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Home / Business / Jeff Bezos’s antitrust hearing was a reminder of Amazon’s power over its dealers

Jeff Bezos’s antitrust hearing was a reminder of Amazon’s power over its dealers

The world’s richest man, Jeff Bezos, testified before members of the US Congress on Wednesday, but said little to reassure one of their biggest concerns: that Amazon’s grip on online retailing gives him the strength to make or break small traders on a whim.

Bezos, along with CEOs of Apple, Google and Facebook, appeared in a video conference in front of a bilateral group of 15 members of the American House, which has examined four technology giants in the last year. The purpose of the Antitrust Subcommittee’s inquiry was to show whether these corporate titans were abusing their power in sectors ranging from retail to social networks, and to assess whether the country̵

7;s antitrust laws were modern enough to prevent such abuses.

“The ability to dictate conditions, fire missiles, lift entire industries and arouse fear is the responsibility of the private government,” said David Cicilline (D-RI), chairman of the subcommittee, in his introductory remarks on what the five-hour hearing was.

In the case of Bezos, most questions from lawmakers focused on how Amazon competes and benefits from the 1.7 million small and medium-sized businesses that help supply Amazon’s digital shelves. Amazon boasts that 60 percent of its retail sales now come with the kind permission of these resellers, not from the storage and resale of Amazon goods.

But some Amazon dealers have complained over the years that as Amazon’s market share in the US online store has increased – to about 40 percent today, about seven times more than another competitor – the company has squeezed them and otherwise harmed them in new and different ways. because they do not have viable alternatives online.

According to Cicilline, Amazon dealers informed the subcommittee that “[Amazon has] he has never been an excellent partner, but you have to work with them. “

One of the problems was the data that Amazon uses from its own merchants to help inform about which products are being developed under its own brands, such as Amazon Basics. In April, the Wall Street Journal published a report stating that Amazon employees used data from individual vendors to help Amazon decide which branded products to track. This contradicts what Amazon’s top lawyer, Nate Sutton, told Congress earlier this year when he said it was Amazon’s policy to use product data only if it was sold by at least two retailers.

On Wednesday, Bezos informed a representative of Pramila Jayapal (D-WA), who represents Amazon’s hometown of Seattle, that the company’s investigation into the violation of the policy outlined in the magazine’s report is still ongoing. “I’m not happy we got to the end of it and we’re still going to look at it,” he said.

And Jayapal clarified her point: “So you could allow third-party vendors on your platform. However, if you are monitoring the data to make sure that it never becomes large enough to compete with you, this is a concern that the committee has. “

Bezos argued that other retailers don’t even have such a policy, which is completely out of the question – no other American retailer operates in the market or close to the size of the Amazons. What’s worse, Bezos does not provide up-to-date information about the investigation, but it only means that concerns about these potentially anti-competitive practices remain unresolved.

Lawmakers also asked Bezosa what they thought of Amazon’s growing decline in sales from small retailers. According to a recent study by the Institute for Local Self-Sufficiency, a non-profit organization that advocates a strong economy based on independent businesses compared to huge corporations, Amazon collected an average of 30 percent in 2019 on sales from sales. According to ILSR estimates, this number increased by 19 percent five years ago. Some vendors claim that Amazon’s reduction is even higher. In an episode of the Land of Giants: Rise of the Amazon podcast last summer, one Amazon toy retailer told Recode that Amazon now collects fees that equal almost half of each company’s sales when it includes the cost of advertising its products on the site.

Bezos’s defense against those increases focused on the value that Amazon provided for those charges. The CEO talked about Amazon’s advertising platform as a way for businesses to emerge – but some retailers and brands consider it a tax only for trading on that platform. However, the CEO has done little to ask the open question whether small businesses on Amazon can succeed without giving their company more and more reductions in earnings.

Bezos also mentioned how the Amazon Fulfillment by Amazon (FBA) warehousing program allows merchants to store, ship and provide customer service through Amazon. In order for most retailers to qualify their products for Amazon Prime delivery, they must pay for FBA storage. And Bezos acknowledged that Amazon’s algorithm, which determines in real time which vendor will win a given sale, indirectly affects whether the vendor is an FBA customer. The admission could offer more ammunition to critics who claim that Amazon is using its control of the largest e-commerce market in the United States to force its merchants to pay for more and more services than the FBA.

Then there’s the frequency with which Amazon changes its policies and the algorithms that power its platform in ways that can bring or disrupt merchants’ business, essentially overnight. One member of Congress told Bezos the story of a textbook vendor on Amazon, who claims that her business was started from the platform without notice or explanation after her business grew. The seemingly arbitrary suspension by Amazon is not a new complaint.

Bezos said he was “surprised” to learn of such a story and that he would like to talk to the seller. However, he also defended himself against a defense that believes that such treatment is not “systematic” in the Amazon.

For Bezos, this was his first testimony of the Capitol Hill, at least in part because Amazon was for the most part good for millions of online shoppers. As I wrote before, Amazon offers buyers incredible convenience, good prices, fast delivery and a huge selection. And U.S. antitrust authorities tend to favor companies that treat consumers and keep prices low, usually focusing on business practices or mergers that they believe will harm consumers, for example by raising prices for a product or service.

Amazon is now worth $ 1.5 trillion and Bezos is the richest man in the world. Media control and regulation have intensified through the media. The Federal Trade Commission has investigated Amazon’s various business practices over the past year to determine whether Amazon has violated existing antitrust laws. And the House Anti-Corruption Subcommittee will then issue its own report closing its inquiry, which could argue for new or revised antitrust legislation that may be responsible for damaging innovation and competition, which some lawmakers say do technical giants like Amazon. although consumers seem to reach them.

Although Bezos did not close the legislators’ concerns about potentially anti-competitive practices, his first testimony from Congress sometimes proved to be the most authentic of the directors-general at the hearing. At the same time, several times politely rejected the seller’s complaints submitted during the hearing as one-time, instead of being the core of Amazon’s DNA.

And that is one of his problems. While Bezos is right and Amazon rarely abuses its position against its own dealers, complaints shared during the hearing show that the company has grown so large and strong that even the abuse of neglect has the power to crush the small businesses that drive Amazon’s success. – however, they are so platform dependent that they can crush them without noticing it.

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