The influence of Amazon on private business can hardly be underestimated. Amazon has developed a business model which has disrupted not only the retail world, but the very way in which consumers interact with brands.
Now, legislation proposed before Congress could effectively halt operations of Amazon's own logistics services, stranding some 83 percent of third-party sellers. Namely, FBA sellers.
What is the Ending Platform Monopolies Act?
H.R. 3825, otherwise known as the Ending Platform Monopolies Act (EPMA), was entered into legislation by Washington Representative Pramila Jayapal with bipartisan support partly as a result of an investigation into competition in digital markets presented before the Senate Subcommittee on Antitrust, Commercial and Administrative Law in October 2020.
EPMA seeks to promote competitive opportunity in digital markets by eliminating conflicts of interest which result from a dominant company's ownership.
Under the proposed legislation, any retailer could potentially be forced to dismantle any asset proven to be given preferential treatment—not the least of which would be its own internal services.
Which in Amazon's case, could very well mean their FBA services.
The Reach of EPMA
While EPMA is just one bill among five different proposals entered by legislators on the Antitrust Subcommittee which purport to help regulate Big Tech, its ramifications are among the farthest reaching for Amazon's 6.1 million third-party sellers.
“The bipartisan Ending Platform Monopolies Act requires dominant platforms including Amazon to divest lines of business—such as Fulfillment by Amazon—where the platform's gatekeeper power allows it to favor its own services,” stated Jayapal spokesman Chris Evans. “Numerous third-party sellers reported feeling that they had no choice but to pay for Fulfillment by Amazon in order to sell their products.”
“This isn't about Amazon. This is about the monopoly powers of the Big Four tech companies,” said Congresswoman Jayapal in an interview with the Seattle Times recently. “It's an irresistible urge for companies that are operating on multiple platforms with conflicts of interest and competing business to use power in ways that will suppress competition.”
The Impact of Amazon FBA
FBA helped revolutionize retail logistic delivery by filling a void; a cost-effective method of storage, fulfillment and delivery directly from a retailer already known for placing customers first. It was a detail which wasn't lost on the 200 million Prime members who rely in no small part on expedited shipping and delivery options included as part of their membership.
And for Prime members, Amazon's word justifies the increasing costs of their subscriptions. But it takes more than just words to persuade many of Amazon's third-party sellers.
Sellers don't necessarily have to use FBA. Merchant-fulfilled delivery is still common among Amazon sellers either unwilling to pay the relatively exorbitant fees of FBA or unable to reach the volume of sales to command them.
But it's also not a secret that sellers leveraging Amazon's internal systems will be favored through product placement and search results; a trait hardly exclusive to the retailer. And for new sellers looking to take advantage of FBA, the more examples they have to gauge the benefits of Amazon's proprietary systems, the better.
The Impact of EPMA on FBA
It's been estimated that Amazon's FBA could be valued as high as $230 Billion by the end of 2025. But what EPMA represents is a much deeper cost to both consumers and sellers.
While few can argue that the retailer doesn't have a disproportionate advantage in eCommerce, fewer still can argue that it's not directly the result of consumer demand.
“We believe [the bills] would have significant negative effects on the hundreds of thousands of American small- and medium-sized businesses that sell in our store, and tens of millions of consumers who buy products from Amazon,” stated Brian Huseman, Amazon's VP of Public Policy in a press release. “More than a half million American small- and medium-sized businesses make a living via Amazon's marketplace, and without access to Amazon's customers, it will be much harder for these third-party sellers to create awareness for their business and earn a comparable income. Removing the selection of these sellers from Amazon's store would also create less price competition for products, and likely end up increasing prices for consumers.”
Criticism Against Amazon
While EPMA may never be formally signed into law, Amazon continues to draw widespread criticism from lawmakers on both sides of the political spectrum.
With a predominant share of the eCommerce market in the US, criticism levied against the retailer of undue monopolization aren't entirely unfounded. But EPMA is the first time Amazon's increasing growth rate in the logistics industry has been subject to potential regulatory committee oversight, despite reported promptings from the Trump administration of rate increases specific to the retailer in 2017 and 2018.
It's rare for any retailer to receive any form of constructive criticism. In Amazon's case, it's virtually unheard of. While it remains to be seen whether the legislative process of EPMA will result in a breakup of big tech, the status of Amazon isn't merely as a provider. They're pioneers.
They've reshaped not only consumer purchasing habits, but the very dynamic of how consumers perceive businesses. They've reshaped logistics. And they've reshaped small business visibility. That doesn't mean they're above criticism. But it also doesn't mean they're not without their own merits.
In the end, it simply means that they represent more than just a retail platform. They represent a force for change.
For more up to date information on Amazon as well as their critics, visit Color More Lines.