Amazon's supply deal with Apple could be illegal; FTC will investigate
Amazon has acted illegally after agreeing to the deal with Apple says one antitrust expert
Bumstead was given a two months warning after the Amazon deal with Apple was announced, and he is no longer allowed to peddle his refurbished MacBooks on the site unless he meets some new conditions, such as purchasing $10 million in inventory a year. That is well out of reach for someone like Bumstead. In other words, Amazon’s deal with Apple has led to the removal from the platform of smaller third-party merchants hawking Apple products. And that has to be bad for Bumstead’s business considering that Amazon’s third-party marketplace is the largest such platform in the U.S.
If you’re thinking that what Amazon has done here is illegal, you just might be correct. Antitrust expert Sally Hubbard, who is the director of enforcement strategy at the OpenMarkets Institute (a publication that fights back at companies it believes are committing antitrust violations) says the Amazon-Apple deal smacks of what she calls “brand-gating.” This occurs when a platform makes a deal with a brand name in order to stop third parties from selling the brand’s products (or counterfeit versions) at lower prices. As a result, the price of used or refurbished Apple devices on Amazon has gone up hundreds of dollars in price Bumstead says. And since the U.S. consumer is the one affected by what appears to be anti-competitive behavior, the FTC is now involved.
“You put a gate around the brand and say all the third-party sellers of whatever that brand is get a notice saying you can no longer sell this product on our platform unless you get authorization from the brand. But of course, the brand is not going to let you sell if you’re under the [minimum advertised price]. Problem is that it’s illegal under antitrust law.”-Sally Hubbard, Antitrust expert, Open Markets Institute
Amazon has already been called out for this behavior in Europe, and an investigation started earlier this month. The e-commerce giant is charged with prioritizing its own products and using its own proprietary sales data against competitors. Local regulators in Germany have already forced Amazon to make terms of service changes so that third-party sellers like Bumstead can continue to sell on the site in that country.