Did Amazon Fear Antitrust Lawsuits? Dozens of Its Private Labels Discontinued

US FTC Nears Antitrust Lawsuit Against Amazon

Amazon, the world's largest e-commerce company, has decided to discontinue dozens of its private brands (PB). This move is seen as an effort to minimize the fallout as the U.S. Federal Trade Commission (FTC) prepares to file an antitrust lawsuit against Amazon.

According to the Wall Street Journal (WSJ) on the 10th (local time), Amazon plans to discontinue 27 out of its 30 private clothing brands from last year. Once the company clears out its inventory, only three brands?Amazon Essentials, Collection, and Aware?will remain.

The exact number of brands to be discontinued outside of clothing is not precisely tallied. Amazon’s private furniture brands are expected to be phased out gradually, while Amazon Basics, which sells household goods and IT accessories, is expected to remain. Matt Teddy, Amazon’s VP of Private Brands, explained, "Given the high preference for large private brands that offer high-quality products at good price points, we plan to withdraw brands that do not resonate with customers."

Amazon has described the brand discontinuation as a cost-cutting measure, but the market interprets it as a response to the impending antitrust lawsuit expected to be filed soon by FTC Chair Lina Khan, who is known as the "Amazon Reaper." Chair Khan views Amazon as disrupting market order through a "predatory pricing strategy," where the company secures a monopoly position by enduring cutthroat competition and then gradually raises prices. She is also closely monitoring Amazon’s vertical integration as it expands into logistics, cloud services, and grocery sales. Additionally, Amazon faces allegations of using information from third-party sellers to develop its own brands and favorably positioning its private brands on its sales platform.

To address these issues, the FTC is reportedly planning to demand the breakup of Amazon’s business units through the antitrust lawsuit. As a final step before filing the suit, the FTC will provide Amazon’s management with an opportunity to explain their position next week.

Meanwhile, it has been reported that Amazon proposed to the FTC last year to end its private brand business. As of 2020, Amazon had 45 private brands with a total of 243,000 products. However, Amazon stated that sales from private brands account for only 1% of the company’s total revenue.