Sonos: Amazon Selling Smart Speakers Below Cost is Illegal

Posted on August 6, 2020 by Paul Thurrott in Amazon, Smart Home, Sonos with 35 Comments

In the wake of its legal challenge to Google, Sonos has finally gone after the market leader, Amazon, albeit indirectly, in claiming that the online giant sells its smart speakers below cost illegally.

But here’s the amazing bit: The Sonos claim is backed by comments that Amazon CEO Jeff Bezos made during a congressional hearing last week.

When asked by representative Jamie Raskin whether Amazon priced its Echo speakers below cost, Bezos admitted that they did.

“Not its list price,” he said, “but it’s often on promotion. And sometimes when it’s on promotion, it may be below cost, yes.”

“That’s predatory pricing,” Sonos CEO Patrick Spence told Protocol. “That’s illegal. They just take money from their monopoly business, they just subsidize, subsidize, subsidize.”

It’s not clear why Sonos hasn’t sued Amazon, as the firm also claims that Amazon, like Google, has stolen its intellectual property. But Spence says he was happy that Amazon and Google are finally in the antitrust hot seat.

“We were encouraged by the hearing last week,” he said. “You gotta stand up to bullies.”

In related news, Sonos this week reported revenues of $249.3 million for the quarter ending June 30, a decline of 4 percent year-over-year, a falloff the firm attributes to COVID-related retail store closures, especially IKEA.

“One of the key factors in our ability to achieve this was the investments we’ve made in our [direct to consumer (DTC)] efforts,” a letter to Sonos shareholders reads. “We quickly adapted when physical retail stores started to close in the second quarter, and drove a 299 percent year-over-year increase in our DTC revenue in the third quarter.”

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