Amazon Faces the Law – The FTC’s New Lawsuit ⚖

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Amazon Faces the Law – The FTC’s New Lawsuit

After joining the generative AI race back in April, Amazon has championed AWS’s two new language models that allow users to create their own tools and bots. With the likes of Microsoft and Google’s AI innovations encroaching on Amazon’s cloud market share, the e-commerce giant has successfully transitioned to ride the AI-induced rally. This week, a new issue for the king of cloud may have arisen. The Federal Trade Commission, the governmental agency that protects against unfair business practices, announced its lawsuit against Amazon. This lawsuit does, however, pertain to their e-commerce business, specifically Amazon Prime. The FTC believes that Amazon has used deceptive tactics to both capture and retain customers in its Prime services.

Beginning in 2005, Prime served as a subscription-based membership that gave customers several perks such as its infamous fast shipping times. Although nearly all subscription services attempt to hold onto as many users as they can, the FTC believes that Amazon has a manipulative strategy. Through user interface designs dubbed “dark patterns”, the FTC claims Amazon has tricked users into unwilling Prime renewals behind their backs. With the inclusion of several obstacles and misleading offers throughout the process of cancelling payments, Amazon has created a tough position to stand strong. With only two clicks leading to Prime enrollment, Amazon’s cancellation process includes a six-click, fifteen-option process to keep users hooked. The investigation, which began in March 2021, has been revised and redacted several times throughout its timeline, but similar lawsuits have proven successful in the past. With Vonage paying a $100 million settlement for similar charges, it will be interesting to see if Amazon battles the damaging lawsuit or chooses to end the fight and pay its dues.

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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