Skip to main content

Report: The FTC's Looking Into Amazon Web Services

(Image credit: Shutterstock)

Regulators around the world have expressed concern about the way Amazon runs its marketplace. But that isn't the only part of the company that's attracted scrutiny from law enforcement agencies: Bloomberg reported yesterday that the U.S. Federal Trade Commission (FTC) has "been asking software companies recently about practices around Amazon's cloud unit, known as Amazon Web Services," as well.

Bloomberg's report was based on anonymous sources familiar with the FTC's efforts. The issue doesn't seem to lie with AWS itself, but rather with the services Amazon builds on top of its cloud-computing technology. Those services often compete with outside companies that rely on AWS on the back-end. Antitrust enforcers might be worried that this leads to a conflict of interest that Amazon might not handle well.

Regulators have the same concerns about the Amazon marketplace. The company makes it easy for smaller businesses to sell their goods, but it also sells many of those businesses' products itself. It's kind of like a parent helping their kid make some lemonade to sell on a hot summer day... and then making some lemonade to sell by themselves. The kid probably wouldn't like that, but what other choice do they have?

The difference here, of course, being that Amazon's a massive business instead of a curbside lemonade stand. (And that Amazon won't have to pay for anyone's therapy after years of being forced to compete with their own parent. But that's besides the point.) It's only natural to expand scrutiny from Amazon's marketplace to AWS.

The products themselves aren't important. What matters is the concern that Amazon offers platforms that other businesses rely on while simultaneously using those platforms itself. It doesn't matter whether it's undercutting a marketplace seller on a pair of underwear or charging software companies more to access its cloud-computing tech. The principle is the same.

An investigation into AWS could be even more impactful, however, because that division accounted for 60% of Amazon's operating income over the last year. There's no guarantee anything will come of the FTC's prying, but even the fear of regulatory backlash could lead to problems. Shareholders already seem a bit spooked about the prospect--Amazon's stock price was slightly down (-0.52%) at market close.