Amazon slams FTC probe into Prime membership practices

Amazon is simply outraged.

Since 2021, the tech giant has been the subject of a Federal Trade Commission investigation into its Prime membership subscription practices, with a focus on whether the company’s user interface could unfairly trick people into choosing the service.

A formal investigation was not confirmed until this week, when the agency issued a public legal statement from the company. But along with that, something else was revealed: how unfair Amazon thinks the whole affair is.

The filing claims at length that founder Jeff Bezos and current CEO Andy Jassy simply shouldn’t appear for an interview with the agency.

“Jeffrey Bezos and Andrew Jassy file a supplemental petition to revoke their individual CIDs [Civil Investigative Demand by the FTC] because staff has not established a legitimate reason to need their testimony when it can obtain the same information and more from other witnesses and documents,” the Aug. 5 document reads.

The filing is a rare public outburst in months of conflict between Amazon and FTC Chairwoman Lina Hahn, who takes over as commissioner in 2021. Hahn, 33, has made a name for herself and her school of “hipster antitrust” theory which argues that big firms, especially Amazon, have too much power over markets. Hahn breaks with decades of antitrust practice, when lower prices were the primary standard adopted by the Federal Trade Commission.

The work that put her on the map was published in the Yale Law Review in 2017. The title is: “Amazon’s Antitrust Paradox.”

Amazon complains about “not listening” behavior

Amazon also recalls the FTC’s “miraculous” decision to prevent the company and its individual executives from hiring the same legal counsel.

Insider previously reported the investigation, as well as the fact that the company had considered several adjustments, but executives shelved them due to lower subscription growth, citing unreported internal documents and current and former employees.

Why are Bezos and Jassi not needed? Amazon’s legal counsel says that not only has the company produced about 37,000 pages of documents, worked with the Federal Trade Commission to answer its questions, and followed up with the agency to make sure it complied with its requirements, but it could continue to prepare documents and suggest other staff to respond to agency inquiries.

Some of the egregious actions highlighted by Amazon: The company’s legal counsel says there was a four-month hiatus in communication from the Federal Trade Commission that ended in April of this year, when the agency announced a new attorney was taking over the investigation. The FTC then initiated another CID in June, which Amazon’s counsel says both “expanded” and “accelerated” the investigation, while imposing a strict deadline for its conclusion that was completely “arbitrary.”

“Staff’s handling of this investigation was unusual and confusing,” the document said, citing the FTC.

The FTC did not respond to Conditionrequest for comment while Amazon forwards Condition to its legal submission.

As for what comes next, the abstract of Khan’s 2017 paper may provide some clues. “[T]the company has positioned itself at the center of e-commerce and now serves as the core infrastructure for many other businesses that depend on it… We cannot realize the potential competitive harms of Amazon’s dominance if we measure competition primarily by price and output. Specifically, current doctrine underestimates the risk of predatory pricing and how integration between different lines of business can prove anticompetitive. These concerns are heightened in the context of online platforms.”