The world’s richest man, Jeff Bezos, testified against members of the U.S. Congress for the first time on Wednesday, but said little to deny one of their biggest concerns: that Amazon’s grasp of online retail gives it the power to make or break small retailers on a whim.
Bezos, along with the CEOs of Apple, Google and Facebook, appeared in a video conference in front of a bilateral group of 15 U.S. members of the House investigating four technology giants over the past year. The stated purpose of this antitrust inquiry was to document whether these corporate titans are abusing their power in industries ranging from retail to social networks, and to assess whether the country’s antitrust laws are modern enough to protect against such abuses.
“Their ability to dictate deadlines, shoot at shots, unite entire sectors and inspire fear reflects the powers of the private government,”; said David Cicilline (D-RI), sub-committee chair. there were five or more hours of listening.
Bezos asked most lawmakers asked how Amazon competes with and profits from 1.7 million small and medium-sized merchants who help build Amazon’s digital shelves. Amazon boasts that 60 percent of retail sales now come from these retailers, not from the stockpiling and resale of Amazon merchandise.
But some Amazon sellers have complained over the years that as Amazon’s market share in U.S. online commerce grows to about 40 percent, which is about seven times more than its next competitor, the company has squeezed and otherwise harmed them new and different. ways because they have no viable alternatives online.
According to Cicilino, Amazon sellers told the subcommittee that “[Amazon has] has never been a great partner, but you have to work with them. ”
One concern was the data Amazon uses from its merchants to help inform what products to develop under its own brands, such as Amazon Basics. In April, the Wall Street Journal published a report alleging that Amazon employees used data from individual vendors to help Amazon decide which private label products to use. This contradicts what Amazon chief lawyer Nate Sutton said in Congress earlier this year, saying that Amazon’s policy is to use product data only when it is sold by at least two vendors.
On Wednesday, Beza spokesman Pramila Jayapal (D-WA), who represents Amazon in her hometown of Seattle, continued the company’s investigation into the policy violations reported in the Journal. “I’m not happy we’ve got it all right and we’ll keep looking,” he said.
And Jayapal made it clear, “So you can allow third-party vendors on your platform. But if you’re monitoring the data and making sure it’s never big enough to compete with you, that’s the committee’s concern. “
Bezos said other retailers don’t even have a policy that they completely disagree with – no other U.S. retailer operates in a market even close to the size of Amazon. But even worse, Bezos does not provide an update of the investigation, which means that concerns about this potentially anti-competitive practice remain unresolved.
Lawmakers have also asked Beza’s opinion on how some view the growing decline in sales Amazon is taking from small retailers. According to a recent Local Independence Institute, a nonprofit profit that supports a strong economy based on independent businesses compared to giant corporations, Amazon collected an average of 30 percent tax on certain sales made by the seller in 2019. According to ILSR estimates, that number rose from 19 percent five years ago. Some sellers have argued that Amazon’s cutout is even higher. In last summer’s episode of The Rise of Amazon, one Amazon toy retailer, Recode, said that Amazon now collects taxes equivalent to nearly half of each of its company’s sales. price by including your product on the advertising site.
In defending these increases, Bessos focused on the value he said Amazon provided in exchange for these charges. The CEO spoke of the Amazon advertising platform as a way for businesses to learn, but some vendors and brands see it more as a fee to run a business on the platform. But the CEO had little to do with leaving the open question of whether Amazon’s small businesses could be successful without lowering their company’s revenue.
Bezos also mentioned Amazon as an Amazon warehousing program (FBA) that allows merchants to store, ship, and service customer service through Amazon. In order for most sellers to qualify their merchandise for Amazon Prime delivery, they have to pay for FBA storage. And Bezos acknowledged that Amazon’s algorithm for determining in real time which vendor wins a given sale indirectly determines whether the vendor is an FBA customer. This release could offer additional ammunition to critics who claim Amazon is using its control of the vast U.S. e-commerce market to fundamentally force its merchants to pay for more and more services, such as the FBA.
Then there is the frequency with which Amazon changes its policies and algorithms that distribute its platform so that it is essentially possible to set up or close a merchant business overnight. One member of Congress, Bezos, told the story of an Amazon textbook seller who says her business was launched from the platform without warning or explanation after her business grew. Arbitrary suspension of Amazon does not appear to be a new complaint.
Bezos said he was surprised to hear about such a story and that he would like to talk to the salesman. However, he also opposed the defense that he said such behavior was not “systematic” on Amazon.
For Bezos, this was his first testimony on Capitol Hill, at least in part because Amazon was for the most part a good thing for millions of online shoppers. As I’ve written before, Amazon offers shoppers incredible convenience, good prices, fast delivery, and a large selection. And U.S. antitrust law enforcement tends to favor companies that treat consumers well and keep prices low, while they typically target business practices or mergers that they believe will harm consumers, such as increasing the price of a product or service.
But Amazon is now worth $ 1.5 trillion, and Bezos is the richest man in the world. Along the way, media and regulatory control intensified. The Federal Trade Commission has been reviewing Amazon’s various business practices over the past year to determine whether Amazon has violated applicable antitrust laws. The next antitrust subcommittee of the House will publish its report concluding its inquiry into new or amended antitrust laws that could justify the harm of innovation and competition, some lawmakers say, technical giants such as Amazon, even if they seem to treat it. consumers well.
Even if Bezos did not abandon lawmakers ’concerns about possible anti-competitive practices, his first congressional testimony was sometimes the most certain of the meeting’s directors-general. At the same time, he repeatedly politely rejected anecdotal grievances from vendors filed at the hearing as one-time rather than major Amazon DNA.
And herein lies one of his problems. Even if Bezos is right, and Amazon rarely abuses its position against its sellers, the complaints shared during the hearing show that the company has grown so large and powerful that even negligent abuse has the power to crush small business, which affects Amazon’s success. – but are also so platform dependent that it can crush them without even noticing.