Arizona’s Attorney General takes on Amazon with two new lawsuits

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POST OF THE WEEK

BLACK MARKET

Big news from the Grand Canyon State—Arizona’s Attorney General Kris Mayes is taking on Amazon with two new lawsuits. The Verge reported the details, and if you’ve been following the drama with the Federal Trade Commission, these might ring a bell. 🔔

Lawsuit #1: The Prime trap

• Allegation: Amazon uses deceptive design tricks, or "dark patterns," to complicate their Prime subscription cancellation process. This practice tricks consumers into staying subscribed longer than they intend to.
• Legal basis: Violation of Consumer Fraud Act

If this sounds familiar, it’s because the FTC already took action against Amazon over the same dark pattern issue back in June.

Lawsuit #2: Monopoly moves

• Allegations: Amazon maintains monopoly status by imposing "no offering lower prices elsewhere" agreements with third-party sellers.
• Legal basis: Breach of Uniform State Antitrust Act

The kind of deal mentioned, known as a “most favored nation” clause, has been under fire in other states, too. The District of Columbia and California have taken action against it, but the former's case was thrown out. 🗑️

Lawsuit #2.1: The Buy Box controversy

• Allegations: The second lawsuit also aims at the tech giant's Buy Box algorithm. Mayes claims that it unfairly favors Amazon's own products or those from FBA sellers. This practice misleads consumers into believing they are getting the best price. In reality, customers might overpay because Amazon prioritizes listings that generate higher fees.
• Legal basis: Violation of Consumer Fraud Act

This echoes the FTC's antitrust case against Amazon, supported by multiple state AGs. It highlights how such control can lead to anti-competitive behavior and consumer deception.

Amazon fires back

Amazon spokesperson Tim Doyle criticized the Arizona AG for filing lawsuits without reviewing Amazon's documents, calling the allegations a “fundamental misunderstanding and mischaracterization” of their business practices.

Doyle emphasized that Amazon's operations aim to offer fair prices and services for consumers and sellers, contrary to the lawsuits' claims. ❎

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BITES OF THE WEEK

• Last Mile Solutions: Hyperlocal Delivery Software could answer last-mile logistics challenges.
• Going Viral: Be inspired by these 5 viral products from Amazon small businesses.
• AI’s Choice: Amazon's Package Decision Engine determines the most efficient packaging to lessen waste.

HOT TOPIC

TikTok ban in the US concerns some sellers

TikTok ban in the US concerns some sellers

ICYDK, TikTok is facing several issues: from data privacy risks to the spread of misinformation. Now, there’s another significant problem: a possible ban in the U.S. 🚫

A bill passed by the U.S. Senate and signed into law by President Biden in late April 2024 could ban TikTok if its owner, ByteDance, doesn’t sell the app within the next year. 

However, according to Reuters, some sellers are worried about the impact of this bill.

❌ Why do some sellers oppose the ban?

• Business growth: TikTok has helped many small businesses grow rapidly. For example, sellers Paul and Lynda Tran saw their skincare brand, Love & Pebble, go viral and sell out their products.
• Unique algorithm: TikTok’s algorithm allows small businesses to reach large audiences quickly. Unlike other platforms, it doesn’t require a huge following to go viral.
• Community engagement: TikTok users not only buy products but also share them with others. This helps boost sales and brand visibility.
• Sales platform: The launch of TikTok Shop in 2023 has enabled sellers to sell directly within the app, which helps increase their sales.
• Lack of alternatives: Other platforms like Instagram and Facebook have not yet provided the same level of opportunity for small businesses. However, Meta's recent updates to Instagram aim to improve the experience and performance of small content creators.

🤹‍♂️ Finding the perfect balance

The question is: can we protect our digital borders without crushing the hopes of small business owners? Let's hope for a solution that balances both: keeping our data safe while leaving the door open for small businesses to thrive. 🌱

ACTIONABLE ADVICE

4 steps to a sustainable ecommerce business

4 steps to a sustainable ecommerce business

Another hot and trending topic, aside from bans and controversies, is “sustainability.”

In recent times, it refers to the environmental impact of your business. Many companies have pledged to go carbon-neutral.

Sounds good until reports showed some companies are faking their sustainability efforts - a.k.a  “greenwashing.”

Be clean, be green

Consumers are more discerning about genuine sustainable practices. Entrepreneur lays down 4 ways to truly be green (with AI help).

1. Demand Forecasting

The main problem in business is making more but selling less. Minimize overproduction (waste) by predicting product demand. AI can calculate these predictive analytics.

2. Promoting sustainable products competitively

“Eco-friendly” tags can be a bonus OR make consumers feel something was sacrificed for it. Monitor how others market, price, and label their sustainable goods.

3. Sustainable packaging

Packaging has operational costs, material resources, and manufacturing wastes. Choose biodegradable or reusable packaging solutions. Have AI get buyer feedback on their preferred packaging.

4. Sustainable data collection

All the above steps require data collection and analysis. However, large-scale data collection requires significant energy. Utilizing existing infrastructure and shared resources, like residential proxies and renewed data centers, can make data collection more sustainable.

We can’t stress enough the importance of sustainable practices to your long-term goals. It’s not easy, but with technology, it’s possible.