Will ending its price parity rule take the antitrust heat off Amazon?
There’s no doubt that Amazon.com carries a lot of weight for third parties looking to establish and/or grow their B2C businesses online in the U.S. It draws more traffic than any other site, and product listings that come in near the top of searches on Amazon can lead to big sales for small businesses.
There’s also no doubt that Amazon has come under increasing scrutiny in its relations with marketplace sellers as its business has grown exponentially over the years. The spotlight put on Jeff Bezos and company has not always been favorable. Its business practices have been depicted as predatory (moving into hot categories first established by its third-party sellers) and even anti-competitive (requiring third-parties to offer their lowest prices on Amazon under the threat of being tossed off the platform).
On the last point, Amazon has decided to end its “price parity” rule, which may mean that consumers will find better prices from third-party sellers on other sites. The e-tail giant took the action after Sen. Richard Blumenthal of Connecticut wrote a letter to the Justice Department in December raising antitrust concerns. In the letter, Sen. Blumenthal pointed out that Amazon had dropped a similar price parity rule in Europe in 2013 after coming under regulatory scrutiny.
Last week, Sen. Elizabeth Warren of Massachusetts, who is running to become the Democratic Party’s nominee for president, wrote in a blog on Medium that antitrust rules need to be updated for the modern, tech-driven economy.
While she didn’t name Teddy Roosevelt, Sen. Warren did echo arguments made more than a century ago that asserted business behemoths have the ability to limit competition. In President Roosevelt’s time, the focus was on prices. Today, Sen. Warren argues, it is more a matter of access. Limiting access by denying space on a platform or pushing down listings in search results are anti-competitive acts with top- and bottom-line repercussions for smaller businesses.
“America’s big tech companies provide valuable products, but also wield enormous power over our digital lives,” she wrote. “Nearly half of all e-commerce goes through Amazon. More than 70 percent of all internet traffic goes through sites owned or operated by Google or Facebook.”
- Amazon to end price practice critics said could violate antitrust law – Axios
- Here’s how we can break up Big Tech – Medium
- Study: Amazon goes all predatory on marketplace sellers – RetailWire
DISCUSSION QUESTIONS: Do you think Amazon’s “price parity” rule was within its rights or did it cross a line? Do you agree that America’s anti-trust rules need to be updated for the realities of the tech era? If yes, how might they affect Amazon, Facebook, Google and others?