What lurks beneath all that blacked-out text?
That’s the immediate question for anyone reading the Federal Trade Commission’s landmark antitrust lawsuit against Amazon, filed Tuesday in federal court in Seattle.
The FTC complaint refers extensively to internal Amazon documents and communications in an apparent effort to contradict Amazon’s public statements and support the agency’s allegations that the company achieved and exploited monopoly power to give itself an unfair advantage in e-commerce, to the detriment of sellers and consumers.
For example, the complaint says at one point, “Amazon recognizes the importance of maintaining the perception that it has lower prices than competitors. Behind closed doors, however, Amazon executives actively …”
The rest of that sentence is blacked out in the public version of the complaint, followed by three paragraphs of mostly redacted material apparently intended to support the FTC’s allegation that “Amazon’s first-party anti-discounting algorithm is designed to discipline rivals from lowering their prices.”
Also among the redactions are nearly four pages describing “Project Nessie,” which the FTC alleges is a secret pricing algorithm that Amazon used to compete unfairly in the e-commerce market.
Amazon insiders described Project Nessie differently to journalist Jason Del Rey in his recent book, “Winner Sells All,” about the Walmart-Amazon rivalry.
By default, non-public information is redacted from such complaints to give a corporate defendant the opportunity to make its case to the court to keep trade secrets and other potentially sensitive competitive information under wraps.
When and if they’re revealed, the details behind the many redactions will be key not only to understanding the merits of the FTC’s case, but also to assessing the prospects for Amazon’s defense.
“We share the frustration that much of the data and quotes by Amazon executives in the complaint that describe what we allege is monopolistic and illegal behavior is redacted,” said Douglas Farrar, an FTC spokesman, via email.
Farrar added, “Amazon has 14 days from the entry of a temporary sealing order to provide legitimate justification for preventing this information from being revealed. We do not believe that there are compelling reasons to keep much of this information secret from the public.”
David Zapolsky, Amazon senior vice president and general counsel, issued an extensive response to the FTC’s complaint on Tuesday, saying it’s based on a “fundamental misunderstanding of retail,” a twisted definition of the relevant market, and a misleading narrative of Amazon’s actions, intentions, and impact on sellers and consumers.
“We respect the role the FTC has historically played in protecting consumers and promoting competition,” Zapolsky wrote, “Unfortunately, it appears the current FTC is radically departing from that approach, filing a misguided lawsuit against Amazon that would, if successful, force Amazon to engage in practices that actually harm consumers and the many businesses that sell in our store—such as having to feature higher prices, offer slower or less reliable Prime shipping, and make Prime more expensive and less convenient.”
