FTC investigating the Amazon and Apple deal that crushed small resellers

In the past year, Amazon made a deal with Apple to bring the sale of iPhones on its own platform, something that had never happened before. Our sources report that this deal made between both companies is now under scrutiny by the Federal Trade Commission (FTC).

The original idea behind the deal was so that Apple could sell on an official basis and by so doing reduce the rate of counterfeit or misleading products in the market. But as a result, a lot of sellers who had legitimate Apple products that were refurbished, cheap and no longer sold by the company itself were also kicked off the market.

One John Bumstead who is a specialist in refurbished MacBooks was contacted by a group of FTC officials. When our sources spoke with Bumstead, he said he was interviewed by FTC lawyers and an economist on the effects of the Amazon-Apple deal on his business. Although he was not told the purpose of the interview, but one member of the group is listed among the FTC recently formed Tech Task Force launched in February to deal with anti-competitiveness on tech platforms.

Bumstead told our sources that the FTC officials were asking about the role Amazon Marketplace played in his business and how much this has caused his business to suffer since it was kicked off. When Apple got the deal in November, John Bumstead was given a few months before he was removed from the Marketplace platform which so happens to be the top US e-commerce website for third-party sellers.

While speaking to our sources, Bumstead went on to say, “They wanted to know how Amazon works, how eBay works. I went into describing how a listing works on Amazon. Amazon is interesting in that you don’t necessarily create a listing. You just sort of tag on to an existing listing. If that listing gets deleted, chances are you’re not allowed to sell that product. That’s how Amazon did this. They created a bunch of renewed listings from the people who were certified, and they let those people sell on those listings, and they abandoned everyone else.”

Early this week, our sources reported that the FTC presented a subpoena ad testificandum to Amazon Marketplace seller data on products not sold by the company itself, though there’s no certainty on the relationship between both situations. We couldn’t get the FTC to comment.

All in all, experts are of the opinion that the deal between Apple and Amazon is a basis for an antitrust complaint. Sally Hubbard, an antitrust expert and the director of enforcement strategy at the OpenMarkets Institute states that the practice of making a deal with a brand to shut out third-party sellers who may be selling counterfeit products or just low-cost products is called “brand gating”. Hubbard therefore thinks the Amazon-Apple deal is a violation of antitrust laws and a move to remove competition.

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