The American Innovation and Choice Online Act, introduced in October 2021 by Senators Amy Klobuchar and Chuck Grassley, expresses a desire to level the playing field between online marketplaces and small businesses. As the world’s largest online retailer, Amazon has long been criticized for its dominance of the e-commerce market. In recent years, the company has come under fire for its practices in areas ranging from worker safety to antitrust concerns. Now, Congress is going after the conglomerate marketplace itself, accusing them of “prioritizing their own products on their platforms, using their market power to edge out competitors, and limiting consumers’ choice.”
This bill is set to directly limit Amazon, Apple, Google, Facebook, and other large tech companies’ ability to show bias in the search engine. It would alter the search results algorithm to allow more competition of smaller businesses for the Buy Box and SEO ranking, and fulfillment of Prime orders through Amazon. In essence, the search engine would prioritize the most relevant results, rather than deferring to what is most beneficial for the bigger companies.
The AICO Act would change the way that Prime orders are fulfilled, opening up the process to other logistics providers and extending sellers’ carrier options. Under the current system, known as “Fulfillment by Amazon” (FBA), only Amazon itself can fill Prime orders (Amazon’s Seller-Fulfilled Prime service, which permits sellers to process orders through the shipping company of their choosing, is not currently accepting new registrations). The new bill would allow other carriers to compete for this business, potentially undercutting Amazon’s fulfillment capabilities in the process.
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Arguments Against the Bill:
Arguments for the Bill:
Proponents of the bill maintain that Amazon’s dominance of the e-commerce platform gives them an unfair advantage over third-party sellers and small businesses. Amazon can choose which products to showcase and how prominently to display them, giving them a level of control that smaller businesses can’t match. In addition, Amazon has been accused of using its size to negotiate lower fees from suppliers, putting smaller businesses at a disadvantage. In the words of Senator Klobachar, “…our country faces a monopoly problem, and American consumers, workers, and businesses are paying the price.” Congress has stated that the AICO Act will result in increased accountability for the alleged discriminatory practices of Big Tech companies, and that it stands to improve customer service moving forward.
Critics of Amazon’s response to this new bill say that extending the capabilities of third-party sellers to use logistics providers of their choosing will enhance the consumer/ seller experience, because the new level of competition will encourage increased service delivery for consumers.
Conclusion:
The Amazon Marketplace Fairness Act has the potential to help level the playing field between online marketplaces and small businesses. However, it is still unclear whether or not the act will be passed and what its effects would be. Small businesses should keep an eye on this legislation and voice their support if they want to see it enacted.
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