CNBC recently reported that Amazon is reaching out to a small number of its third-party sellers to warn them of the impacts of proposed antitrust reforms making their way through Congress.
The legislative package approved by Congress in June would among other things prevent Amazon from discriminating against other business (i.e. third-party marketplace sellers) on its own platform.
Another provision included in the package, could spell trouble for Amazon’s Fulfillment service. The bill, as reported by Bloomberg, would prevent Amazon from the “…anticompetitive practice…of luring sellers to use its logistics services in exchange for preferential treatment on its busy web store,” such as better placement in search results.
The legislation would also make it easier for regulators to break up companies that operate a dominant platform (Amazon is expected to seize 50% of the e-commerce market this year).
Perspective from Ethan McAfee, CEO of Amify:
While Amazon argues that the proposed legislation would have “significant negative effects” on marketplace sellers and consumers alike, we take an opposing view – if the measures take effect, an Amazon breakup would be a win for brands.
Amazon has long engaged in anticompetitive practices such as using algorithms to pit brands against each other for a place in the prized Buy Box, while giving its own products prime placement when it competes with other sellers.
The discrimination that the antitrust legislation seeks to shut down is also rife. In addition to giving preferential treatment to Amazon Fulfillment services customers, Congress accuses the tech giant of routinely bullying third-party brands to maintain its monopoly. For example, Amazon takes advantage of data insights to promote its Amazon Basics products over the products of its third-party sellers, controls what it deems “essential” goods and prioritizes them for shipment, and even suspends seller accounts without warning.
It’s time to level the playing field.
If a breakup occurs, Amazon.com will become like any third-party seller. It’s ability to win the Buy Box or dominate search results will diminish. Antitrust controls will also limit its ability to exploit its access to competing sellers’ data.
This is a positive for sellers who’ve struggled to win their fair share of consumer eyeballs on the platform or felt squeezed out by Amazon’s business practices.
Sellers should prepare now for the opportunity new legislation will unleash. And if you’re looking for deeper thoughts on how you might take on the opportunity, drop us a line.
Read more about What an Amazon Breakup Would Look Like and Why It’s a Win for Brands.