Amazon started as online book store and has grown to be the worlds largest online retailer.
US Ending Platform Monopolies Act Amazon killing draft bill
THe US Congress have published 5 discussion bills which could serious impact Amazon’s ability to sell products on their own platform. One bill in particular, The Ending Platform Monopolies Act aims to stop a marketplace from selling products on their own marketplace. Other bills address promoting your own products on your marketplace, mergers for big tech companies, making it easier to migrate your personal data from one social media company to another and increasing filing fees for mergers to raise cash.
The big one however is The Ending Platform Monopolies Act as this is aimed at Amazon and Apple, both of who operate marketplaces in which they also sell their own products. For Amazon, this is a massive problem and although the bills are in the discussion phase and then have to pass in the House of Representatives and the Senate before being signed into law, they are the result of a year long investigation in to the way big tech operates.
So what does it mean for Amazon? Well it probably means that they either have to float off marketplace selling as separate from Amazon retail, or the more likely outcome would be to float off Amazon Retail as a separate entity, no longer owned by Amazon, for the purposes of clarity let’s call this AZRetail. This in itself would have several impacts – It would instantly reduce Amazon’s valuation and it would take away Amazon’s ability to back fill products where merchants aren’t offering them. In effect it would make the new AZRetail Amazon’s biggest merchant by far and this would be a giant of product creation and selling like no other.
AZRetail would have to pay the same admin costs to sell their products as any other merchant, pay the same advertising costs to promote them, and pay the same FBA fees if they wanted to have the Amazon Prime badge.
But would this be better for merchants? Currently, Amazon say that they have a Chinese wall between marketplace and retail but this would immediately be removed with no pretence for it to exist in the future. Amazon wouldn’t have to pass data as it’s pretty much all freely available anyway so AZRetail could scour Amazon for your next best selling product and immediately create a similar product to develop and sell.
Another area of problem for Amazon would be in their range of Alexa, Ring, Fire, and Kindle type products which require deep integration with Amazon and are then sold on their marketplace. Stunting Amazon’s growth by not letting them sell these would cripple their ability to further develop them. This arm would too probably have to be floated off leaving Amazon to develop capabilities and third party companies to sell supporting hardware. It would remove Amazon’s immediate ability to sell products at cost or at a loss to drive traction.
The problem with The Ending Platform Monopolies Act and other bills
With five bills including The Ending Platform Monopolies Act all aimed largely at Amazon, Apple, Facebook and Google, there is an underlying problem. This is legislation targeted at specific companies and so the criteria that decides whether a bill applies to you or not has been drawn up to make sure they are impacted.
This is not a set of bills aimed at general fairness across industry and for that reason means that after causing the break up of the four big tech companies the next business it impacts may have highly undesirable impact. As an example, the bills aren’t aimed at Walmart but Walmart has a marketplace. If Walmart grew their marketplace to 50 million US users and the company value grew to $600 billion, then Walmart would suddenly be banned from selling their own food on their marketplace!
While you might agree with the sentiment of The Ending Platform Monopolies Act and other four bills, it could be argued that they are bad because they are going to impact other businesses in the future in unknown and unpredictable ways and one of those ways could be limiting businesses like Walmart from going digital.
The Ending Platform Monopolies Act and other four bills
The Ending Platform Monopolies Act
Aimed at stopping a marketplace from selling products on the marketplace that they own
The American Choice and Innovation Online Act
Aimed at preventing a marketplace from promoting their own products through manipulation vs merchants’ products
The Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act of 2021
Aimed to introduce portability to social media sites meaning you should be able to leave one and join another taking your data with you
The Platform Competition and Opportunity Act of 2021
Designed to force companies to prove acquisitions are lawful rather then the onus falling on government to prove they will lower competition
The Merger Filing Fee Modernization Act of 2021
Aiming to raise money for the Federal Trade Commission and Department of Justice by raising companies’ notification fees
All sounds good to me, hopefully a way can be found to implement this in the UK!
On paper it sounds good but it will just force the big companies to make/buy up smaller companies and use them instead. So the monopoly will still be there we just won’t know about it any more.
Look at how many companies BT own with different names in the same market. Amazon already own a host of companies so it wouldn’t be difficult for them.
As a business idea I do think it makes sense for Amazon to more apparently distinguish between third party sellers and Amazon.