The news: Amazon will pay $2.5 billion to settle a Federal Trade Commission lawsuit, covering $1 billion in civil penalties and $1.5 billion in customer refunds.

• The FTC accused the company of “knowingly duping” users into its $14.99-a-month Prime program and making cancellation unnecessarily difficult.
• The 2023 lawsuit argued that Amazon violated a 2010 consumer protection law by designing a cancellation process so cumbersome it was internally nicknamed “The Iliad.” Customers reportedly had to click through five pages on desktop or six on mobile to exit the program.

The details: Under the settlement, Amazon must:

• Add a clear button to decline Prime
• Provide upfront disclosures on Prime’s cost, billing dates, auto-renewal, and cancellation policies
• Allow customers to cancel using the same method of enrollment

Our take: The deal is a win for Amazon. The ruling may ease cancellation, but it won’t loosen Amazon’s grip on US households. Prime generated $44.37 billion in subscription revenues last year, meaning the settlement represents just 5.6% of that total. While Amazon must streamline cancellation, the program itself—the backbone of its business model—remains intact.