Amazon Prime, initially a shipping subscription, has evolved into a comprehensive package including video streaming, music, gaming, and prescription services. It strategically raised its annual fee to $139, fostering a sense of loyalty among subscribers who tend to spend more on Amazon. The company's deliberate interface design tactics, like the "Prime Badge" and "Prime Filter," encourage Prime subscriptions. Currently, over (redacted)% of U.S. households are enrolled in Prime, accounting for a significant share of Amazon's revenue.
FTC v. Amazon Court Filing, retrieved on Sep 26, 2023, is part of HackerNoon’s Legal PDF Series. You can jump to any part in this filing here. This is part 8 of 80.
D. Amazon Prime
98. Amazon runs a subscription program called Amazon Prime. Amazon launched Prime in 2005 as a shipping subscription. For an annual fee of $79, subscribers bought unlimited shipping on eligible items, at no per-order cost to shoppers. Amazon today continues to include a shipping service as part of Prime, with an unlimited two-day shipping promise on eligible items at no per-order cost.
99. Over time, Amazon has expanded Prime from a shipping program to a subscription that is, in Amazon's internal assessment, (redacted) It includes a broad combination of products and services, including many that are unrelated to online retail shopping, such as: (1) Prime Video, a video-on-demand and streaming service; (2) Amazon Music Prime, an ad-free music streaming service; (3) Prime Gaming, a video gaming service that includes downloadable games, exclusive in-game content, and channel subscriptions and badges on Twitch, a livestreaming service Amazon acquired for nearly $1 billion in 2014; and (4) RxPass, which provides access to a list of eligible prescription medications, including shipping, for a flat $5 per month fee. Prime subscribers also receive access to exclusive online shopping discounts and promotions such as "Prime Day," a highly publicized annual promotion with exclusive deals for Prime subscribers.
100. Amazon has increased the subscription fee for Prime from the original $79 to nearly double that price, at $139 per year, with a monthly subscription priced at $14.99.
101. Amazon charges a Prime subscription fee primarily to (redacted). As Amazon puts it, (redacted) The Prime subscription fee makes subscribers feel as though they must make the subscription fee worth it by making more purchases on Amazon. A former Amazon employee who was involved in the development of Prime explained that Prime pricing "was never really about the seventy-nine dollars. It was really about changing people's mentality so they wouldn't shop anywhere else."
102. According to Amazon's internal analyses, (redacted). Accordingly, the average Prime subscriber spends (redacted) each year on Amazon than the average non-Prime Amazon shopper. Conversely, consumers who are not Prime subscribers are (redacted) Amazon’s rivals’ analyses also show a (redacted)
103. As shown in Figures 9a (desktop) and 9b (mobile), Amazon displays a "Prime Badge" to show Prime subscribers which items are eligible for the prepaid unlimited shipping included in the Prime subscription.
104. Amazon’s interfaces let Prime subscribers filter their searches to display only Prime-eligible offers. On the top left-hand side of Amazon’s desktop webpage and mobile app, Amazon displays a “Prime” filter. Once a shopper selects the filter, only Prime-eligible offers appear in search results, as shown in Figures 10a (desktop) and 10b (mobile).
105. For Amazon, signing up and maintaining as many Prime subscribers as possible is a top priority. In service of this goal, Amazon has even knowingly tricked shoppers into signing up for Prime and actively thwarted their efforts to cancel their subscriptions. Amazon internally admits to using (redacted) for its user interfaces "to mislead or trick users to make them do something they didn't want to do, like signing up for recurring bill, (redacted). Amazon constructed a cancellation process so lengthy, arduous, and complex that it was internally codenamed the “Iliad Flow,“ after Homer’s 15,693-line epic poem.
106. As of late 2021, nearly (redacted) people in the United States-(redacted)% of U.S. households-were enrolled in Prime. Amazon’s U.S. Prime. In some zip codes, more than (redacted)% households have a Prime subscriber. Amazon's U.S. Prime subscriber base is larger than the populations of (redacted) Amazon projects that by 2024, (redacted)% % of all U.S. households (redacted) and that Prime enrollment will be (redacted)
(This info is Redacted)
Figure 11. Source: Amazon Internal Documents.
107. In 2021, Prime subscriber purchases accounted for more than (redacted)% of the purchases by dollar amount on Amazon’s U.S. online superstore. And in 2021 alone, U.S. customers paid Amazon more than (redacted) in Prime subscription fees.
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