There’s no doubt that Amazon.com carries a lot of weight for third parties looking to establish and/or grow their B2C businesses online in the U.S. It draws more traffic than any other site, and product listings that come in near the top of searches on Amazon can lead to big sales for small businesses.
There’s also no doubt that Amazon has come under increasing scrutiny in its relations with marketplace sellers as its business has grown exponentially over the years. The spotlight put on Jeff Bezos and company has not always been favorable. Its business practices have been depicted as predatory (moving into hot categories first established by its third-party sellers) and even anti-competitive (requiring third-parties to offer their lowest prices on Amazon under the threat of being tossed off the platform).
On the last point, Amazon has decided to end its “price parity” rule, which may mean that consumers will find better prices from third-party sellers on other sites. The e-tail giant took the action after Sen. Richard Blumenthal of Connecticut wrote a letter to the Justice Department in December raising antitrust concerns. In the letter, Sen. Blumenthal pointed out that Amazon had dropped a similar price parity rule in Europe in 2013 after coming under regulatory scrutiny.
Some on the RetailWire BrainTrust in an online discussion last week essentially said “good riddance” to an unfair practice from a business with unparalleled reach.
"It’s amazing that Amazon got away with this 'rule' for so long," wrote Jeff Sward, founding partner at Merchandising Metrics. "'Suggested' retail could only be suggested because retailers are supposed to be able to sell at their discretion. Brands could demand absolute fealty, so why did Amazon get away with it? I know, silly question. But this move is long past due."
Earlier this month, Sen. Elizabeth Warren of Massachusetts, who is running to become the Democratic Party’s nominee for president, wrote in a blog on Medium that antitrust rules need to be updated for the modern, tech-driven economy.
While she didn’t name Teddy Roosevelt, Sen. Warren did echo arguments made more than a century ago that asserted business behemoths have the ability to limit competition. In President Roosevelt’s time, the focus was on prices. Today, Sen. Warren argues, it is more a matter of access. Limiting access by denying space on a platform or pushing down listings in search results are anti-competitive acts with top- and bottom-line repercussions for smaller businesses.
“America’s big tech companies provide valuable products, but also wield enormous power over our digital lives,” she wrote. “Nearly half of all e-commerce goes through Amazon. More than 70 percent of all internet traffic goes through sites owned or operated by Google or Facebook.”
Some on RetailWire’s BrainTrust noted that heading off regulators at the pass is a necessity for a retailer operating at Amazon's scale.
"I’ll say it again, regulations haven’t caught up with (digital) realities," wrote Carol Spieckerman, president of Spieckerman Retail. "Amazon needed to throw a bone here in order to get the spotlight off, if only temporarily. As a global operator, anti-Amazon momentum can build quickly as countries with tighter anti-competitive and privacy controls amp up scrutiny, which in turn draws attention to the U.S.’s more lax standards. None of it good for Amazon."
Given the scale of Amazon and other tech giants, some registered concern that a regulatory cure could end up worse than the poison if not pursued carefully.
"Like all major legislation, it should be reviewed and updated to reflect the new realities of a changing market," wrote Mark Ryski, CEO of HeadCount Corporation. "So I think it’s right for lawmakers to want to examine the laws. But it’s complicated, and given the dysfunction in Washington, I’d worry about unintended consequences of over reactions. While I do believe that some measure of reform may be required, ultimately it will be very difficult to break-up Amazon, Facebook and Google in this age of global business."
