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Tag: FTC

  • Amazon Settles For $2.5 Billion With FTC: Prime Subscribers To Benefit While Market Dominance Remains Unaffected

    Amazon Settles For $2.5 Billion With FTC: Prime Subscribers To Benefit While Market Dominance Remains Unaffected

    Amazon has agreed to a settlement of $2.5 billion with the Federal Trade Commission (FTC), following allegations of misleading customers to increase subscriptions. The settlement, however, is unlikely to significantly impact Amazon, given that the company generates approximately the same amount every 33 hours. Amazon’s share value remained relatively stable following the news of the settlement.

    Prime Subscribers To Receive Reimbursements

    Approximately 35 million Prime subscribers are eligible for a share of a $1.5 billion fund established by Amazon as part of the settlement, with the remaining $1 billion to be paid as a fine to the FTC. A key point to note is that Amazon has not accepted any wrongdoing in relation to the settlement.

    Prime subscribers who signed up between 23rd June 2019 and 23rd June 2025 via certain offers, and utilised few of the associated benefits, will automatically receive $51 according to the terms of the settlement. In addition, those who attempted and failed to cancel their Prime subscription during this period will be able to submit claims for payment.

    Amazon’s Statement on Settlement

    Amazon released a statement indicating that the settlement will allow the company to continue to prioritize its customers. The company emphasized its commitment to ensuring that subscribing and unsubscribing to Prime is straightforward and that the service provides significant value to its millions of loyal members worldwide.

    As a requirement of the settlement, Amazon will be making changes to its Prime subscription process. This will include the introduction of a clear and conspicuous button to decline a Prime subscription and to facilitate easier cancellation. The company will also be more transparent with the terms and conditions of subscriptions during enrollment and will engage an independent supervisor to oversee compliance.

    Amazon maintains that most of the required actions are already in progress, with little need for additional changes. However, in the FTC’s case, it alleged that Amazon executives disregarded recommendations to clarify the subscription and cancellation procedures between 2017 and 2022.

    FTC’s Tough-on-tech Victory

    The settlement is seen as a significant success for the FTC’s stringent tech regulation policy, marking the second-largest restitution in the history of the agency. FTC Chair, Andrew Ferguson, hailed the settlement as a monumental win for the millions of Americans frustrated with deceptive subscriptions that are challenging to cancel.

    The settlement arose during an FTC trial in Seattle federal court, where it was argued that Amazon sought to enroll members indiscriminately. The agency suggested that Amazon’s subscription and cancellation practices were deceptive, citing internal discussions referring to the methods as “‘a bit of a shady world” and “an unspoken cancer.”

    Impact on Prime’s Market Dominance

    Despite the settlement, the market dominance of Prime, a key growth driver for Amazon, is not expected to be significantly affected. Prime, introduced in 2005 at $79 per year, rose to $139 in 2022 and generated $23.9 billion in subscription revenue in the first half of 2025.

    Although Amazon has committed to amending certain practices as part of the agreement, analysts do not anticipate these changes to affect Prime’s popularity. Zak Stambor, an Emarketer analyst, points out that despite the changes facilitating easier cancellation, the program remains deeply embedded in most American households.

    Questions & Answers

    What is the total sum of the Amazon-FTC settlement?
    The settlement totals $2.5 billion, with $1.5 billion set aside as reimbursements for Prime subscribers and the remaining $1 billion being paid as fines to the FTC.

    What changes is Amazon expected to implement as part of the settlement?
    The company will introduce a clear and conspicuous button for declining Prime subscriptions and simplify the cancellation process. It will also work on improving the transparency of subscription terms and conditions during enrollment.

    Will the settlement affect the market dominance of Amazon Prime?
    While Amazon will make changes to some of its practices as part of the settlement, analysts don’t forecast these changes to significantly affect Prime’s market appeal.

  • The FTC’s attempts at splitting up Meta are continuing

    The FTC’s attempts at splitting up Meta are continuing

    The Federal Trade Commission (FTC) has been trying to break up Meta for quite some time now, due to alleged anti-competitive practices the company did: pretty much, the act of buying rising possible competitors Instagram and WhatsApp has been considered as anticompetitive by the FTC. It had filed a lawsuit last year, and the “amended and more detailed” version of it was now allowed to proceed.

    The documentation provided by CNN’s Brian Fung shows that the social media giant has again tried to dismiss the case; however, the judge didn’t agree with its argument and allowed the case to move forward.

    This lawsuit was initially filed back in December of 2020, and it indeed accused the social media giant of anti-competitive practices. According to the complaint, Facebook violated antitrust regulations with the purchase of Instagram and WhatsApp (which have been rising rivals to it) in an attempt to eliminate possible competition.

    Back in June, the complaint was dismissed by a federal court, and the main reason for this decision was the lack of evidence that Facebook is indeed a monopoly in its market. Despite the dismissal though, the FTC went ahead with a 3-2 vote to refile the complaint.

    As many of you may have probably heard so far, many regulators (not only in the United States but in Europe as well) have been scrutinizing tech giants for at least a couple of years now. The reason: supposed anti-competitive practices. And it’s not only Facebook but Google, as well as Apple, that have been under the radar of antitrust entities.

    Many of these antitrust regulations, research, proposals, or lawsuits are continuing for years. In some of the cases, tech giants have been found to behave in an anti-competitive manner, and of course, fined by commissions quite heavily.

    One of the more recent cases was involving Google vs the EU court, and the Mountain View tech giant ended up having to pay a fine of $2.8 billion. In this particular case, the fine was due to the fact Google had paid phone makers to have Google Search pre-installed on Android phones.

    Additionally, back in July, Google was ruled to stand trial for recording and disseminating private conversations of people who accidentally activated Google Assistant.

    On the other hand, both Apple and Google are currently being investigated for their alleged monopoly by a UK watchdog. In this case, we are talking about the mobile operating systems Android and iOS; for which the two companies have been alleged to hold a monopolistic position on the global market.

    Facebook is one of the big tech companies that US regulators are looking to split up, but it is not the only one. The effort to empower healthy competition (at least, according to the US regulators) could end up affecting all four big companies (Apple, Google, Facebook, and Amazon), and any of these might have to go against similar complaints that we have reported on above. This means that technically, US regulators might try to split up Amazon, Google, and Apple.

    Back in June last year, five bills were introduced aimed at these four tech giants, because of their domination in online shopping, search dominance, and entertainment. Basically, anti-trust practices. All of this comes to say that these tech companies have been having quite a hard time with regulators across the globe for their alleged monopolies over the mobile (or generally the tech) market.

    In summary, the tech giants are facing scrutiny all over the world. Australia and India have also aimed laws at reducing their monopolistic power.

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  • South Korea’s CU fined US$1.4 million for unfair trading

    South Korea’s CU fined US$1.4 million for unfair trading

    South Korean convenience-store operator BGF Retail has been fined for pushing exorbitant sales promotion costs onto its suppliers.

    The firm was ordered to pay KRW1.67 billion (US$1.4 million) for its breach of the Act on Fair Transactions in Large Retail Business, according to a report in The Korea Times.

    While the act forbids any retailer from forcing its supplier to shoulder more than half of any promotional cost, BGF was found to have run “two-for-one” promotional events from early 2014 to late 2016 at its CU-branded stores and passed on the majority of expenses.

    The firm pushed KRW2.39 billion ($2 million) in costs on 79 suppliers to pay for 338 promotions conducted during the period at more than 13,000 CU locations. It also failed to sign written agreements with suppliers prior to holding sales events in 76 cases.

    “This is the first time that the FTC has punished a company for forcing suppliers to shoulder more than 50 percent of the cost for two-for-one events,” said an official at Korea’s Fair Trade Commission. “The FTC will enhance monitoring and punishments for similar violations.”

    CU is currently in second place among Korea’s leading convenience store chains, with a 31.14 percent market share.

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  • Senators want FTC to send a Massive Fine to Facebook

    Senators want FTC to send a Massive Fine to Facebook

    A couple of days ago we told you that the Federal Trade Commission (FTC) could be days away from announcing a fine against Facebook in the amount of $3 billion to $5 billion. The FTC is trying to decide how much to punish Facebook and is negotiating a settlement with the company. While there have been a number of privacy issues involving the social media app/site over the last few years, back in 2016 it violated a previous FTC consent decree it had signed five years earlier. Under the terms of that deal, Facebook agreed not to use subscribers’ personal data without obtaining consent; however, during the 2016 presidential campaign, 87 million members had their profiles used without permission by political consultancy Cambridge Analytica.

    Two U.S. senators want the FTC to fine Facebook more than $5 billion and force the company to make “sweeping changes.” Senator Richard Blumenthal (D-CT) and Senator Josh Hawley (R-MO), both members of a sub-committee that oversees the FTC, wrote a letter to the regulatory agency today. In the letter, the senators said that Facebook should receive a large enough fine that it would act as a deterrent to prevent future violations. They also want to put limits on Facebook’s use of consumer data, force the deletion of tracking data, stop the practice of collecting certain consumer information and revise its advertising policies. In addition, Blumenthal and Hawley want Facebook to put up a firewall blocking its other apps (like Instagram and WhatsApp) from sharing consumer data with each other.

    “The Commission should pursue deterrent monetary penalties and impose forceful accountability measures on Facebook, including limits on the use of consumer data, managerial responsibility for violations, and other structural remedies to stop further breaches of consumer trust.”-Letter to FTC from Senators Blumenthal and Hawley.

    Considering that the company took in more than $56 billion last year, a $5 billion fine might not be high enough to deter Facebook from committing future privacy violations. In addition, the senators say that Facebook co-founder and CEO Mark Zuckerberg must be held accountable for failing to keep Facebook members’ profiles private. The FTC is also considering taking action against the executive.

    In anticipation of the fine, Facebook took a $3 billion charge against its first-quarter earnings. Even with this adjustment, Facebook reported $2.4 billion in net profits during the three month period running from January through March.

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  • Facebook expects to be hit hard by the FTC

    Facebook expects to be hit hard by the FTC

    After word got out last year that 87 million Facebook members had their profiles sold to political consultant Cambridge Analytica without permission, the Federal Trade Commission started an investigation. After all, this action violated an FTC consent decree that Facebook signed off on back in 2011, promising not to use subscribers’ personal data without consent.

    Facebook announced its first-quarter results today and took a charge of $3 billion to cover an anticipated fine from the Federal Trade Commission (FTC). Neither side has reached an agreement, but clearly, Facebook expects to be spanked pretty hard by the FTC. The company noted in its report that it faces a fine as high as $5 billion from the FTC. The 87 million profiles received by Cambridge Analytica were reportedly used to created profiles of voters used by the 2016 Trump campaign to determine the areas of the country where more money needed to be spent for advertising.

    Facebook also announced today that 2.1 billion people use Facebook, WhatsApp, Messenger or Instagram on a daily basis, and 2.7 billion use one of these members of the Facebook family at least once a month. At the end of the three months that included January through March of this year, Facebook had $45.42 billion in the vault. That’s after the company spent $3.96 billion on capital expenditures during the quarter.

    For the first quarter of 2019, Facebook had $15.1 billion in revenue. That was up 26% from the $12 billion it raked in during the same quarter a year earlier. Net came to $2.4 billion (or 85 cents a share) against $5 billion earned during the first quarter of 2018. But those results include the $3 billion charge. Without the charge, Facebook would have earned $1.89 per share vs. the $1.69 it reported for the first three months last year.

  • Lotte Mart’s distribution fees scrutinized

    Lotte Mart’s distribution fees scrutinized

    Korea’s antitrust body is examining the practice of retailers unfairly shifting distribution costs to their suppliers. The Fair Trade Commission (FTC) has started evaluation proceedings against Lotte Mart for transferring this burden and charging an onward transportation fee after a product has been delivered. The regulator could fine the retailer 400 billion won ($353.92 million) if it is found to have violated the law. It has the authority to prosecute and punish companies that contravene the Fair Trade Act and other statutes related to anti-competitive practices.

    The FTC’s Distribution Division, which monitors the activities of retailers, submitted an evaluation report, equivalent to a prosecutor’s indictment, to the commission early last month. The document outlined Lotte Mart’s infractions over five years.

    Lotte Mart has until early February to respond.

    This will be the first time the FTC has taken action against a company for shifting distribution costs to suppliers. Lotte Mart’s practice of transferring the costs, commonly known as post-distribution costs, is widespread.

    The action comes amid FTC Chairman Kim Sang-jo’s drive to root out unfair practices in the retail industry.

    Lotte Mart’s shifting of post-distribution cost to suppliers is likely to have far-reaching implications in the industry as the practice is common.

    “When signing a contract, there are requests to supply products at a price three to five percent lower than the actual price to account for the post-distribution costs,” explained Mr. Lee, who operates a company that supplies to retail stores. “It’s not just Lotte. It is common for large retail stores such as Emart, Homeplus, department stores, convenience stores and even e-commerce companies, such as Coupang.”

    The 400 billion won fine, if charged, would be an unprecedented amount. If other companies are fined, the total sum could rise to the trillions.

    “Unlike sales promotion fees, distribution costs have to be paid,” said Mr. Kim, the president of a large food company. “We struggled as it’s impossible to know the exact figure, but the FTC took on this matter for the first time.”

    From the FTC’s perspective, large retail stores use distribution centers for their own benefit, and it is unfair to force suppliers to take on costs incurred after products are delivered to the centers.

    “Suppliers that just want to deliver to distribution centers are forced to deliver to branches,” explained a senior FTC official. “If the final delivery destination is a branch store, the supplier should be able to manage their products as they want at the distribution center, but that is not the case.”

    “From a common-sense perspective, distribution costs apply only until the delivery location, not costs after the delivery,” the official added.

    Other experts disagree with the FTC’s assessment.

    “If the retailer and supplier haven’t agreed on the location of the delivery, the supplier burdening the delivery cost abides by civil law,” said Lee Ho-young, a law professor who specializes antitrust law at Hanyang University.

    Lotte is going all out on its defense, hiring Kim & Chang’s fair-trade team to represent it.

    “In the past, when there weren’t distribution centers, suppliers used to be burdened with the distribution costs,” said a Lotte Mart official. “Post-distribution costs are paid after distribution centers were established.”

    The FTC is looking into other cases.

    “The retail business cannot work if post-distribution costs are shifted to retailers,” said an executive at a large retail company who is in charge of fair trade matters.

    The FTC could make a final decision as early as March.

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  • Apple took unfair profits: Korea FTC

    Apple took unfair profits: Korea FTC

    Korea’s corporate watchdog claimed Apple Korea has bargaining power over local mobile carriers and that it has reaped unfair profits from them in a statement Monday. According to the Fair Trade Commission (FTC), experts called in by the antitrust body said Apple Korea exploited its market position to place part of its advertising costs on local telecommunications companies.

    The statement comes after exchanges between the FTC and the iPhone maker during a deliberation on the company’s position on Jan. 16. It was the second round of hearings since the first deliberation in December.

    Apple Korea has been under investigation by the FTC since 2016 on whether it forced carriers to pay advertising and warranty costs.

    Korea’s fair trade law prohibits abuse of one’s position during a transaction.

    Apple Korea claimed through its expert witnesses, which included economists and business experts, that it does not have leverage over local carriers and defended its actions, saying that its advertisement fund was able to help all parties involved.

    The experts also argued that Apple’s involvement in advertisements was justifiable to maintain the iPhone brand.

    Expert witnesses for the FTC responded that Apple Korea can be regarded as being in a position of power over carriers and that the advertisement fund served to collect additional profit from them. They also stated that the company’s activities in taking part of carrier advertisements cannot be seen as part of their branding strategy.

    The FTC’s Economic Analysis Division provided similar analysis to those made by its witnesses.

    The hearings on the investigation will continue, with the third round of deliberations scheduled for Feb. 20.

    The antitrust body said that the third hearing will discuss specific actions made by Apple. It is unclear whether the third hearing will be the last.

    If found to have abused its position, Apple Korea could face fines worth up to two percent of its related sales.

    The iPhone maker has a history of trouble with the FTC.

    The company made corrective measures under the corporate watchdog for its product replacement policy back in 2011 and its services agreements with local companies in 2016.

  • Apple Korea faces antitrust probe

    Apple Korea faces antitrust probe

    Apple Korea has found itself under the spotlight in South Korea over its repair contracts.

    South Korea’s antitrust watchdog Fair Trade Commission (FTC) said today it is checking possible unfair provisions in contracts signed between Apple Korea and local electronic repair companies.

    The FTC did not elaborate on details but said it confirmed there were unfair clauses that favored the electronics giant.

    “The probe was launched by the commission based on suspicions, with investigators processing all the information gathered,” FTC chief Jeong Jae-chan said.

    He predicted that results of the review will be made public soon. He said because many consumers used iPhones in the country, the investigation should generate considerable interest.

    The latest examination follows the corporate regulator’s recent order that eight local repair companies and mobile operators must change their customer service rules that unfairly restrict the rights of consumers.

    Repair firms, such as UBase Inc., Peach Valley and Beyond Tech Co, along with mobile operators SK Telecom and KT, were ordered to make changes earlier in the year.

    An FTC official said that while the ruling against repair firms involved businesses and consumers, the latest ongoing actions target business-to-business arrangements.

    Besides Apple, the FTC said it plans to release repair information by all mobile phone manufacturers within the year, so consumers can personally check how companies fix gadgets.

    Information will be provided by the Korea Consumer Agency on Samsung Electronics, LG Electronics and Apple, with data to go into such matters as costs, how repairs are made, the time it takes to fix broken devices and related procedures that must be followed, it added.

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