Report says Amazon gave Apple a special deal that it wouldn't give to others
A report from Business Insider quotes a source that says when it comes to Apple's Amazon storefront, Amazon is giving the tech giant "massive preferential treatment." Giving Apple a special deal isn't something unusual. Earlier this year we told you that TSMC is eating the cost of any 3nm A17 Pro chips that fail to pass Quality Control. Usually the chip designer, in this case Apple, is forced to pay for defective chips.
Amazon and Apple inked their deal in 2018 and it led to a lawsuit that charged Apple and Amazon of getting rid of 98% of resellers allowing Apple to raise the price of iPhone and iPad devices being sold on Apple's Amazon pages. According to the suit, when Apple signed the deal with Amazon, the latter agreed to allow only Apple-authorized sellers to offer Apple devices in Amazon's marketplace. This would keep prices higher for Apple devices than they would have been otherwise.
The suit also alleges that in return for limiting the number of sellers offering Apple devices on Amazon, Apple agreed to ship Amazon discounted devices. In June, the judge overseeing the class-action suit involving Apple and Amazon, which accuses the pair of artificially raising iPhone and iPad prices on Amazon, refused to dismiss the case as requested by the defendants.
Apple's Amazon storefront
The report by Business Insider goes even further and states that the deal between Amazon and Apple also reduces the number of ads and recommendations found on Apple's Amazon product pages. While other product pages on Amazon, like the ones for Apple rivals like Samsung, are full of ads, recommendations, and sponsored results, Apple's product pages have just one banner ad on the bottom.
Business Insider says that other companies, including Samsung, have complained to Amazon about Apple's preferential treatment. Limiting the number of ads and recommendations on Apple's Amazon product pages could result in higher sales for those devices since it would help the consumer focus on the Apple device offered for sale on a specific page.
Other companies wanted a similar sweetheart deal like the one Apple got, but as the report noted, at "least half a dozen salespeople on Amazon’s advertising team" say that "they were not able to extend this Apple-style special treatment to their clients." Amazon originally did not agree to Apple's special demands, but eventually, it did give in. At one point Amazon demanded that Apple compensate it for lost ad revenue from the deal but it is unknown whether Apple agreed to that demand when it signed the agreement.
Apple told Business Insider that the 2018 deal was designed to lower the high rate of counterfeit Apple products sold on the platform. Apple said that it made test purchases from Amazon that "consistently returned high counterfeit rates." Apple told Business Insider, "The 2018 Agreements significantly reduced the sale of counterfeit and unsafe Apple products on Amazon’s marketplaces and have materially improved customer experience."
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