Beyond the Antitrust investigation into the App Store, the FTC is Apparently Investigating the 2019 Apple-Amazon Deal
In June Patently Apple posted a report titled "The Stars are lining up against Apple as they now may be in the U.S. Government's Antitrust Crosshairs over the App Store." The report noted that 'The Justice Department’s Antitrust Division and the Federal Trade Commission (FTC) met in recent weeks and agreed to give the Justice Department the jurisdiction to undertake potential antitrust probes of Apple and Google. Bloomberg's report on this added Amazon to the list under investigation.
Late this morning The Verge reported that "Last year, Amazon cut a deal with Apple to bring direct iPhone sales to its platform for the first time. Now, that deal is coming under scrutiny from the Federal Trade Commission.
The deal in question was first announced last fall, ostensibly as a way for Apple to sell on Amazon in an official capacity and cut down on counterfeit or misleadingly marketed products. However, it had the effect of kicking off hundreds of legitimate sellers that were offering low-cost and refurbished Apple products that were no longer for sale by the company itself.
One seller, a Minnesota man named John Bumstead who specializes in refurbished MacBooks, was contacted earlier this month by a group of FTC officials. Bumstead told The Verge that he was interviewed by FTC lawyers and an economist about the impact of the Amazon-Apple deal on his business. The group did not disclose the broader purpose of the interview, but at least one member of the group is listed as belonging to the FTC’s newly formed Tech Task Force, a division launched in February to police anti-competitive behavior on tech platforms.
The FTC officials were curious about the role Amazon’s Marketplace played in Bumstead’s business and how much his business suffered from being kicked off. When Apple secured the deal in November, Bumstead was given a couple months’ notice before he was forced off the Marketplace platform, which is the leading US e-commerce website for third-party sellers.
Still, experts say the Apple-Amazon deal could easily be grounds for an antitrust complaint. According to Sally Hubbard, an antitrust expert and the director of enforcement strategy at the OpenMarkets Institute, the practice of cutting a deal with a brand to shut out third-party sellers who may be peddling counterfeit products or simply just lower-cost versions is called “brand gating.” It’s rampant on Amazon, and it may be illegal, she argues. For more on this, read the full story from The Verge.
On yet another front today, Reuters is reporting that "U.S. Democrat Senators Amy Klobuchar and Richard Blumenthal introduced legislation on Friday to allow harsher penalties for companies that violate antitrust law, following a Justice Department probe into alleged anticompetitive behavior by big tech.
The "Monopolization Deterrence Act" would allow the Justice Department and the Federal Trade Commission to seek civil penalties for monopolization offenses under U.S. antitrust law, Klobuchar’s office said in a statement.
Under the bill, the penalties could be as high as 15% of the company’s total U.S. revenue. For more on this, read the full Reuters report.
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