesting claims to say the least.

California being the home of silicon valley and 5th largest economy in the world. As well as the homes of google, apple, tesla, microsoft and countless other world famous US tech start ups. One might wonder how california came to have leadership which blames amazon for high market prices. Is this the future direction for silicon valley and the united states as a whole?

Interesting case to say the least. What does everyone think about this?

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[Gayong88]

Is this a case of good competition, or are other motives at play? I think this is an interesting experiment that should help inform consumers, and sellers. Thanks to the Internet, the cost of selling goods is more transparent than ever.

Speaking as an individual consumer myself, I'd rather pay more if I have to than risk paying less and possibly never getting my stuff at all because free market forces dictate retailers until they decide it's no longer profitable for them to operate.

Consumers should be able to pay whatever price they think is fair. In this respect, there is no difference between selling directly on Amazon compared to going through a retail store. If Amazon has raised their prices because of the shortfall caused by the new law, Maybe, then more power to them.

[NeuroticFish]

Is this a case of good competition, or are other motives at play?

Amazon is so big it can pretty much act like a monopoly. If you want to sell at Amazon, you may have to lower the price or even sell at a loss. Many think that their products being sold at Amazon is a commercial by itself.
So it's a complicated issue and I would not be surprised that everybody who sells at a loss at Amazon, will try to recover that loss somewhere else.
Maybe this is what "California" is implying? I don't know. It will be a very interesting case, however.

[avikz]

Amazon is super predatory in nature. They are the sole reason for the death of millions of businesses around the world. It's great that California detected the trend and taking actions accordingly.

It's their practice to create products under the brand name of Amazon Basics and sell it at a low price to capture the market. Once they capture the majority percentage of sales in the market, they start increasing price. That's how they play the game. I believe California government is doing the right thing.

[Moneyprism]

California as a state should be able to regulate how Amazon works in their state and with their regulations can prevent things like this from happening .. I totally agree that California officials sued Amazon because their policies can cause significant price increases which will harm consumers

[Jody.Drummer]

A free market competition where the market in California feels competitive because the prices on Amazon are much cheaper while the images and quality of goods have the same strength. This is not only happening in big companies, mostly triggered by the rise of imported goods with similar duplication and sold at relatively cheap prices, even much cheaper. So that consumers are interested because the value set is much different. The global market competition system is almost the same as other micro markets. Let's say a market with a Chinese supplier of duplicate goods has a low selling point. This makes consumers unable to distinguish between genuine and fake goods, especially if the goods are on Amazon, which is the largest marketplace platform in the world.

A little story, I am a reseller (third party) in the biggest marketplace in my country, which is selling goods at low prices by shops/suppliers (I only act as an affiliate). Indeed, in terms of fixing the price, we are given the freedom as long as we get from one item x around 1-$2 x 100 items. Only selling pictures and taking care of the goods is the supplier's job.

[jrrsparkles]

When someone became the monopoly then their next step is obviously to make more money as much as they can so it's understandable that why it is happening. But the future can really change quickly if people realize what is actually happening in the market, and if government support the local products more then surely the market will come back to neutral again.

Another reason why prices are getting higher is because of drop shipping which is new business idea and lot of people engaging in it, they simply buy from a seller and sell it back again on the platform.

[coupable]

Is this a case of good competition, or are other motives at play? I think this is an interesting experiment that should help inform consumers, and sellers. Thanks to the Internet, the cost of selling goods is more transparent than ever.

There's likely motives in play, of that I am pretty sure because Amazon is a pretty big deal and I think that there's enough people that Amazon has good terms with that they go towards this case. Good competition is out of the picture, it's unlikely that we are going to see any competition against Amazon, they're essentially a monopoly in e-commerce.

Amazon has caused thousands of job losses around the world, which is a much larger number than the jobs it created. It may have become easier for small sellers to sell their products through Amazon, but this has created a real jobs crisis after the company itself manufactures many products on its own and controls the entire distribution process.
I did not expect any party to cancel its activity contracts locally due to the company's popularity and the huge number of its clients. On the other hand, I do not know if Amazon's competitors are able to fulfill the state's needs with the same smoothness and ease that it was with Amazon.

[Gyfts]

I'm open to the argument that amazon might have a monopoly in local markets because of the wholesale/online advantage, which might require some level of regulation. Except the tyrants in California decided to lockdown their entire economy during COVID and implement business killing regulations which allowed Amazon to drink up the consumer base when small businesses couldn't adhere to the COVID regulations. Combine this with inflation, I'm sure it would appear the higher prices are a result of corporate monopoly and not anti-competition government policy.

Seems on par for California to blame the businesses for their own incompetence. Somehow they're still confused as to why they're leaving.

[Renampun]

Is this a case of good competition, or are other motives at play?

Amazon is so big it can pretty much act like a monopoly. If you want to sell at Amazon, you may have to lower the price or even sell at a loss. Many think that their products being sold at Amazon is a commercial by itself.
So it's a complicated issue and I would not be surprised that everybody who sells at a loss at Amazon, will try to recover that loss somewhere else.
Maybe this is what "California" is implying? I don't know. It will be a very interesting case, however.

what amazon is practicing is actually also being done by other e-commerce around the world, so I'm not really surprised if the California government tries to warn amazon about the possibility of monopoly and also other illegal practices that cause small traders to lose competitiveness with big traders.
I think the regulation on e-commerce needs to be tightened again because the competition in it is getting more and more unhealthy.

[edgycorner]

I think that this lawsuit has merit. Amazon has been accused of anticompetitive practices before, and I think that this case could set a precedent for future cases.

The evidence presented in the lawsuit filed by the state of California can be damning since it's really happening and can be easily proved. It is clear that Amazon has been using its market power to stifle competition and keep prices artificially high. This is detrimental to consumers and is a clear violation of antitrust laws.

Hopefully, we will see some real regulations after this lawsuit else it will be frivolous and futile.

[Upgrade00]

Judging from the fact that Amazon has earlier this year paid $2.25 million to the Washington state attorney general's office after a lawsuit on alledged price manipulation on their site and also discontinuing their "sold by Amazon" program, which was a way where sellers let the platform determine the best price for their products, it's no surprise they are getting another lawsuit now.

Big companies with monopoly like Amazon, Google etc are prone to unsavoury practices to boost profits and also fizzle put competitors.
I've not gone through this entire law suit to know the merits of the case which the state of California is bringing up yet, but with their antecedents, Amazon is likely culpable.

[Sithara007]

No sympathies here. Companies such as Amazon and Google spend billions of USD every year to manipulate elections in favor of left-wing political parties, and they are now getting sued by the same people whom they helped to elect. I don't understand this logic. How can Amazon influence the prices in other online platforms? I can say with full confidence that the arrival of Amazon helped to lower prices for 99% of the products and to remove the middle-men. I am sure that the current lawsuit was planned by the middle-men who lost their business due to Amazon. 

[yhiaali3]

I do not know if these allegations are true, but in some cases I found that Amazon prices are lower than local stores, the Internet is transparent enough to know the validity of these allegations, but in my opinion this is a competitive field and everyone sets the price they see fit and no one is forced to buy, buyers have The freedom to search online and find out the cheapest price and buy from the site that suits them, I don't think anyone can force them to buy.

[Poker Player]

I am not surprised from a state that has abandoned the ideals that made it the state where everyone wanted to emigrate, and has become a state from which people flee:

How Many People Are Leaving California (2022)



More and more regulations and taxes, prohibiting and forcing, and now the typical thing was missing, which is to understand the economy backwards from the way it works.

Let them keep it up in California, they are going to do very well.

[stompix]

California being the home of silicon valley and 5th largest economy in the world. As well as the homes of google, apple, tesla, microsoft and countless other world famous US tech start ups. One might wonder how california came to have leadership which blames amazon for high market prices. Is this the future direction for silicon valley and the united states as a whole?

The dream is near the end, California has stopped being the land of the promise and it's starting to turn more and more into a mess of capitalism socialism and even communism with the cheery on top being that they are only taking the worse part from everything.

The whole dream about building a utopia, like the one with green energy that has led California to have both the highest prices and the most black-outs, the ban of gas cars, and then the announcement to not load your electric car as you stress the grid, the taxes that are driving the same companies away to, ironically Texas, idiotic laws to preserve cities like they are museums driving up prices for homes, driving up rents, turning people into homeless and the ending up destroying the same city center you wanted to protect and eradicating every business there because of crime. And god, how many more!!!

Amazon has caused thousands of job losses around the world, which is a much larger number than the jobs it created. It may have become easier for small sellers to sell their products through Amazon, but this has created a real jobs crisis after the company itself manufactures many products on its own and controls the entire distribution process.n.

Let's bring back switchboard operators, lamplighters, bowling pin setters, and all the others!
Because that's what we need, to have thousands of people doing what can be done by a single person, and of course, everyone is willing to pay those 1000x extra wages out of their own pocket.

[el kaka22]

It is certainly a difficult job to be in the senate of California, or be its governor or mayor anywhere there, or basically have any sort of power. It is a state where the silicon valley people are making a huge huge amount of money and increasing the prices of course, living in a world where money is abundant for them, and anyone else there would be living in poverty.

By comparison, there are "people" who are richer than famous Hollywood celebrities and they are just employees, a good CTO could make a lot more and you wouldn't even know who they are, how many people know the name of Amazons CTO really? Hence, amazon does, but it is not just amazon, silicon valley drives the prices up together, for anyone who is not working in tech.

[Sithara007]

I am not surprised from a state that has abandoned the ideals that made it the state where everyone wanted to emigrate, and has become a state from which people flee:

More and more regulations and taxes, prohibiting and forcing, and now the typical thing was missing, which is to understand the economy backwards from the way it works.

Let them keep it up in California, they are going to do very well.

The problem is that a lot of people migrate to neighboring states such as Arizona, Texas and Nevada as a result of sky high tax rates in California, and these people after coming to NV and AZ vote for the same sort of politicians who push tax rates further up in these states. And in the end, these states will also pursue populist policies and end up similar to California. And I don't have any sympathies for those who reside in CA. They deserve whatever they get, after electing people like Nancy Pelosi, Dianne Feinstein and Kamala Harris.

[tygeade]

The problem is that a lot of people migrate to neighboring states such as Arizona, Texas and Nevada as a result of sky high tax rates in California, and these people after coming to NV and AZ vote for the same sort of politicians who push tax rates further up in these states. And in the end, these states will also pursue populist policies and end up similar to California. And I don't have any sympathies for those who reside in CA. They deserve whatever they get, after electing people like Nancy Pelosi, Dianne Feinstein and Kamala Harris.

The problem is not the taxes, it is the high income individuals, there are other states with high taxes and democrats in charge and they do not have this problem. There is a great understanding among the republicans to keep on showing California as a failed state to get votes in other places, but we have seen horrible states managed by republicans and amazing states managed by democrats as well, should we just make deductions based on that?

It's the people that makes a state good or bad, if it's a good person and a republican then they will make it a good state, if it's a good person but a democrat they will make it a good state, look for good people, not policies, republican ideas or democrat ideas, laws of both side, as long as managed by people with good hearts and intentions, could make any state better.

[Sithara007]

The problem is not the taxes, it is the high income individuals, there are other states with high taxes and democrats in charge and they do not have this problem. There is a great understanding among the republicans to keep on showing California as a failed state to get votes in other places, but we have seen horrible states managed by republicans and amazing states managed by democrats as well, should we just make deductions based on that?

It's the people that makes a state good or bad, if it's a good person and a republican then they will make it a good state, if it's a good person but a democrat they will make it a good state, look for good people, not policies, republican ideas or democrat ideas, laws of both side, as long as managed by people with good hearts and intentions, could make any state better.

California is the bluest of the blue states and whatever happened there during the last 2-3 decades can be solely attributed to the policies of the Democrat party. Else how can a state which is home to the Silicon Valley can become bankrupt? I am not defending the GOP as well. Pre-Trump era Republican party was like Democrats on steroids. There were countless invasions of third world nations, which resulted in military expenses of trillions of USD. Trump era was an exception, as the tax rates went down, and there were no major military interventions.