FTC Investigates Amazon Prime, But Firm Hits Out At FTC Staff Conduct

Amazon has accused the Federal Trade Commission (FTC) of harassing its senior leadership, mirroring a similar claim earlier this year from Elon Musk against the SEC.

The e-commerce giant accused the FTC of harassing Amazon founder and executive chairman Jeff Bezos, and CEO Andy Jassy, by asking them to testify in its investigation of the company’s Prime subscription service.

News of the FTC probe of Amazon Prime was revealed in a filing dated 5 August, that has only recently been made public.

Probe or harassment?

Amazon in its filing accused FTC staff of taking “unusual and perplexing” measures in its investigation.

It also alleged that “unexplained pressure” has been placed on FTC staff to “complete the investigation hastily, by an arbitrarily chosen deadline.”

And Amazon blamed FTC staff behaviour that “has exacerbated the breakdown in this investigation, with the most recent incident being the most egregious.”

Amazon alleged that FTC staff attempted to restrict, contrary to law and FTC practice, counsel’s ability to jointly represent Amazon and the individual Civil Investigative Demand (CID) recipients.

FTC staff even reportedly demanded that counsel leave a hearing for the first individual witness “for failing to abide by this improper restriction.”

Amazon said that for more than a year it had “worked diligently and cooperatively” with FTC staff to provide relevant information of the agency’s probe of Amazon Prime sign-up and cancellation processes.

The FTC probe apparently began in March 2021.

Business Insider earlier this year reported that since at least 2017 there has been internal concern at Amazon that the user design on Amazon.com had led customers to feel manipulated into signing up for Prime”.

But the e-commerce giant reportedly didn’t implement changes over concern the changes would negatively impact subscription growth.

An Amazon spokesperson at the time told Insider that Prime’s cancellation and sign-up process were simple and transparent.

Staff allegations

And Amazon also complained in its filing that after helping the FTC by supplying it with information, FTC “staff inexplicably disengaged,”.

Amazon said that for six months there was radio silence from the FTC, and then in April its staff allegedly told Amazon that a new attorney would take over the probe, and he or she was under “tremendous pressure” to conclude the investigation before the fall (Autumn).

Amazon said this was the first it heard of such a deadline and it soon received a new CID in June that “accelerated” and “expanded” the scope of the investigation to “at least five additional non-Prime subscription programs.”

The FTC sought information on Audible, Amazon Music, Kindle Unlimited and Subscribe & Save, and added nearly 20 individual CIDs – that were served to current and former employees’ homes.

Amazon argued that many of the FTC’s CIDs are “unworkable and unfair”, are overly broad beyond the scope of the Amazon Prime investigation, and no witness could be “prepared to provide complete and accurate testimony.”

Amazon said it remains committed to continuing to co-operate with FTC staff with the information it needs, but the FTC staff need “to further clarify its vague and argumentative requests and grant more time to comply with them, something staff has refused to do with explanation.”

Amazon Prime

In July 2022 Amazon confirmed the cost of Amazon’s Prime service for UK subscribers would rise in September, as the e-commerce giant passes on its increased delivery costs to customers.

The firm had earlier in the year raised the prices for its North American customers.

Amazon Prime was launched all the way back in 2005 in the United States, and membership gives users access to unlimited deliveries for online shopping, and Amazon Fresh grocery deliveries.

However many people now use their Amazon Prime membership to access access to its video and music streaming services.

Indeed, half of all UK consumers (roughly 27 million people) are thought to have access to Prime, as the service rapidly expanded during the pandemic, when high-street retailers were forced to close for long periods.

Last year Amazon confirmed it had more than 200 million paid Prime subscribers worldwide, up 50 million more than it had at the start of 2020, before Covid-19 took hold of the world.

At the same time in 2021 the firm confirmed that streaming hours on Prime Video were up more than 70 percent year-over-year, in another confirmation of its growth during the Coronavirus pandemic.

It should be remembered that Amazon also purchased veteran film studio MGM in May 2021 for $8.45 billion, gaining access to all its films produced during a century of film making.