Amazon over the years has used its established muscle to build a new business in advertising. That business has grown from a relatively small unit a decade ago to what is now the third-largest digital-ad operation by revenue in the U.S. after Google and Facebook, according to eMarketer, with revenue of $21.5 billion last year.

In 2013, in a previously unreported episode, Prime Video was in negotiations with Viacom Inc. -- now part of ViacomCBS Inc. -- to buy more than $200 million in content from the media company to stream on Amazon's Prime platform, said people involved with the deal.

Amazon's advertising business at the time was nascent, and Amazon's management team wanted to expand it quickly, said people involved in the talks. Prime Video and advertising both fell under the purview of Jeff Blackburn, an Amazon executive who belonged to the circle of top advisers to CEO Jeff Bezos.

In the middle of negotiations, he instructed his team to tell Viacom that Amazon would buy the content only if Viacom bought millions of dollars in advertising across Amazon's properties, said people involved in the deal. Viacom reluctantly agreed.

Mr. Blackburn, who left Amazon this year, didn't respond to inquiries. Amazon's Mr. Evans said the company's "individual businesses build partnerships independently with other companies."

In 2018, AMC Networks Inc.'s contract was up for negotiation with Amazon Prime, where it had channels for its Shudder and Sundance Now franchises. The new terms Amazon was proposing were much more lucrative for Amazon than they had been in the prior contract, said people involved in the deal. Amazon was demanding more revenue from subscriptions of the channels and pressed AMC to spend significant amounts on advertising across its platforms, including Fire TV and Amazon's IMDb movie website, the people said.

AMC pushed back on the terms, the people said. Weeks before the contract was set to expire, Amazon disabled the ability for Amazon Prime members to subscribe to AMC's channels, they said. The timing coincided with Halloween. The weeks around the holiday are the busiest time of year for AMC to sign up new subscribers, with around a quarter of new subscribers enrolling during that period, the people said.

Within two weeks of Amazon's suspending subscriptions, AMC agreed to pay Amazon a higher revenue share, although not as high as Amazon was asking, and agreed to the advertising terms, they said.

An AMC spokeswoman said: "We had productive renewal conversations with Amazon in 2018 around our targeted streaming services Shudder and Sundance Now. Since then, we have expanded our relationship with the launch of AMC+ and Amazon continues to be a great partner that has contributed to the service's fast growth."

Fulfillment link

Rep. Pramila Jayapal, the Democrat who represents Amazon's home district and is vice chair of the House Antitrust Subcommittee, said Amazon also has used tying tactics to build part of its logistics arm, called Fulfillment by Amazon, or FBA.

Amazon takes a percentage of sales on its platform by outside vendors. Since 2006, it has also charged sellers who sign up to have FBA handle warehousing, processing and shipping of their items. Today, nearly two-thirds of sellers on Amazon.com in the U.S. use FBA, according to Marketplace Pulse, a research firm. FBA is a pillar of the Amazon Logistics unit that is separate from the retail operation and that rivals FedEx Corp. and United Parcel Service Inc.

Ms. Jayapal said sellers testified privately that Amazon compelled them to use its fulfillment service by making it harder to sell goods on its retail platform. In particular, access to Amazon's coveted "Buy Box," which determines which seller of an item is featured for a sale, and getting good placement in search results, are contingent upon a seller's participating in the fulfillment program, she said.

Jerry Kavesh, who sells apparel and footwear on Amazon, said he recently pulled some inventory from FBA because he couldn't afford the cost. Since then, he said, he has noticed a slowdown in sales for those items compared with ones he kept in the fulfillment program.

"There's a ramification for not using FBA," he said. "It impacts your search-ability and impacts your Buy Box opportunities because FBA trumps everything when it comes to the Buy Box."

Amazon has said that using its fulfillment service is voluntary for sellers. Closely guarded algorithms determine the Buy Box and search ranking on Amazon.com.

Amazon's Mr. Evans said that FBA participation isn't part of the algorithms for the Buy Box or search ranking but that speed of delivery is. Products offered through Amazon's logistics network generally provide a better experience for customers than fulfillment through other means, he said.

In PopSockets' case, its hit product -- a collapsible handle that attaches to smartphones -- was contending with counterfeits on Amazon, said Mr. Barnett, the CEO. For more than a year, the Boulder, Colo., company made regular complaints to Amazon about the fakes, he said. It asked for its products to be "gated" on Amazon's site, which would require resellers of PopSockets products to be vetted for authenticity. Amazon repeatedly turned PopSockets down, he said.

In 2017, Mr. Barnett flew to Seattle to meet with Amazon. The executives in the meeting offered a solution, he said: If PopSockets agreed to spend $1.8 million on marketing on Amazon, it would gate the company's products.

He said Amazon never puts the terms in writing. "It's always implemented during phone calls, or in person, but never in emails," he said. Mr. Barnett said he agreed to Amazon's terms and the counterfeits immediately disappeared.

PopSockets took a break from selling to Amazon, estimating it lost $10 million in 2019 revenue from not selling on the site, then resumed sales on Amazon -- without paying the extra marketing tab, Mr. Barnett said.

"We are fortunate to have grown so fast and have a healthy business that we were able to say 'no' and take a big hit and survive," he said. "Most businesses can't afford to say no."

Write to Dana Mattioli at dana.mattioli@wsj.com and Joe Flint at joe.flint@wsj.com

(END) Dow Jones Newswires

04-14-21 1049ET