Today, the Federal Trade Commission (FTC) released a less redacted version of its complaint against Amazon over how it runs its popular Amazon Prime service.
Now that folks have had a chance to review most of the complaint, it seems to be lacking the cornerstone of American antitrust law: how has Amazon harmed consumers?
But the FTC isn’t interested in answering this question because it isn’t prioritizing the needs or opinions of consumers. It’s focusing on complaints from Amazon’s competitors, who have a financial stake in taking down the company.
So what did today’s “bombshell” report show? That the FTC is twisting statistics to purposefully mislead Americans and manipulate their perception of Amazon. This entire attack on Amazon is not based on facts, the law or reality. That is why the FTC is relying on PR spin rather than legal facts and analysis.
Amazon has been prioritizing ensuring that its customers receive goods and services efficiently at low prices, and its customers are very happy with this service. In our October polling with Echelon Insights, we found that Americans clearly love Amazon, and they particularly love the very services being targeted by the FTC in this lawsuit. These findings complement the data we’ve seen from several previous studies.
One target of the FTC’s complaints focuses on how sellers choose to operate on Amazon’s platform—whether they want to subscribe to the “Fulfillment by Amazon” program (FBA) or whether they choose to operate under “Seller Fulfilled Prime,” (SFP) in which the sellers are responsible for meeting Amazon’s Prime-level fulfillment standards themselves.
The SFP program was paused in 2019 due to the low level of sellers in the program meeting its fulfillment requirements for customers. But the FTC in its complaint alleges that Amazon’s pause of the program was unnecessary to ensure quality, citing incorrect statistics about it to make this point.
The FTC intentionally (and misleadingly) says in the complaint:
“Sellers enrolled in SFP met their promised ‘delivery estimate’ requirement set by Amazon more than 95% of the time in 2018.”
What the FTC intentionally didn’t say is that these figures are based on sellers setting their own estimates – not Amazon Prime’s 2-Day delivery guarantee. It was correct to say sellers met their own estimates, but those estimates for delivery could be days, weeks or even months. Customers who bought from these sellers would get their stuff at the “promised delivery date,” but that date could be several days, weeks or months later – not the two days promised under a “Prime” badge.
If Amazon could eliminate the costs of logistics – storage of goods, shipping costs, personal to box and ship, handling returns, taking customer phone calls, dealing with defective goods, advertising and more, it would. In fact, this less redacted version of the complaint notes that “Mr. Bezos described SFP as a win-win for sellers and shoppers.” Amazon wanted SFP to work! But unfortunately, customers were unhappy with not getting their goods by the 2-Day Prime promise, and that is why Amazon had to pause the program.
As an Amazon spokesperson noted in a public statement:
“Despite good intentions, before COVID-19, fewer than 16% of SFP orders in the US met the Prime Two-Day delivery promise customers expect.”
This twisting of data shows the FTC is trying to craft a misleading narrative to undermine Amazon’s popularity with Americans. The agency also is abusing its position as a regulator to intimidate the company financially with the force of law.
Of course, the FTC’s premise that Amazon is trying to undermine its sellers makes no sense. If Amazon makes the most money on sales from third-party sellers, then it is in Amazon’s financial interests to help their sellers—not minimize them.
In the end, if it is successful, Amazon will not be the only loser of the FTC’s crusade. Consumers will lose, who are consistently seeking out low prices and high quality, reliable services in retail.
The FTC may be playing a PR game to obscure this fact, but make no mistake: Americans will feel the real effects in their wallets and in their lost services. Big competitors giving consumers low-quality services and DC regulators looking to seize more power for themselves will be the only so-called “winners.”
The complaint today shows what consumers already know about Amazon: the company is working around the clock to provide the best possible for them.