WishingUWell Insights

We’re not only consultants—we’re here to help you with all-things Amazon.
Read our blog to get your questions answered.

Anti-Trust Legislation in Amazon

Anti-Trust Legislation in Amazon

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.

Is selling on Amazon harder than you thought? Are you looking for a team manager your products on the Amazon market?

Contact our experts at WishingUWell for help today!

Arguments Against the Bill:

Amazon has expressed disapproval of this bill because, in the words of Amazon Vice President of Public Policy Brian Huseman, “[this law] would substantially degrade the value and quality of Prime.” Huseman’s stance is that Amazon could lose its ability to execute 1-2 day delivery for Prime orders if other logistics companies are allowed to fulfill orders for third-party sellers and small businesses selling on Amazon, as other companies may not have the bandwidth to meet the demand of faster delivery. Amazon argues that Prime’s ability to provide 1-2 day shipping is solely dependent on their ability to control shipping and fulfillment, and that leaving this step in the hands of individual sellers could very well be the end of the Prime service altogether. They have also voiced concern about a possible decline in effectiveness of the search algorithm, arguing that it might show less relevant results in the interest of giving smaller companies a stronger Amazon presence. This could, in turn, hurt the customer experience rather than improving the seller/ consumer interface. Critics of the bill also argue that it would be burdensome for small businesses because of a potential price increase for products, thereby giving the larger tech companies like Amazon an even bigger leg up on the smaller ones.

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.

Need help managing your brand on Amazon? Contact our experts at WishingUWell for help today!

Lastest Post

Amazon Updates

Amazon is introducing new Account Health Rating (AHR) procedures on September 14-15, 2022. Amazon’s increased assistance with monitoring metrics and giving detailed accounts of policy

Read More »

Amazon Brand Store Content

Amazon A+ Content