Amazon’s Most Beloved Features May Turn Out to Be Illegal

from New York Times I'm Michael Alvaro. this is the daily. [Music]. last week when the U.S government filed. a landmark Anti-Trust lawsuit against. Amazon it pointed to a set of familiar. features that have made Amazon so. beloved by consumers today my colleague. Karen Weiss on why those beloved.

features may actually be illegal. [Music]. [Applause]. [Music]. Monday October 2nd. [Music]. Karen now that the US government has. actually sued Amazon for monopolistic. tactics we wanted to talk to you. somebody who has covered Amazon for.

years about the very specific ways that. Amazon has allegedly broken the law so. talk us through that yeah so the Federal. Trade Commission looked at a lot of. things but they said in the end it kind. of boiled down to two tactics that are. behind the scenes of things that we all. know so one is how we buy things on. Amazon when you click buy the buy now. button and then also Prime shipping. that's super fast shipping that is part.

of how things get to your door so. quickly right what you just mentioned. are basically the throbbing heart of my. relationship with Amazon I assume. everyone's relationship to Amazon and. you're saying those are at the center of. this Federal action against Amazon. exactly and the government is saying. there is these very sophisticated. mechanisms that let Amazon illegally. maintain its Monopoly that's kind of the. core of their argument that behind the. scenes that we all see there's this grip. of power over not just the sellers on.

Amazon's website but over the whole. internet okay so I want you to explain. this behind the scenes grip on the. internet and consumers and sellers that. Amazon has developed through these two. items you mentioned and let's start with. the buy now button and how according to. our government that has been misused by. Amazon sure so the first thing you have. to understand briefly is that most. things we buy on Amazon are not actually. sold directly by Amazon they're sold by.

outside Sellers and these are companies. and brands that list their products on. Amazon's Marketplace. and as a consumer that whole world of. sellers is more or less invisible. mostly what you see is you go to a. product page and you see these big. orange and yellow buttons that say buy. now and add to cart or they entice you. free delivery this could be here. tomorrow if you order in the next hour. that is called a buy box and so the. government says Amazon has used this buy.

box those buttons as one of its key ways. it prevents discounting across the. internet and how does that work sure so. they're basically saying that Amazon. wants to have the lowest price available. for a product and it does that and. enforces that by saying if a product is. available on another website it crawls. the web Amazon has these machines that. go across scrapes other websites and if. they find it's even one penny less. elsewhere they will essentially punish. the seller for that happening and they.

do that by removing those big bright buy. now and add to cart button and instead. they make this little button that says. you know it's just plain black and white. text that says see all buying options. it's like the opposite of calling you to. action the opposite of enticing you to. buy maybe you've landed on a page like. this I know I have where it just has. it's like how do I even buy this thing. it looks like it's unavailable even. though technically it is available. you're saying that Amazon regularly. scours the online retail world and.

figures out if one of its sellers is. simultaneously selling on another online. retail platform at a lower price and if. it discovers that's the case it. basically demutes. that product and I guess that seller on. Amazon and makes you not really want to. buy their stuff because it doesn't even. give you the buy now button exactly. exactly so for most sellers Amazon is a. huge portion of their sales and so if.

the buy button goes away their sales. plummet and then the sellers have to. figure out what to do and they can do. two things they can either raise their. price on another website or lower their. price on Amazon and what the FTC in this. complaint against Amazon says is that. they say Amazon knows that sellers often. raise their price elsewhere. and here's an example of how that might. work. well for a story a couple years ago I. spoke with a company called vitacup and.

they make those little coffee pods. theirs have vitamins infused in them and. so they wanted to reach new customers. and decided to offer a deal on a. different website that has a different. model they basically do these flash. sales so deep discounts but with slow. shipping and so they offer their coffee. pods at 30 off on this other website. but what Amazon's web crawlers find this. they remove that buy now button and all. of a sudden sales plunge and for vitacup. like many sellers like most sellers I've.

spoken with Amazon is most of their. sales. and so all of a sudden their biggest. Outlet the sales go close to zero for. them and so they then scramble and they. email the other website and said please. take the listing down immediately. because I can't afford to lose my Amazon. sales like I am. so in this example with vitacup we. clearly see that Amazon's decision to. remove the buy now button is so.

meaningful that the seller takes their. product off of a rival website once they. lose that button it doesn't just raise. the price says oh I can't even do. business with you anymore which suggests. just how powerful this tactic of. removing the buy button really is. exactly I mean I've talked to sellers. who don't even list on other websites at. all because they're like you know it's. not worth losing my sales on Amazon and. so the complaint against Amazon is. saying this has a effect across the.

internet of preventing discounting that. yes Amazon may have the lowest price but. it's actually raising the costs across. websites because Amazon is essentially. policing what people sell elsewhere. Amazon is basically preventing deals. from happening elsewhere which. effectively means it has almost sole. control over the price in the entire. Market. that's what the FTC is alleging and if. you know anything about antitrust law. what we are describing here Karen sounds. a lot like something that is.

anti-competition and anti-consumer. choice exactly because they're saying. that this mechanism this. anti-discounting control that Amazon has. that's how they talk about it that it. has the effect of making it so. competitors can't compete on price. I think that brings us to the second. example that you mentioned Amazon Prime. perhaps even better known than the buy. now button. everyone enrolls in it seemingly because. you get really good deals and you get.

them delivered in insanely fast ways how. does the government say that Prime is. being abused here. they're really focusing on the shipping. component of prime that Prime is this. membership program that you know an. estimated 170 million American people. have so this is you know most adults in. America yeah kind of like half the. country half the country if you include. kids so like lots of people right and. Prime works because people love Prime. right and there's this idea at Amazon.

people love great selection great prices. and fast delivery they will always love. those things and you focus on that and. you have this flywheel this virtual. Circle that consumers love right and so. what's the problem so the way Amazon has. done this is by building all of their. Logistics infrastructure warehouses. delivery Vans those vans you see driving. down your street all the time yep and. the FTC is saying that they basically. Force sellers to use their Logistics.

operations also basically to get that. check mark to get it to say that this is. a prime product the sellers have had to. pay Amazon to use this program called. fulfillment by Amazon they have to use. Amazon's warehouses they have to use. Amazon's Logistics as fast system you. just described exactly so they send. their product to Amazon Amazon puts it. through all these buildings when you. click buy pretty much immediately gets. put in a box and you put on a truck and. to your house and it's doing that faster. and faster every single day but if you. don't use Amazon's Logistics and you.

don't use their warehouses then you. don't get that check mark You're not. prime eligible and then your sales are. going to tank because customers are. looking for that we've seen that time. and again and so sellers know that and. it's very hard to build a business on. Amazon if you don't ship through Amazon. so if you're a seller this isn't really. feeling like that much of a choice. you're basically being compelled to use. Amazon's fast Logistics system or you're. going to be. locked out of half of America's buying.

habits which are Amazon Prime. that's exactly right and when I talk to. sellers they say the more you get into. Amazon's Logistics the more you're into. the whole Amazon system the harder it is. the more complicated the more expensive. it can be to sell elsewhere because you. know so much of your sales are on Amazon. that you then all of a sudden to have to. set up a whole different supply chain. and figure out different warehouses just. gets much more complicated right and I'm. going to guess that some sellers. basically decide ugh this is too much of.

a headache I'm only going to sell to. Amazon which then calls back to our. earlier conversation about the buy. button so what you're describing. collectively is just a tremendous amount. of control exactly Amazon has so much. scale so many orders it's delivering it. can deliver them really efficiently. really really quickly and that's. incredibly hard to compete with now if. you look at their number of warehouses. the number of drivers the speed of their. delivery it's unsurpassed I mean it is. incredible right and so what we as.

consumers have come to understand as. Amazon's Brilliance its ability to be so. fast and so cheap this is why we all use. it what the FTC is saying is it's. actually built on a couple of tactics. that ultimately are kind of coercion for. sellers exactly that's exactly right and. that there's a broader effect on. consumers. that it has an effect of both raising. prices and an effect of limiting our.

choice because there aren't that many. places that can viably compete with. Amazon anymore. we'll be right back. Karen I imagine that Amazon and their. lawyers have a very robust defense to. this lawsuit and I wonder if you can. represent their counter argument both to.

the charges about these two specific. tactics and to the larger allegation. being made by the US government that. Amazon is being monopolistic. anti-competitive and bad for the economy. sure so when you talk about that buy now. button the buy box Amazon says why in. the world should we show our customers. bad deals why should we knowingly let. our customers buy something that we. think is not the best deal around.

and people trust us because they know. that we can give them the best deal. around. so in some sense it's kind of a simple. argument we serve customers and we're. not going to do wrong by them and for. Prime and Logistics they say look we've. made billions of dollars of investments. in these warehouses and let sellers use. it that this is actually made it very. easy for sellers to build businesses you. can build a business without being a. supply chain person you can just be. great at coming up with like this really. cool new toy for kids or whatever it is.

they say that it's very well priced. which most sellers I talk to say is true. and they say it's very easy and it's. actually unlocked this business for so. many people and let so many sellers get. something that customers love which is. this unbelievably fast and reliable. delivery that we all know and that makes. so many things so simple. I would say broadly their argument is. the FTC has this totally upside down. also Amazon says that they are the most.

customer obsessed company in the world. and that every decision they make is. what is best for customers we're going. to show them the best deal we're going. to get them things fastest that they do. things with the customer in mind that. has had an effect of creating this whole. world of sellers that didn't really. exist. that its lower prices broadly over time. that it's just made this whole ecosystem. work essentially in a way that customers. clearly love because they keep coming.

back for more. but. in theory and in practice it's possible. for two things to be true at the same. time and I'm sure that's what the. government is going to say in response. to Amazon's response which is you can be. a customer focused company you can be. great at delivering fast discounted. products to customers and you can. simultaneously be making life very hard. for sellers by eliminating their choices. through coercive tactics that ultimately.

over time might be bad for consumers I. think that's right there's kind of two. sides to this coin it's like what is. good in the Amazon Universe for Amazon. customers and what is good for customers. broadly are we missing out on things. that we don't even know are we paying. more than we even realize we need to be. are there other websites other companies. that could have started up and done. things differently that we don't even. it's like what don't we know right what. don't we know because we so thoroughly. live in Amazon's world that's exactly.

right so that of course raises the. question of what will happen to Amazon. if it loses this case and what does the. government really want here in the end. does it want to basically turn back the. clock turn back the clock to a time. where Amazon doesn't so thoroughly. dictate the terms of the American Retail. Landscape and if that is the goal what. might that look like. the government doesn't exactly say what. they want they don't say we're going to.

break Amazon up they just say we want to. undo these things and what Amazon says. is that it's going to force them to. unwind all these things that customers. love they won't be able to offer their. prices they won't be able to make it as. easy and as simple as possible these are. the things that keep us coming back for. more all these things they have to. unwind it and that's very hard to do and. I know because I tried to do it myself. thank you. what do you mean about a year ago my.

husband and I did something that very. few people do which is we canceled our. Prime subscription. huh you predicted that there was going. to be an Anti-Trust case you just went. ahead and said what will this future. potentially look like exactly. [Music]. in. a matter of reporting though this was. not a protest thing this was not like an. Amazon's bad thing this was us looking. at our finances and we felt like many. Americans we spent a lot of money in the. pandemic we were just buying a lot of.

stuff. and we wanted to buy less stuff and so I. know from reporting we know from what. Amazon tells sellers we know from our. own experience that the easier things. are to buy the more you buy them right. nothing's easier than Amazon Prime so. you drop it so we dropped it yeah it was. an experiment would we miss it would we. would we agreed we'd pay for fast. shipping when we wanted it we wouldn't. when we didn't we might you know put. things in the cart but not click buy. eventually and we were just curious like.

what would happen. oh. and so. what happens tell us about this. alternate universe. it's very weird it's like you have to. plan ahead a little bit I found that I. spent more on other websites as a result. of it you know Target there's one near. my kids swim class I put things to buy. online and pick up in their store and I. go and swing by and get it I also found. that we did buy less you know there were. things that I searched for and when I.

saw it it wouldn't be available in the. time for when I wanted it we just didn't. buy it you know I remember we were going. camping with friends and I was. considering getting these reusable water. balloons which are a thing with kids. these days they're kind of cool they. don't produce the scraps all over the. ground and I couldn't get it fast enough. and so we just didn't buy it before we. went camping and guess what camping was. okay. but then there were other times like I. had the Seattle Bureau for the New York. Times over for a barbecue and I wanted.

to get something for the kids to play. with outside so I ordered these little. tiny soccer goals and we paid eight. dollars or whatever for the shipping and. it got there before the weekend and the. kids actually spent a ton of time. playing with their soccer goals. broadly I definitely spent way less on. shipping because I realized very few. things are quite that urgent. it's striking to be Karen your. experience in some ways like you said. you are kind of making the case for. Amazon because.

what you have found is that there's life. beyond Amazon you can opt out of it and. you're fine therefore it's a little hard. to think of them as a coercive Monopoly. that you can't avoid in our economy but. on the other hand. what you're describing experience you're. having. requires you to have a totally. re-thought version of being a consumer. than the one the rest of us have gotten. used to quite happily. and. you have volunteered to have a more. burdensome version of buying stuff.

waiting for it diversifying your. shopping experience driving to a store. God forbid so you're kind of making. Amazon's Point you're also kind of. undermining it. that's exactly right Amazon. fundamentally changed what we all expect. I mean even in the year since I stopped. having prime their shipping speeds for. Prime have dramatically improved they're. faster than they've ever been they've. built all these warehouses in the. pandemic and now they are putting them. to use like you would not believe.

they're getting things so fast. they have taught us how to shop online. basically and that is very hard to. unwind as a consumer I did it as an. experiment and I'm an outlier and I. don't even know like we may still rejoin. Prime we haven't even decided because. there are definitely times where I'm. like oh man this would have been really. nice to have. [Music]. right I mean ultimately what you're.

saying is no matter what happens here no. matter how this case gets resolved it's. going to be really hard perhaps even. impossible to unrewire our brains in the. way that Amazon has as consumers right. they have taught us that we can go to. them Open click buy the item shows up at. your doorstep that day done. I mean that's a very hard Loop to break. [Music]. well Karen thank you very much we.

appreciate it anytime. [Music]. thank you. we'll be right back. here's what else you need to another day. I have very good news for the country. Democrats and Republicans have come to. an agreement and the government will. remain open. we will have avoided a shutdown over the.

weekend the U.S government narrowly. averted a shutdown that had appeared to. be all but certain after a republican. house Speaker Kevin McCarthy put forth a. short-term spending bill that won more. support from house Democrats than it did. from House Republicans hours later that. bill was adopted by the. democratic-controlled U.S Senate and. signed by President Biden moments before. the government was scheduled to shut. down. the bipartisan outcome was the exact.

scenario that McCarthy had sought to. avoid for fear of upsetting The house's. far-right membership who unanimously. voted against the bill and who may now. use it as a pretext to try to remove. McCarthy as house speaker in the coming. days. during a news conference McCarthy said. he was willing to take that risk if. somebody wants to make a motion against. me bring it there has to be an adult in. the room. Democrats especially in the Senate.

celebrated the moment as both an. economic and political Victory and as a. chance to schooled House Republicans for. their partisanship if there is one. lesson for House Republicans to take. from the absolute chaos they have caused. this past week it is that partisanship. is not a path forward it's a path to. chaos. today's episode was produced by Rob. cipko Asta chaturvedi will Reed and.

Jessica Chung it was edited by Mark. George Lisa Chao and Devin Taylor. contains original music from Marion. Lozano and Dan Powell and was engineered. by Alyssa Moxley our theme music is by. Jim runberg and Ben landmark of. Wonderland. [Music]. that's it for the Daily I'm Michael. Bavaro. see you tomorrow. [Music].