Amazon Seeks Dismissal of Class Action Lawsuit Over Prime Video Advertising Tier
Amazon is currently seeking to dismiss a class action lawsuit that alleges the company misled Prime subscribers by introducing an additional fee for ad-free streaming of movies and TV shows. The technology giant argues that its terms of service allow it to “add or remove Prime membership benefits” at its discretion. This legal move comes in response to claims that the recent changes to the Prime Video service constitute deceptive practices.
Amazon’s Defense Against the Lawsuit
In its motion to dismiss, Amazon emphasizes that it has consistently informed customers that Prime benefits may change over time. The company asserts, “Amazon never promised—to Prime members or anyone else—that Prime Video would be always, or entirely, ad-free.” This statement reinforces Amazon’s position that it has not misled customers regarding the availability of ad-free streaming options.
The Federal Trade Commission (FTC) views Amazon Prime as a key element of the company’s dominance in the retail market. By providing various benefits, including access to Prime Video, Amazon effectively retains users within its marketplace. The FTC has noted that while the streaming service may not be a highly profitable segment on its own, it plays a crucial role in contributing to Amazon’s overall lucrative ecosystem.
Transition to Ad-Supported Streaming
In the past year, Amazon made its advertising tier the default option for its over 100 million Prime subscribers, transforming the service into a significant player in the streaming ad market. As a result, users must pay an additional fee of $2.99 per month for an ad-free viewing experience. This decision led to the class action lawsuit from annual subscribers, who claim that the introduction of the fee breaches their contract and violates state consumer protection laws.
Amazon references a federal judge’s ruling from a similar case in July, which dismissed a class action alleging misleading Prime benefit claims related to a concealed delivery fee on certain Whole Foods purchases. The judge found that the plaintiffs had relied on advertisements promoting “free” and “rapid” delivery. Amazon argues that even if it marketed Prime Video as ad-free, it retains the right to modify or eliminate that feature at any time without breaching the contract.
Legal and Consumer Protection Implications
The proposed class action seeks a minimum of $5 million and aims to prevent Amazon MGM Studios from continuing misleading practices against users who subscribed to Prime before December 28, 2023. The lawsuit includes claims of breach of contract, false advertising, and unfair competition, along with alleged violations of consumer protection laws in California and Washington.
Amazon has faced increased scrutiny from lawmakers in recent years. In 2023, the FTC filed a lawsuit against the company, accusing it of misleading consumers into subscribing to Prime while making it difficult to cancel their subscriptions. The FTC claimed that Amazon employed a "manipulative" interface that deceives users into enrolling in automatically renewing subscriptions, particularly those who intended to subscribe solely for the more affordable Prime Video.
Additionally, in 2020, Amazon was sued for unfair competition and false advertising concerning its policy of reserving the right to terminate access to content purchased through Prime Video. A federal judge dismissed this proposed class action in 2022, ruling in favor of Amazon, based on the argument that its terms of use clearly inform users that purchased movies and TV shows may become unavailable due to licensing restrictions.
Conclusion
As Amazon seeks to dismiss the class action lawsuit over Prime Video’s advertising tier, the outcome may have significant implications for its Prime membership and overall business practices. With ongoing scrutiny from regulators and consumers alike, Amazon’s ability to navigate these legal challenges will be critical as it continues to evolve its streaming services and maintain its competitive edge in the marketplace.
