Mar 8, 2024

Amazon Takes Advantage of Third-Party Sellers; Bezos’ Response Disappointing


Amazon violated its own policies: Find out if you have a case.

Amazon is one of the biggest hubs for third-party sellers to connect with customers and sell their products, and many small businesses run exclusively on this platform. Third-party companies pay the seller’s fees and follow Amazon’s rules so they can grow their businesses, trusting Amazon to act ethically and hold up their end of the deal. But what really happens on Amazon’s side?

In what appears as an effort to protect third-party sellers, Amazon has a policy that restricts third-party sales and marketing data from being used to develop their own competing products. CEO Jeff Bezos claims that this policy is among the safeguards that protect small businesses who use the marketplace. The safeguards in place don’t seem to be enough, however — competing products are a big problem.

If your business has suffered due to Amazon’s actions, you may be owed compensation for your hardships. Contact Morgan & Morgan for a free case evaluation – it costs nothing to hire us, and we get paid out of your winnings, not your pocket. 

What’s Amazon Doing?

Amazon adopted a policy that protects sellers’ confidential data so it can’t be used to develop and support its own products in competition. Bezos has pointed out that they were under no legal obligation to adopt this policy, but the fact remains that they did, so now they are obligated to follow it. Unfortunately, this hasn’t been the case.

Wall Street Journal investigated the company in April as it came to light that Amazon:

  • Takes confidential and proprietary data from third-party sellers
  • Uses this information to develop and market competing products
  • Sells these products at a lower price point to undercut other sellers
  • Emphasizes their own products on their platform
  • Drives out third-party businesses as a result

That aside, Amazon already makes money by charging third-party sellers to use the marketplace. So not only does the mega-company profit from charging the sellers directly; Amazon also uses their data to undercut them, potentially driving them out using knockoffs of their own products.

Clearly, Amazon’s manipulation of this policy doesn’t just help boost its own sales – it can also bankrupt the “little guys” and force them to close, reducing competition rather than facilitating it. 

How Jeff Bezos Responded

According to Forbes, Bezos said Amazon adopted this policy voluntarily, and the third-party marketplace was designed to increase competition in order to give the customers the best experience. 

Unfortunately, this does nothing to address the fact that they’re not following the policy that they chose to adopt, or that violating this policy can actually reduce competition and create an unfair environment for third-party sellers.

By going back on their word, Amazon has manipulated small businesses into growing their profits for them. If Amazon has taken advantage of your business, Morgan & Morgan may be able to help.

Call Morgan & Morgan

When your business relies on Amazon in order to stay afloat, the value of their word can be make-or-break for your company. Fortunately, a lawyer may be able to get you the damages you’re owed.

Morgan & Morgan has been protecting families and small businesses since 1988. We’re an army of more than 1,000 attorneys that has recovered $20 billion for our clients across all practice areas. We fight For The People, and we have the resources needed to take on the biggest bullies in America and win.

If Amazon has hurt your business by violating its policies, you might deserve compensation. Fill out a free, no-obligation case evaluation to find out if we can help.