House report accuses Amazon of abusing market power


Dive brief:

  • New 450-page report on tech companies from House antitrust subcommittee accuses Amazon of exercising monopoly power in online retailing to the detriment of third party sellers who use its site as well as competitors and other stakeholders.
  • The committee – which also investigated Facebook, Google and Apple – recommended structural separation as well as rules that could limit discrimination and favoritism by tech platforms, among other remedies..
  • In one blog post, Amazon responded that it controls a relatively small share of the overall retail market and dismissed the committee’s claims of its dominance of sellers on its site as “bad regulatory ideas” that “are based on the false narrative that interests Amazon are not aligned ”with its third-party sellers.

Dive overview:

The massive tech giants report has been in the works for over a year, the end product of a thorough investigation that draws inspiration from over a million corporate documents and testimonials, including Amazon CEO Jeff Bezos – and interviews with more than 240 market players.

From Amazon, the committee wrote that “the company’s market power is at its peak in its relationships with third-party sellers” on its market platform. According to a JungleScout survey, cited in House’s report, more than a third of Amazon’s 2.3 million third-party sellers report relying on Amazon as their sole source of income.

From Amazon’s perspective, that means it’s a vital channel and location for small and medium businesses. In its article, the company said that inviting sellers to its main site, where they can compete with Amazon’s own retail operations, has driven prices down and has been “a win for consumers. customers, sellers and Amazon “. The company also highlights the revenue it derives from these sales to third parties as a positive common interest. “Amazon and third party sellers have a mutually beneficial relationship, and our interests are well aligned.”

The House subcommittee found that Amazon internally refers to sellers as “internal competitors” and wrote that its dual role as an online retailer and market operator “creates an inherent conflict of interest” that “Encourages Amazon to exploit its access to data and information from competing sellers. , among other anti-competitive behavior. ”The report also cites the increased spending set by Amazon for sellers and details many ways it allegedly dominates the relationship.

Earlier this year, the Wall Street Journal reported, based on internal documents and old employee accounts, that Amazon staff had developed a habit of using the data of individual third parties sales to develop and price Amazon’s own competing private label products. In response to this story, Amazon told the Journal it was banning the practice and would launch an internal investigation.

The Chamber is not alone in its investigation into Amazon’s practices. The Federal Trade Commission would also be investigate the business on similar issues, just like some state attorneys general and the The European Union Competition Observatory.

The fate of the investigations is far from clear. Federal antitrust authorities, charged with ruling over abusive monopolies and maintaining competition, haven’t dismantled a company in decades.

Some analysts and observers look at markets such as retail and see a lot of competition, and consider Amazon’s role in the industry to be of great benefit to consumers. On the other hand, critics of modern antitrust law enforcement, some of whom participated in the House inquiry, say the federal government has become lax, prioritizing low prices and economic efficiency over healthy markets and anti-monopoly principles designed to control corporate power. (Amazon, in its blog post, referred to these feelings as “fringe notions.”)

As the legal and academic debate continues, Amazon’s revenues and industries continue to grow – now even faster amid a pandemic that is pushing more customers than ever to shop online. .

Leave A Reply

Your email address will not be published.