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Tuesday, July 16, 2024

Arizona Accuses Amazon of Monopoly, Deceptive ‘Dark Patterns’

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The lawsuits echo other complaints against Amazon from the Federal Trade Commission and a series of states.

Arizona Attorney General Kris Mayes filed two new lawsuits against Amazon on Wednesday, bringing similar complaints to those the company is already facing from the Federal Trade Commission.

Both lawsuits are brought under Arizona’s state statutes in the Arizona Superior Court. One lawsuit accuses Amazon of engaging in deceptive business practices that violate the state’s Consumer Fraud Act by allegedly using design tricks known as dark patterns to keep users from canceling their Amazon Prime subscriptions. This is similar to the FTC’s lawsuit against the company in June.

The other lawsuit accuses Amazon of breaking Arizona’s Uniform State Antitrust Act by unfairly maintaining monopoly status by enforcing agreements with third-party sellers that restrict them from offering lower prices off the platform than they do on Amazon. This language, sometimes called a “most favored nation” clause, has also been targeted by other state AGs, including in the District of Columbia and California. (The DC case was thrown out, but the AG is trying to reinstate it.)

The Arizona antitrust suit also targets Amazon’s Buy Box algorithm through the Consumer Fraud Act. That algorithm is the system that determines which product in a category gets the best placement with a “Buy Now” button. The AG alleges this algorithm is “biased in favor of Amazon first-party retail offers or offers from third-party sellers who participate in Fulfillment By Amazon.” Because of this, the AG argues that consumers reasonably believe that items from the Buy Box offer the best price. Still, they “routinely overpay for items available at lower prices from other sellers on Amazon … because Amazon has chosen to display the offers for which it will earn the highest fees.” Both aspects of this lawsuit are reflected in the FTC’s recent antitrust lawsuit against Amazon, where more than a dozen state AGs joined it.

Arizona is asking the court to stop Amazon from engaging in allegedly deceptive and anticompetitive practices and award civil penalties and disgorgement of ill-gotten gains.

Also Read: Google I/O 2024 Recap: A Whirlwind of Innovation!

Amazon spokesperson Tim Doyle said the company was “surprised and disappointed by these cases.” He said the Arizona AG initiated the process without reviewing “a single document from Amazon, resulting in a fundamental misunderstanding and mischaracterization of how Amazon’s businesses work.” Doyle defended Prime’s sign-up and cancellation processes, saying they are “clear and simple by design” and said the lawsuits would “force Amazon to engage in practices that harm consumers and the many businesses that sell in our store—such as having to feature higher prices.”

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