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WSJ: Amazon Abuses Its Market Power to Buy Ownership Stakes in Potential Suppliers

Cliff Owen/AP Photo

LUCAS NOLAN

1 Jul 20214

A recent report from the Wall Street Journal claims that the e-commerce giant Amazon is telling suppliers that want to win Amazon as a client that they must give the e-commerce Masters of the Universe the right to buy large stakes in their firms at steep discounts.

A recent report from the Wall Street Journal states that Amazon has been telling suppliers that want to land the e-commerce giant as a client for their goods and services that they must give Amazon the right to buy large stakes in their companies at steep discounts to market value.

Amazon has reportedly struck at least a dozen deals with publicly traded companies in which it gets rights — called warrants — to purchase the vendors’ stock in the future at what could be well below-market prices.

The Wall Street Journal reports:

Amazon over the past decade also has done more than 75 such deals with privately held companies, according to a person familiar with the matter. In all, the tech titan’s stakes and potential stakes amount to billions of dollars across companies that provide everything from call-center services to natural gas, and in some cases position Amazon among the top shareholders in those businesses.

The unusual arrangements offer another window into how Amazon uses its market heft to increase its wealth and clout. The company has been under growing scrutiny from regulators and lawmakers over its competitive practices, including with companies it partners with.

While the deals can benefit the suppliers by locking in big contracts, which can also boost their share prices, executives at several of the companies said they felt they couldn’t refuse Amazon’s push for the right to buy the stock without risking a major contract. The deals in some cases also give Amazon rights such as board representation and the ability to top any acquisition offers from other companies.

An Amazon spokesperson said that the warrants it obtains in commercial agreements are usually tied to milestones that Amazon has to meet, such as large purchases from the supplier.

Amazon declined t comment on specific deals or how many warrants it has exercised or the amount of money it has made from such agreements. The spokesperson said that it has warrant deals in fewer than 1 percent of the commercial agreements it enters into.

Read more at the Wall Street Journal here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan or contact via secure email at the address lucasnolan@protonmail.com

 

 

Amazon.com and 'Big Five' publishers accused of ebook price-fixing

This article is more than 5 months old

Class action lawsuit filed in US claims the houses have colluded with the online giant to keep prices artificially high

 

An Amazon Kindle e-reader on a bookshelf. Photograph: Samuel Gibbs/The Guardian

Sian Cain

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Amazon.com and the “Big Five” publishers – Penguin Random House, Hachette, HarperCollins, Macmillan and Simon & Schuster – have been accused of colluding to fix ebook prices, in a class action filed by the law firm that successfully sued Apple and the Big Five on the same charge 10 years ago.

The lawsuit, filed in district court in New York on Thursday by Seattle firm Hagens Berman, on behalf of consumers in several US states, names the retail giant as the sole defendant but labels the publishers “co-conspirators”. It alleges Amazon and the publishers use a clause known as “Most Favored Nations” (MFN) to keep ebook prices artificially high, by agreeing to price restraints that force consumers to pay more for ebooks purchased on retail platforms that are not Amazon.com.

The lawsuit claims that almost 90% of all ebooks sold in the US are sold on Amazon, in addition to over 50% of all print books. The suit alleges that ebook prices dropped in 2013 and 2014 after Apple and major publishers were successfully sued for conspiring to set ebook prices, but rose again after Amazon renegotiated their contracts in 2015.

“In violation of Section 1 of the Sherman Antitrust Act, Defendant and the Big Five Co-conspirators agreed to various anti-competitive MFNs and anti-competitive provisions that functioned the same as MFNs,” the complaint states. “Amazon’s agreement with its Co-conspirators is an unreasonable restraint of trade that prevents competitive pricing and causes Plaintiffs and other consumers to overpay when they purchase ebooks from the Big Five through an ebook retailer that competes with Amazon. That harm persists and will not abate unless Amazon and the Big Five are stopped.”

The suit seeks compensation for consumers who purchased ebooks through competitors, damages and injunctive relief that would require Amazon and the publishers to “stop enforcing anti-competitive price restraints”.

The lawsuit comes a day after the state of Connecticut announced it was investigating Amazon for potential anti-competitive behaviour in its sales of ebooks. A spokesperson for Connecticut Attorney General William Tong confirmed on Wednesday that Amazon had cooperated with a subpoena requesting documents relating to its dealings with the Big Five.

Amazon declined to comment on the New York lawsuit when approached by Reuters.

Hagens Berman sued Apple and the Big Five publishers for fixing ebook prices in 2011, in a case that would eventually lead to suits from several US states and the Department of Justice, which accused Apple of colluding in order to break up Amazon.com’s dominance in the ebook market.

In that case, the five publishers settled for $166m (£120m), while Apple lost at trial and was order to pay out $450m in 2016, after a lengthy legal process that ended when the US supreme court declined to hear the company’s challenge.