{"id":702,"date":"2026-08-25T09:09:28","date_gmt":"2026-08-25T09:09:28","guid":{"rendered":"https:\/\/frontierhousingreport.com\/?p=702"},"modified":"2026-08-25T09:09:28","modified_gmt":"2026-08-25T09:09:28","slug":"amazons-monopoly-problem-is-growing","status":"publish","type":"post","link":"https:\/\/frontierhousingreport.com\/?p=702","title":{"rendered":"Amazon\u2019s Monopoly Problem Is Growing"},"content":{"rendered":"
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Amazon has put Jack Nekhala through the wringer.<\/p>\n

Since 2014, Nekhala and his business partner have sold a product through Amazon\u2019s dominant online marketplace they called the \u201cBed Scrunchie,\u201d a band that helps keep fitted sheets in place while you sleep. But two years ago, Amazon kicked Nekhala and his product off of the platform for dubious reasons the company has failed to fully explain. He was soon contacted by a woman on Chinese messaging app WeChat who said she could get his seller account restored\u2014for a price. The woman had information about his account that only an Amazon employee would know. Insiders were selling knowledge to middlemen, who were using it to exploit sellers.<\/p>\n

Read more Canada Stands Up to Trump\u2019s Illegal Tariffs<\/a><\/p>\n

More from Ron Knox<\/em><\/strong><\/p>\n

It was a window into a world of international bribery that would lead to convictions and jail terms for rogue Amazon workers. But Nekhala\u2019s experience with account hijacking is just an aggressive example of the cascade of abuses Amazon inflicts on the online sellers that make its e-commerce platform run.<\/p>\n

It starts with the fees Amazon charges sellers, which have grown so high that the company now takes around half of every dollar a seller earns on the site, according to research by my organization and others. New changes, not widely reported in the general press, have seen Amazon invent methods to withhold seller earnings for days or weeks longer than in the past, and otherwise handcuff sellers\u2019 ability to manage their own cash flow, pay their workers, buy supplies, or otherwise afford what they need to run their business in a timely way.<\/p>\n

There are other mundane ways Amazon squeezes and traps its sellers within a monopolized ecosystem. Its command over e-commerce allows the company to ratchet up extraction from sellers, raise prices for shoppers across the web, and make the experience of using Amazon.com measurably worse for everyone involved without consequence. Nekhala has also seen this firsthand, and he understands how this abuse makes everything more expensive for everyone. The \u201cAmazon tax,\u201d he calls it.<\/p>\n

\u201cThey control too much. It\u2019s scary,\u201d Nekhala says. \u201cIt\u2019s like a train that\u2019s coming head-on, and if we don\u2019t see this, if we don\u2019t stop this train, it\u2019s going to bulldoze everything that it goes through.\u201d<\/p>\n

While Nekhala\u2019s anger and frustration at Amazon is especially pointed, it\u2019s far from unique. Three years after the U.S. Federal Trade Commission and 19 states sued Amazon over its monopolistic abuse of Amazon\u2019s millions of third-party sellers and shoppers, sellers say that ever-increasing fees and new changes to Amazon\u2019s internal policies have made things far worse. Amazon\u2019s planned changes have triggered a daylong boycott from some of the site\u2019s most prominent sellers, along with a torrent of seller vitriol on Reddit, X, and other online public squares.<\/p>\n

SOME OF AMAZON\u2019S PLOT TO BULLY SELLERS<\/strong> and raise prices for shoppers has been public for years. The federal lawsuit described a Russian nesting doll of monopoly power that spanned Amazon\u2019s retail business and its web of connected services.<\/p>\n

Amazon\u2019s monopoly \u201cflywheel,\u201d as the states is the company\u2019s preferred term, goes like this: Amazon uses its Prime membership program to lock shoppers into the platform, with around 1 in every 2 dollars spent online on Amazon.com (the share is even higher for some categories like books and home goods). Small businesses looking to sell online must sign up with Amazon to find customers; when they do, they get nickeled-and-dimed by Amazon\u2019s ever-increasing fees.<\/p>\n

According to the lawsuit and sellers, Amazon increasingly requires sellers to buy services in order to be visible in shoppers\u2019 search results. That includes Amazon\u2019s in-house logistics program Fulfillment by Amazon (FBA), which stores and ships sellers\u2019 goods. Fees for FBA have increased over the past three years; Amazon added a new, $3.50-per-package fee to make up for fuel costs.<\/p>\n

Then there are the pay-per-click advertisements that increasingly crowd out organic search results on the site. They have become both more expensive and more necessary for sellers to have any chance of reaching customers.<\/p>\n

With nearly 50 percent of every sale going out in fees, sellers must raise prices to maintain their margins and turn a profit. Earlier this month, the group Million Dollar Sellers found that 60 percent of the nearly 200 Amazon sellers it polled had raised their prices in response to Amazon\u2019s fees and policy changes.<\/p>\n

According to both the federal lawsuit and a similar suit filed by California Attorney General Rob Bonta in state court, Amazon uses a host of tactics to ensure that shoppers can\u2019t find a better deal outside of Amazon.com. These include contractual clauses with sellers that effectively require them to never sell an Amazon-listed product for less on other websites. Bonta\u2019s lawsuit described Amazon\u2019s actions as a conspiracy between it and rival retailers, and revealed stunning price increases across the internet.<\/p>\n

One seller, who spoke anonymously to protect their business, describes the experience this way: A while back, they lowered the price of one of their products on their own direct-to-consumer website, but forgot to also lower the price of the same product on their Amazon listing. The next day when they checked their Amazon store, they found the product\u2019s price hidden from public view until it was in a customer\u2019s cart. Once in the cart, the product was the exact price listed on their own website. Amazon found and matched the lower price, presumably using AI-powered web crawlers, without the seller\u2019s input or consent.<\/p>\n

That story detailing Amazon\u2019s algorithmic price-fixing startled me, but the seller said they weren\u2019t surprised. \u201cYou agree to that when you become a seller,\u201d they say. But while sellers may be resigned to that treatment, a new procedure that amounts to a cash flow capture has pushed some to revolt.<\/p>\n

Read more Clone Natalie Harp!<\/a><\/p>\n

Early this spring, Amazon announced that it would change when sellers got paid from a sale. In the past, sellers got paid after a customer bought their product, which makes sense because that\u2019s pretty much how commerce works everywhere. Under Amazon\u2019s new policy, however, sellers now get paid at least one week after a product has been successfully delivered to the customer. Sellers say the new system (called \u201cDD+7,\u201d or delivery date plus seven days) often delays the revenue from a sale for far more than a week; one seller questioned whether the program should be called \u201cDD+40,\u201d after Amazon withheld their revenue for weeks.<\/p>\n

The massively delayed payments have caused chaos for sellers. On forum after forum, sellers say the policy imperils their business, particularly for those who don\u2019t have a pile of cash reserves to draw from. Payroll becomes harder to meet, suppliers don\u2019t get paid, and the whole business begins to buckle.<\/p>\n

\u201cWe can only operate for so long without being paid,\u201d one seller wrote on the popular Amazon Seller Central message board. Another called the change \u201cabsolutely the worst policy in the history of Amazon \u2026 counter productive, counter seller friendly, and almost completely unmanageable.\u201d<\/p>\n

Why would Amazon make this change? Sellers say there are two obvious reasons. First, it pushes sellers to use Amazon\u2019s fulfillment service, FBA. Products get reported as delivered faster when they\u2019re delivered by FBA than by UPS or the Postal Service. That starts the DD+7 clock sooner, which means sellers get paid faster. It\u2019s another tool Amazon is using to force its captured sellers to use its own logistics business.<\/p>\n

The cash flow capture is also very likely lucrative for Amazon, sellers say. If Amazon put all of the $575 billion it made globally from third-party sales into a high-yield savings account for an additional week, it would generate millions at a minimum while keeping its sellers from generating additional revenue in the same way. This is how insurance companies make their money, by investing the \u201cfloat\u201d from premiums before they have to pay out claims. That is essentially what is happening under the DD+7 policy, sellers say: a forced transfer of wealth from third-party sellers directly to Amazon.<\/p>\n

About a month after the DD+7 announcement, Amazon sprang another surprise on sellers. Most sellers who buy the increasingly mandatory pay-per-click ads for their products do so using credit cards. This allows sellers to manage cash flow and take advantage of credit card issuers\u2019 cash-back benefits, which can mean thousands of dollars sent back to sellers to help pay workers and grow their businesses. But in April, Amazon announced it would instead force sellers to pay for advertising directly from their sales revenue. No more cash flow float for sellers, and no more cash back from credit cards. Instead, Amazon takes ad payments straight from sales\u2014revenue already delayed for days or weeks by the DD+7 policy change.<\/p>\n

The uproar arrived quickly. Amazon was forcing sellers to buy ads for visibility, then forcing them to pay out of pocket. \u201cBetween the DD+7 transition and not being able to pay by credit card, talk about a massive blow to cash flow,\u201d one seller wrote on a Seller Central forum. \u201cI\u2019m not sure this small business will survive this if implemented across the board,\u201d another said.<\/p>\n

The Million Dollar Sellers group quickly organized a one-day advertising boycott. Amazon chose to delay implementing the new ad spend policy, but as of this month, it appears to be in place for many sellers. The Save Our Sellers survey found that the policy change had hit more than half of the businesses surveyed.<\/p>\n

ONE QUESTION EMERGES FROM THESE PINGS<\/strong> on small sellers: If the experience is so bad, and the profits increasingly difficult to come by, why haven\u2019t sellers left Amazon en masse for a better platform with lower fees, and where sellers could choose the warehouse and delivery service that makes the most sense for them and their customers?<\/p>\n

According to the Save Our Sellers survey, some sellers they polled are increasingly selling direct to consumers, or are joining the upstart TikTok Shop to look for shoppers there. Many are simply leaving e-commerce altogether, as Amazon\u2019s new policies and fees greatly favor already-wealthy and sizable sellers who are more easily able to absorb those hits.<\/p>\n

Yet sellers searching for Amazon off-ramps largely haven\u2019t been able to inject significant competition into online retail. Walmart, the world\u2019s largest brick-and-mortar retailer, accounts for less than 10 percent of the online retail market, compared to Amazon\u2019s 56 percent share in mid-2025. While it has certainly grown as a platform, TikTok Shop today accounts for just 2 percent of online retail; what\u2019s more, sellers there say shoppers often discover products on TikTok but ultimately buy them on Amazon. According to the most recent Marketplace Pulse annual report\u2014considered the authority on the online retail industry\u2014nearly 93 percent of all online sellers they polled still operated on Amazon.com.<\/p>\n

This gets to the heart of the FTC\u2019s lawsuit. Amazon\u2019s lock-in of Prime members\u2014around 200 million in the U.S. alone\u2014keeps sellers on the site regardless of the burdens they bear. And Amazon\u2019s mandatory algorithmic price-matching and other tactics keep rival platforms from gaining share through lower prices. It doesn\u2019t matter how entertaining a TikTok Shop livestream might be or how many big-name marketplace options might exist; the market doesn\u2019t seem able to solve the Amazon problem because sellers simply can\u2019t afford to leave the platform.<\/p>\n

The federal lawsuit is headed for trial next March, as long as the FTC doesn\u2019t settle as it has in other major cases, and the states stay the course. While there are major state cases winding through the courts as well, including Bonta\u2019s lawsuit and others in Arizona and Washington, D.C., only the federal case can deliver what will likely be necessary to truly and finally inject needed competition in the online retail industry: significant changes to the structure, and not just the behavior, of Amazon itself.<\/p>\n

Read more The Best Protection Against Financial Crises Is Being Destroyed<\/a><\/p>\n<\/div>\n


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