FTC investigation into Amazon reportedly gearing up

The probe is part of a broader antitrust look into big tech by Congress, regulators and attorneys general.

Ben Fox Rubin Former senior reporter
Ben Fox Rubin was a senior reporter for CNET News in Manhattan, reporting on Amazon, e-commerce and mobile payments. He previously worked as a reporter for The Wall Street Journal and got his start at newspapers in New York, Connecticut and Massachusetts.
Ben Fox Rubin
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A federal probe into Amazon's market dominance is reportedly underway.

The Federal Trade Commission has started interviewing small businesses that sell products on Amazon, asking them how much of their business relies on Amazon, Bloomberg reported Wednesday, citing three merchants who've been interviewed.

The Wall Street Journal earlier this year reported that the FTC and the Department of Justice agreed to divvy up antitrust investigations into big tech companies, with the Justice Department looking into Google and Apple, while FTC will investigate Facebook and Amazon.

The FTC declined to comment Wednesday. Amazon didn't respond to a request for comment.

These companies are now facing multiple investigations, many that are just getting started or were just announced, by  Congress, US attorneys general, and the FTC and Justice Department. These investigations are all looking into potential monopolistic practices, such as using their huge platforms to stifle competitors. 

The US investigations follow years of investigations and fines directed at big tech companies in Europe. Those have included a $5 billion fine last year against Google for antitrust practices using its Android operating system. The European Commission in July announced an antitrust probe into Amazon, too.

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Two days ago, 50 attorneys general announced an antitrust probe into Google. Just days earlier, Google confirmed a Justice Department investigation into its business, as well. And on Friday, Facebook became the target of an antitrust investigation by a handful of state attorneys general.

The FTC's interviews of Amazon merchants appears to signal the early stages of a broad investigation into Amazon's business practices, Bloomberg reported.

Chris McCabe, founder of Amazon seller consultancy ecommerceChris and a former Amazon employee, said he's spoken to one seller who was already interviewed by the FTC and has heard from a handful of others who were looking to contact the agency. These sellers, he said, want to come forward after feeling ignored by Amazon for their past complaints and now see the FTC as a new authority that could help fix existing problems at Amazon.

"It looks like they are expanding their scope," McCabe said about the FTC investigation, adding that the agency appears to be probing beyond just antitrust concerns and asking sellers about fake reviews and  seller account suspensions.

Amazon for years has faced criticism for allegedly pushing around smaller businesses and for gobbling up its competitors, like Zappos and Diapers.com. Smaller merchants on its site have often stated that they have few alternatives to Amazon, such as eBay and Walmart, making them increasingly reliant on the whims of Amazon.

Additionally, smaller merchants have complained that Amazon tends to copy their products by making private-label versions of them, making it harder for them to compete on Amazon's marketplace. Amazon executives have said that private labeling is a small part of its business and that they don't use smaller merchants' data to determine what individual private label items to make.

The Free & Fair Markets Initiative, a vocal Amazon critic, applauded the FTC's efforts.

"It is welcome news to see that regulators are finally getting serious about taking on the unfair advantage Amazon has staked out on its platform," Robert B. Engel, a spokesman for the group, said in a statement. "The drumbeat of sellers who are speaking out against Amazon for its efforts to stamp out competition are growing louder and louder each day, and it is time for regulators to hold this company accountable." 

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First published at 6:23 a.m. PT.
Updated at 11:19 a.m. PT: Adds comments from consultant Chris McCabe.