Amazon Settles FTC Prime-Cancellation Investigation for $2.5B

Photo Credit: Marques Thomas

Amazon has officially settled an FTC investigation centering on “deceptive methods” used to drive Prime sign-ups and render cancellations “exceedingly difficult.”

The Federal Trade Commission put out a formal release concerning the $2.5 billion settlement, which itself spans 26 pages. All told, Amazon will pay a $1 billion civil penalty, while the remaining $1.5 billion will reach consumers affected by “unwanted Prime enrollment or deferred cancellation,” per the release.

Though a claims process will roll out for some of the eligible recipients, the settlement is also expected to produce automatic payouts capped at $51 apiece. Specifically, the auto-compensation is designated for consumers “who used no more than 3 Prime Benefits in any 12-month period following enrollment,” according to the actual legal text.

“Consumers do not need to submit a claims form to receive payment under this Subsection,” the document emphasizes.

Meanwhile, Amazon is set to make enrollment and cancellation changes as well, including establishing “a clear and conspicuous button for customers to decline Prime” and “creating an easy way for consumers to cancel,” the release shows.

Said release and the proposed order don’t mention Amazon’s music-related properties, but those offerings are, of course, indirectly tied to Prime. And in the bigger picture, this point traces back to the inherent bundling advantages enjoyed by Amazon Music and Apple Music.

Those advantages aren’t exactly a secret and needn’t be reiterated. However, they’re definitely worth considering from the perspective of Spotify’s continued status as on-demand streaming’s market leader.

Thus far, Apple’s hardware presence (including reportedly strong iPhone 17 sales) and Amazon’s ecommerce dominance haven’t propelled the appropriate music platforms past Spotify.

Nor have exclusive releases, a standalone classical app, an audio-quality edge (Spotify, most know, is just now getting in on the lossless action), and other efforts. Nevertheless, at a minimum, the perks definitely haven’t dissuaded fans from signing up – including in the U.S., where the three aren’t far apart in the all-important Individual subscription category.

Longer term, logic suggests that these points could cause Spotify’s positioning to erode. Admittedly, there are plenty of unknowns here – a few stemming from the service’s recent decision to loosen restrictions on ad-supported accounts.

But both Apple Music ($10.99 per month for Individual) and Amazon Music ($10.99 monthly for Prime members) technically charge less than Spotify in the States.

A closing example of the stiff competition between the platforms: Amazon Music has opted to top the free trials of both Apple Music and Spotify. Tying back to the aforementioned bundling benefits, the DSP is currently offering Prime members four months of free Unlimited access upon subscribing to the music service.