Jeff Bezos’ antitrust trial testimony was a reminder of Amazon’s power over its sellers

The world’s richest man, Jeff Bezos, testified in front of US Congress members for the first time on Wednesday, but said little to assimilate one of his biggest concerns: Amazon’s hold on online retail to make it to small merchants Or gives the power to break like this.

Bezos, along with CEOs of Apple, Google and Facebook, appeared through videoconferencing to a bipartisan group of 15 US House members who have been investigating four tech giants over the past year. The stated goal of the investigation of this antitrust subcommittee is to document whether these corporate titans misuse their power in industries ranging from retail to social networking, and to evaluate whether the country’s anti-people laws are subject to such abuses. Are modern to avoid.

Subcommittee Rep. David Sicilin (D-RI) said, “His ability to set the conditions, summon shots, amplify entire areas and represent the powers of a private represents an inspiration.” There was a five-hour hearing.

For Bezos, most of the lawmakers’ questions focus on the 1.7 million small and medium-sized merchants competing against Amazon and profits that help stock Amazon’s digital shelves. Amazon claims that 60 percent of its retail sales now come courtesy of these sellers, rather than Amazon stocking and reselling merchandise.

But some Amazon sellers have complained over the years that as Amazon’s market share in the online marketplace in the US has increased – around 40 percent today, nearly seven times more than the next competitor – the company has squeezed. And have otherwise harmed them in new and different ways. Ways because they have no viable online option.

According to Cicillin, Amazon sellers have told the subcommittee that “[Amazon has] Never been great companions, but you have to work with them. “

One concern is that Amazon uses data from its own merchants to inform what products under its own private-label brands help to develop, such as Amazonix. In April, the Wall Street Journal published a report stating that Amazon employees used data from individual vendors to help Amazon decide which private-label products to pursue. It is contradictory that a top Amazon lawyer, Nat Sutton, told Congress earlier this year when he said that Amazon’s policy is to use data on only one product when at least two sellers are selling it.

On Wednesday, Bezos told Rep. Pramila Jaipal (D-WA), who represents Amazon’s hometown of Seattle, that the company’s investigation into the policy violation was outlined in a journal report. He said, “We are not satisfied that we have reached its bottom, and we will keep watching it.”

And Jaipal made his point clear: “So you can allow third party vendors on your platform. But if you are monitoring the data to make sure they are never going to grow up then they can compete with you, that’s the committee’s concern. “

Bezos argued that other retailers also have no such policy, which is entirely beside the point – no other US retailer operates a market even closer to Amazon’s size. But even worse, Bezos has not provided an update on the investigation means that concerns over these potential antichromatic practices remain unresolved.

Lawmakers also questioned Bezos as some of the scenes that Amazon takes from small merchants as sales increase. According to a recent study by the Institute for Local Self-Reliance, a nonprofit company that advocates a strong economy built on independent businesses vs. huge corporations, Amazon collected an average of 30 percent of fees from a given sale in 2019, That a seller made. According to ILSR estimates, the number was 19 percent five years ago. Some sellers have said that Amazon’s deduction is more than that. Last summer, in an episode of The Land of the Giants: The Rise of the Amazon Podcast, an Amazon toy seller told Recode that Amazon now charges fees equal to about half of each of its company’s sales when its products are at a cost. Advertising involves the place.

Bezos’ defense has increased, focusing on the price that Amazon is providing in return for these fees. The CEO saw Amazon’s advertising platform as a way for businesses to be discovered – but some sellers and brands see it more as a tax for only doing business on the platform. But the CEO did not openly question whether small businesses at Amazon can succeed without giving their company a larger and larger share of their earnings.

Bezos also mentions how Amazon’s warehousing program Fulfillment by Amazon (FBA) allows merchants to store, ship, and take care of customer service through Amazon. For most sellers to qualify their goods for Amazon Prime delivery, they would have to pay for FBA storage. And Bezos acknowledges that Amazon’s algorithm determines in real time that the seller wins a given sale, indirectly factors in which a seller is a customer of the FBA. This admission could offer additional ammunition for critics who argue that Amazon is using its control over the largest US e-commerce marketplace to essentially pay its merchants for more and more services, such as the FBA Used to be.

Then there is the frequency with which Amazon changes its policies and the algorithm powers its platform in a way that can essentially make or break the businesses of its merchants overnight. A congressman told Bezos the story of a textbook seller on Amazon who says his business was removed from the platform without notice or explanation after he grew up. The frequent arbitrary suspension by Amazon is not a new complaint.

Bezos said he was “shocked” to hear of such a story and wanted to talk to the seller. But he also stated with a defense that he believes that such treatment on Amazon is not “systemic”.

For Bezos, this was his first time witnessing on Capitol Hill, at least in part because Amazon had, for the most part, a good thing for millions of online shoppers. As I’ve written before, Amazon offers buyers incredible convenience, good prices, fast delivery, and a huge selection. And US antitrust enforcers typically favor companies that treat consumers well and keep prices low, while generally targeting business practices or mergers that they believe will harm consumers, such as someone Raising prices for a product or service.

But Amazon is now worth $ 1.5 trillion, and Bezos is the richest man in the world. Also, media and regulatory investigations have intensified. The Federal Trade Commission has been investigating various Amazon trade practices since last year to determine if Amazon has violated existing antitrust laws. And the House Antitrust Subcommittee will conclude its investigation in its next report that could argue for new or revised antitrust legislation that could account for the loss of innovation and competition that some legislators say were made by tech giants like Amazon Goes well while treating consumers properly.

Even though Bezos did not close lawmakers’ concerns about potential anticompetitive practices, his first congressional testimony at times appeared as chief executive at the hearing. At the same time, he politely dismissed the anecdote seller’s complaints presented during the hearing on several occasions, rather than being the core to Amazon’s DNA.

And therein lies one of his problems. Even though Bezos is right and Amazon does not abuse its position only on its own vendors, complaints shared during the hearing suggest that the company has grown so large and powerful that even small businesses in disuse misuse Crushing is the power of Amazon’s success – but it is also so dependent on the platform that it can crush them even without notice.

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