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Amazon’s Deal to Sell New Apple Devices Under Scrutiny by FTC

Naomi Nix and Joe Light

(Bloomberg) -- The Federal Trade Commission is scrutinizing a deal Amazon.com Inc. made with Apple Inc. to sell iPhones directly on its e-commerce site, signaling the agency has increased oversight of the tech giant.

John Bumstead, who sells refurbished Apple products, said in a Facebook post last month that about seven lawyers and an economist from the FTC interviewed him about the deal. He made the posting in a group of Apple resellers that complained about being forced to stop selling their refurbished products on Amazon.

The FTC and the Justice Department are ramping up scrutiny of Silicon Valley’s biggest companies. Facebook Inc. disclosed last week that the FTC is probing its businesses, the same week the Justice Department announced a broad review into whether tech companies are using their power to thwart competition.

The FTC and Amazon declined to comment. Apple didn’t immediately respond to requests for comment. The FTC inquiry was reported earlier by the Verge.

Amazon announced last November that it would sell the most-recent iPhone, iPad, Mac computer, Apple Watch and Apple TV models on its website, along with branded accessories and headphones from Apple’s Beats subsidiary. Previously, Amazon sold only older model iPhones.

Amazon in 2015 stopped selling the Apple TV media-streaming device that wasn’t easily compatible with the e-commerce giant’s video service, an example of Amazon using its clout as the world’s biggest online retailer to promote products that helped push its own streaming content.

In 2016, Apple filed a lawsuit against Amazon alleging that the online retailer was selling counterfeit Apple products on its web store.

Bumstead has been complaining to the media that Amazon removed listings of refurbished Apple products from its site, pushing out small independent dealers of recycled devices.

“Wouldn’t it be awesome if the FTC sued Apple/Amazon and actually SOLVED this problem for us?,” he posted on a Facebook page for Apple sellers.

Marketplace Scrutiny

Last week, Treasury Secretary Steven Mnuchin backed the Justice Department’s scrutiny of the technology sector and singled out the Seattle-based retailer. Amazon “destroyed the retail industry across the United States, so there’s no question they’ve limited competition,” Mnuchin said in a July 24 interview on CNBC. “There’s areas where they’ve really hurt small businesses.”

Fears that Amazon may be shortchanging smaller merchants that sell on its marketplace have already drawn scrutiny from European antitrust officials and Congress.

The European Commission opened a formal investigation earlier last month into Amazon’s dual role as retailer and online platform, focusing on the potential misuse of merchants’ data.

Amazon’s agreements with marketplace sellers allow the company to collect “competitively sensitive information” on what’s selling and how much of a product merchants might have in stock, the EU said. The EU suspects that Amazon can spot best-selling products and start stocking the same items itself, promoting the most profitable or high-volume goods without having to take the risks that the other sellers did to find out what people buy.

How Amazon treats its third-party sellers is also being scrutinized by the House Judiciary Committee as part of its separate probe into the technology industry. After a July 16 hearing before the House antitrust panel, Representative David Cicilline sent a letter to Amazon seeking information on its relationship with third parties that sell on its platform.

The Rhode Island Democrat focused on testimony by Amazon lawyer Nate Sutton, who said that the company doesn’t use data it collects on sales to favor its own products over third-party sellers.

The Justice Department is also investigating Alphabet Inc.’s Google and overseeing antitrust scrutiny of Apple, Bloomberg has reported. A group of states have said they’re considering a “range” of antitrust actions against big technology firms after meeting with Attorney General William Barr.

--With assistance from Spencer Soper and Mark Gurman.

To contact the reporters on this story: Naomi Nix in Washington at nnix1@bloomberg.net;Joe Light in Washington at jlight8@bloomberg.net

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, Andrew Pollack

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