Amazon Bids to Keep Sealed Calif. Suit Detailing Prime’s Inner Workings

Portions of a California complaint alleging Amazon skirted antitrust and unfair competition laws need to be kept sealed to protect “highly confidential and competitive information, the disclosure of which could cause significant harm to Amazon,” said Cristina Fernandez, Amazon corporate counsel-competition, in a declaration in support of the motion to seal posted Tuesday (docket CGC-22-601826) in California Superior Court in San Francisco.

California Attorney General Rob Bonta (D) filed the heavily redacted complaint Sept. 15, alleging Amazon "makes consumers think they are getting the lowest prices possible, when in fact, they cannot get the low prices that would prevail in a freely competitive market." That's because Amazon "has coerced and induced its third-party sellers and wholesale suppliers to enter into anticompetitive agreements on price," said Bonta. The public version of the complaint said the document contained "materials" redacted from the “conditionally sealed record.”

Amazon wants to keep redacted details about its competitive monitoring program and data for the Amazon Prime program, plus information about the services Amazon provides to third-party sellers, said Fernandez. Highly sensitive information about Amazon's business operations were gleaned from the company's confidential discussions with Bonta's office, she said. A hearing on the motion to seal is planned for Nov. 2.

Amazon has “unique and proprietary processes, strategies, techniques, procedures, and plans surrounding its operation of the Prime program,” said Fernandez. Amazon’s strategy for pricing Prime subscriptions “is closely held and highly confidential,” she said.

Portions of the complaint “describe Amazon’s analysis pertaining to pricing of Prime subscriptions, including references to data about Prime customers and the response of these customers to changes in Prime’s subscription prices,” said Fernandez. If the information were disclosed publicly, “it would provide other retailers or providers of subscription services with visibility into Amazon’s highly confidential business decisions, which they could use to gain an unwarranted competitive advantage,” she said.

Amazon has devoted “significant resources” to developing “tools and services” for its third-party sellers, said Fernandez. “It has unique and proprietary processes, strategies, techniques, procedures, and plans surrounding the provision of the marketplace, fulfillment, and advertising services that it offers to third-party sellers,” she said.

Portions of the complaint list “current percentages of certain fees as a percentage of third-party seller revenue, as well as the current percentage of orders that are fulfilled by Amazon and estimated pass-through rates of fee increases,” said Fernandez. “Amazon does not disclose this confidential information to competitors, because those competitors would gain unwarranted insight into Amazon’s business operations that they could then use to undercut Amazon’s offerings.”