World News

Amazon attracts scrutiny of Federal Trade Commission

Published on: August 15th, 2019

As Amazon comes under fire once again, the agency is interested in hearing complaints alleging penalties for offering lower prices on other e-commerce platforms.

The FTC is undertaking a broad review of the technology sector but declined to confirm that it has opened a formal probe into how Amazon treats merchants on its marketplace, which would have wider implications for all Amazon sellers.

“Anyone who wants to complain, we’re all ears,” said FTC chairman Joe Simons. “That’s the type of scenario that would be among the ones that we would want to look at, but I can’t tell you we are doing it for any particular platform.”

Amazon claims that sellers have full control over the prices they set, but when it discovers a product is cheaper on another website, the company alerts the merchant selling the item. It also makes that product’s listing harder to find and buy on its own marketplace, it has been claimed. Third-party sellers have reportedly been forced to raise prices on competing websites to avoid being penalised.

A House Judiciary antitrust subcommittee and European antitrust officials are already investigating claims that Amazon may be treating smaller merchants that sell on its marketplace unfairly.

The European Commission has also opened a formal investigation into Amazon’s dual role as retailer and platform-operator, focusing on the potential misuse of merchants’ data. Amazon has defended using aggregate sales data from third-party sellers, claiming it is a common practice in the retail industry.

Adding to criticism of Amazon’s business practices, a report from the Institute on Taxation and Economic Policy has revealed that the company will pay no federal income taxes for the second year in a row.

Thanks to the new Tax Cuts and Jobs Act, Amazon’s federal tax responsibility is 21%, down from 35% in previous years. Despite posting more than $11.2b in US profits in 2018, Amazon will pay nothing in federal income taxes. The company reported $5.6b in US profits in 2017 and paid zero taxes last year.

Revelations about Amazon’s tax liability come despite Donald Trump’s public criticism of Amazon not paying enough tax. “This is another situation where the rhetoric from President Trump is completely divorced from what he does and what his policies do,” explained Steve Wamhoff, ITEP’s director of Federal Tax Policy.

“Amazon pays all the taxes we are required to pay in the US and every country where we operate, including paying $2.6b in corporate tax and reporting $3.4b in tax expense over the last three years,” an Amazon spokesperson said in a statement.

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