Amazon's Stronghold in Online Retail Heavily Affects Small Sellers: Antitrust Report
An employee of Amazon walks through a turnstile gate inside an Amazon Fulfillment Centre (BLR7) on the outskirts of Bengaluru. (Reuters)
The US Antitrust Subcommittee noted in its investigation that Amazon refers to third party sellers on its platform as ‘partners’ in public, but internally consider them as ‘internal competition’.
- Last Updated: October 7, 2020, 16:39 IST
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Amazon has been at the centre of numerous investigations with reference to work conditions and market practices. Now, after multiple rounds of summons issued by the US Congress through the Judiciary Subcommittee on Antitrust, Commercial and Administrative Laws, Amazon has been found to have promoted significantly anticompetitive work practices, and in particular, stifled competition from small businesses that heavily depended on Amazon for regular operations. The committee also noted that Amazon downplays its overall market share and dominance on the American online retail market, and also uses its ancillary businesses including its Alexa voice assistant and Amazon Web Services cloud platform to further strengthen its market dominance.
A million ‘internal competitors’
According to the House Subcommittee report, Amazon reportedly has close to 2.3 million active third party sellers on its platform, of which close to 850,000, or nearly 40 percent of all third party sellers rely on Amazon heavily as their sole source of conducting business. While this itself goes on to show the impact that Amazon has on online retail, the company further compounds issues by downplaying their market share – as opposed to Amazon’s claim of less than 40 percent of USA’s online retail market, it seemingly controls well over 50 percent of it. In short, a majority.
Along with its market dominance, Amazon has continued extensive acquisitions to shore up customer data, and in turn, increased its influence on online shoppers through data analytics. The report also notes that while Amazon speaks of third party sellers as ‘partners’ in public forum, it actually considers them as ‘internal competitors’ in documents of accessed by the Subcommittee.
“Amazon’s dual role as an operator of its marketplace that hosts third-party sellers, and a seller in that same marketplace, creates an inherent conflict of interest. This conflict incentivises Amazon to exploit its access to competing sellers’ data and information, among other anti-competitive conduct,” the report notes.
Amazon also uses its dominant position in the voice assistant market of Alexa-driven speakers and displays as a way to market its products more than competitors. Deep discounts offered on these products, as well as services such as the Amazon Web Services (AWS) cloud platform, have also been deemed as detrimental to healthy competition – one that is seen as a push towards brute force market dominance by the US Antitrust Subcommittee.
The 449-page report on antitrust and anti-competitive practices by Big Tech firms can be read in full here.