Major Restructuring at Amazon 'Unlikely' if the FTC Files Antitrust Suit, Says Analyst

An expected September FTC antitrust lawsuit against Amazon that “materially alters the structure of the business" is "unlikely” since antitrust legislation over the past half-century “has largely favored businesses that improve consumer welfare,” wrote Wedbush Securities analyst Michael Pachter in a Thursday investor note. U.S. retail continues to function as a “highly competitive market” offline and online “despite Amazon’s success," Pachter said. Large retailers have replicated Amazon’s marketplace business model, along with digital enablers including Shopify that have “powered hundreds of billions” of gross merchandising value (GMV) “outside of Amazon’s ecosystem.” Customers are “highly satisfied” with Amazon, Pachter said, citing its No. 1 ranking for value and selection in the 2023 American Customer Satisfaction Index among online retailers and second-place ranking for overall for online retail customer satisfaction. “There is still ample opportunity with eCommerce outside of Amazon for brands/sellers of all sizes,” said Pachter, noting the success of over 2 million Shopify merchants that are on pace to generate over $230 billion in GMV this year. Citing published reports, Pachter said the FTC’s expected upcoming lawsuit will focus on elements of Amazon’s marketplace, including its third-party seller services, logistics and advertising, plus allegations it prevents sellers from setting lower prices for their goods on other platforms. “Reportedly, the FTC is concerned about the methods Amazon uses to stimulate adoptions of seller services,” including its practice of providing preferred product placement for sellers using its service Fulfilled by Amazon, Pachter said. The FTC is also said to be considering Amazon Prime as part of an antitrust suit over concerns that the program’s bundled service approach “may have illegally helped Amazon secure its market power," the complaint said. The FTC didn’t comment.