Amazon: FTC is Prime and ready to take action

The idea of a technology company engaging in “dark patterns” sounds more nefarious than ongoing subscriptions. But the US Federal Trade Commission’s decision to sue Amazon for leading customers into unwanted Prime subscriptions is part of a broader push to stop companies from nudging users into digital deals. Regulators are growing more forceful in their actions against Big Tech following years of investigation. But this case is not the main event.

Tech companies are fixated on subscription pricing models, which offer predictable, recurring revenue streams. They appear on ride-hailing apps, food delivery sites and video calls. Amazon’s Prime began as a subscription service for free shipping. It has since expanded to video streaming, music and shopping discounts for $139 per year. The FTC accuses Amazon of confusing customers. Amazon says the process to sign up and cancel is clear and simple.

Prime is a popular product. Benefits can exceed prices paid. The $25bn-plus in revenue that subscriptions provide is equal to less than a third of Amazon’s worldwide shipping costs last year. That suggests spending heavily on Prime results in other benefits for the company. Amazon has said before that subscribers tend to order more online. 

The company is cagey about numbers. The last tally provided was in April 2021, when then-chief executive Jeff Bezos put the total at more than 200mn worldwide. Subscriber numbers jumped during the coronavirus pandemic, but are likely to have stalled since. Meanwhile, subscription rates have been lifted, up 17 per cent in the US last year. 

If Amazon really wanted to change subscriptions, one possibility might be to follow the lead of software companies and move into usage-based pricing — an option that gives users more flexibility. But it would be easier to simply tweak the sign-up and cancellation process. 

This is one of a number of FTC investigations into Amazon. But radical change is unlikely without an antitrust case — something that could upend Amazon’s entire business. Targeting Prime subscriptions is just nibbling away at the edges.