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FTC Investigating Impact of Apple-Amazon Deal on Independent Resellers

FTC Investigating Impact of Apple-Amazon Deal on Independent Resellers

Apple and Amazon agreed last year to sell Apple products directly to customers via an official Apple store on the ecommerce site. While the deal may have been a great way to expose Apple products to Amazon buyers and assure them the products are genuine, the FTC has concerns about how the deal may affect third-party sellers on the e-commerce site.

The harm the deal might be doing to independent Apple resellers was raised as a major concern almost immediately following the announcement of the deal.

It’s not just that smaller retailers will now be competing with Amazon, but most of them will now be completely barred from selling Apple products. Part of the deal is that only authorized Apple resellers will be allowed to sell through Amazon from January 4, 2019.

CNET reports that authorized resellers will be limited to those ‘who handle millions of dollars in Apple products,’ which will eliminate small businesses and individual sellers.

The Federal Trade Commission is said to be interviewing resellers who have been affected by the deal. (Via The Verge)

One seller, a Minnesota man named John Bumstead who specializes in refurbished MacBooks, was contacted earlier this month by a group of FTC officials. Bumstead told The Verge that he was interviewed by FTC lawyers and an economist about the impact of the Amazon-Apple deal on his business. The group did not disclose the broader purpose of the interview, but at least one member of the group is listed as belonging to the FTC’s newly formed Tech Task Force, a division launched in February to police anti-competitive behavior on tech platforms.

The FTC officials were curious about the role Amazon’s Marketplace played in Bumstead’s business and how much his business suffered from being kicked off.

Antitrust expert and director of enforcement strategy at the OpenMarkets Institute, Sally Hubbard, says the deal is likely illegal. She says a deal like that between Apple and Amazon is call “brand gating,” and is designed to shut out third-party sellers who may be peddling counterfeit products or simply just lower-cost versions. That may be illegal, Hubbard says.

“You put a gate around the brand and say all the third-party sellers of whatever that brand is get a notice saying you can no longer sell this product on our platform unless you get authorization from the brand,” Hubbard tells The Verge. “But of course the brand is not going to let you sell if you’re under the [minimum advertised price]. Problem is that it’s illegal under antitrust law.”

While third-party sellers are allowed to sell refurbished Apple products below official prices as part of the Amazon Renewed program. However entry to the program is limited to those selling $10 million or more of products per year, eliminating smaller sellers.

Apple is already facing a number of antitrust investigations and lawsuits, including a Department of Justice investigation, as well as actions by at least eight different states.