What FTC's Lawsuit on AMZN Means for Mag 7 Giant & Ad Practices

**SPEAKER_1** (0:00)
Joining us now to discuss the FTC's lawsuit against Amazon is James Czerniawski, Head of Emerging Technology Policy at the Consumer Choice Center. James, we just spoke about meta. I said, I imagine we'd be talking again soon. I didn't know it would be about Amazon, but here we are, so let's talk Amazon.
We've got this new case. They're accusing Amazon of deceptive advertising practices, profiting more than $20 billion off of those alleged deceptive practices here. How serious are these allegations and what does the FTC actually have to prove here?

**James Czerniawski** (0:37)
Yeah, I think anytime you're getting sued by the government in the States, it's a serious matter. So Amazon's gonna be certainly taking it very seriously on their end in terms of the efficacy of what the FTC has to go improve. I think that they need to go and try to prove that this is somehow these actions from Amazon that they've been alleged of doing had resulted in some kind of harm to consumers.
And even in their own complaint, they're not even necessarily alleging that. They're talking about Amazon going and potentially making $20 billion more than they otherwise could have off of advertisers within their own internal ecosystem because of how they were charging people basically for their auction processes, for doing basically promoted listings on Amazon, right? So that is what is being alleged here by the FTC. I think that when it's all said and done, we still do have to go and prove whether or not there is actually harm being done to consumers here. There's not necessarily any evidence of that as far as I've seen so far, but this is admittedly very early on in the process. And we will have to go and continue to monitor and see what other information comes to light as this case continues to move forward.

**SPEAKER_3** (1:42)
Yeah. And of course, Amazon pushing back on this. And as Marlee mentioned at the top of the show, there seems to be some discrepancies in the accusations versus what the company is actually saying. James, is there anything that we can take away from a better outcome or another case that you've seen in your career where we've had, you know, accusations of pricing versus profitability that we could learn as it pertains to what the potential outcome could be in this Amazon situation?

**James Czerniawski** (2:10)
Yeah, absolutely, Sam. I think that when we're looking at it, what the FTC and the states are hoping for here is a settlement. Settlements are great for them because even if Amazon emits no wrongdoing, they still get to go and say that they took the book to big bad tech over there. So they like that outcome and that money gets utilized, obviously, in part to go and hopefully, you know, restore anybody who had been wronged, theoretically speaking, one, but then two, again, it does go and get the highlight of the highlights rather for the headlines in the newspapers. So they certainly would like to go and see that.
I think that that's what the meta-case that Marlee and I had discussed previously in the past would certainly want to indicate for what we would want to see if you are the FTC in the States. If you're Amazon, I think this is just about going and leaning into what the data goes and bears out right now, which is, again, you've got billions of customers that are going and utilizing their service every single day. There's not necessarily a hard link between what's going on in the advertising ecosystem here that Amazon has and the end price that the consumer themselves are paying. They had gone and settled a different case against the FTC earlier. That was more around their subscription practices for the consumer facing side. But again, this is something entirely different. This is more internal facing for businesses that are trying to advertise through Amazon in of itself. Which, by the way, Amazon is not even the largest player in this space, but they are the third largest company that has this online advertising ecosystem.
So they do face some serious consequences if this case continues to go against them.

**SPEAKER_1** (3:44)
James, I'm going to give a little Schwab exclusive spoiler alert here. You're actually the next guest on our podcast, and we're talking about these legal fights more specifically about social media, but including those other two big platforms with Google and Meta being those two big names. For Amazon specifically, we talked about these federal lawsuits as being a potential use of a piggy bank and that they're just hoping for a settlement, because the stocks don't like the overhang, investors don't like the uncertainty, and it has a negative impact. You said in our conversation that you hope somebody stands up and fights against this piggy bank concept of just settle this piggy bank concept. Is this the company that might do it? Is Amazon it? Because they're saying they saved advertisers $8 billion.