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Amazon is on the brink of heightened antitrust scrutiny

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Several reports over the past two days have made it clear that the US Justice Department, the Federal Trade Commission, and the Congress will soon increase their focus over Amazon and other big tech companies over antitrust law violations.

The Washington Post reported that the Federal Trade Commission has come into an agreement with the Department of Justice for dividing responsibilities to monitor big tech companies. As a part of this agreement, the FTC will now take on oversight of Amazon.

The FTC has already been active in terms of gathering data against Amazon for antitrust violations. It is reported that the FTC has probed into several competitors of the e-commerce giant enquiring about its business practices.

On top of this, the FTC’s Bureau of Competition already announced in February about the creation of a task force for monitoring the competition in US technology markets. Rising anti-competitive moves by companies such as Facebook, Google and Amazon have pushed the US government into taking such a decision.

According to a source, the FTC is gathering intel against Amazon from several of its competition and it has three key questions for Amazon.

1. The pricing structure of Amazon’s FBA

Amazon offers its logistic services also known as FBA. With FBA, sellers can outsource the storing, fulfilling, shipping and communication to Amazon. The FTC seems to have few doubts about the pricing structure of the FBA model by Amazon.

2. Amazon competing against its sellers

While Amazon has invited several medium and small scale enterprises to sell on its platform, it has also created 100s of products on its own and sold them as competition to these enterprises and sellers. For instance, Amazon picks the best performing product categories and creates a similar product and brands it under the ‘Amazon Basics’ tag to skyrocket the sales and dominate the competition.

3. Amazon Prime and how the services are justified

Amazon boasts that it now has more than 100 million Prime subscribers worldwide. Through this subscription, Amazon offers free delivery, thousands of movies, songs, and many other perks. However, the FTC isn’t clear on if or whether Amazon is making a profit with this subscription. On top of it, it becomes unclear for its competitors to compete on this service without a clear grasp of the nitty-gritty of this service.

Keeping Amazon’s size in mind, it is most likely that the FTC is investigating into several other aspects apart from the above mentioned three questions. There is news floating around that Amazon is asked to separate the web services from its retail business.

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