Amazon hit with $1bn claim that secretive Buy Box algorithm screws shoppers
Internet mega-souk thinks allegations are a waste of Prime
Amazon is facing a £900 million ($1 billion) lawsuit that claims its Buy Box algorithm breaks competition laws by unfairly favoring products sold by the American giant and preferred vendors.
This class-action complaint was brought by consumer-rights warrior Julie Hunter against the e-commerce goliath to the UK's Competition Appeal Tribunal, a specialist court that handles gripes of monopoly abuse and whatnot.
Hunter slammed the e-commerce goliath for using what she called a "secretive and self-favoring algorithm" that ensures shoppers buy stuff primarily from Amazon and select third-party sellers, which unfairly shuts out competitors and squashes competition. She argues that tens of millions of Brits are owed compensation for being potentially forced to pay inflated prices for goods forced onto them, and she intends to secure that windfall by appealing to the tribunal.
Basically, when you search for a product on Amazon and click on a listing, you'll get a page like this that has details and photos of the thing, customer comments, and so on. Crucially, if that item has multiple suppliers, Amazon decides which supplier will fulfill the order when the user clicks on the "Buy Now" button on the right-hand side of the desktop page. The area of that page is known as the Buy Box.
According to Hunter, and others, the algorithm that chooses the supplier is unfairly biased to selecting Amazon and third-party companies who pay large fees to the US giant. Specifically, she claims Amazon unfairly promotes not only itself but also retailers who sign up for Pro Merchant accounts and pay monthly commission and closing fees to appear as the Buy Box option. Suppliers who aren't selected are buried down the page, thus this feature prevents people from finding potentially cheaper options and blocks other third-party vendors from competing fairly, it is claimed.
"Many consumers believe that Amazon offers good choice and value, but instead it uses tricks of design to manipulate consumer choice and direct customers towards the featured offer in its Buy Box," Hunter said in a statement.
"Far from being a recommendation based on price or quality, the Buy Box favors products sold by Amazon itself, or by retailers who pay Amazon for handling their logistics. Other sellers, however good their offers might be, are effectively shut out – relegated down-page, or hidden several clicks away in an obscure corner of Amazon's website," Hunter continued.
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Hunter believes Amazon should pay a whopping £900 million ($1 billion) in compensatory damages to screwed over shoppers in the UK. The case is being represented by the law firm Hausfeld & Co, and there's more info here.
"Online shoppers have a right to be treated fairly and to be able to make informed decisions," Hunter said.
"This lack of transparency and manipulation of choice is an abuse of consumers' trust, as well as a raid on their wallets. Amazon occupies an incredibly powerful position in the market, making it impossible for consumers to take individual action. Amazon shouldn't be allowed to set the rules in its favor and treat consumers unfairly. That is why I am bringing this action."
An Amazon spokesperson told The Register the complaint to the tribunal is "without merit."
According to the spokesperson, Amazon is "confident that will become clear through the legal process," and they are "focused on supporting the 85,000 businesses that sell their products on our UK store, and more than half of all physical product sales on our UK store are from independent selling partners. We always work to feature offers that provide customers with low prices and fast delivery."
Amazon faces similar allegations in the US. California's Attorney General Rob Bonta sued the corporation last month, claiming it maintains dominance by punishing sellers who list their goods on other sites at lower prices by threatening to remove the Buy Box feature for their items. ®