New legislation proposed before Congress earlier in June could effectively halt operations of Amazon’s own logistics services, stranding some 83 percent of Amazon sellers.
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 the conflicts of interest which result from a dominant company’s ownership. And while it’s just one of five different bills entered by lawmakers on the Antitrust Subcommittee which purport to help regulate Big Tech, its ramifications are among the farthest reaching for Amazon sellers. Under the proposed legislation, Amazon 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.
“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.”
While EPMA may never be formally signed into law, Amazon continues to draw criticism from lawmakers on both sides of the political spectrum. With a 40.4 percent share of the eCommerce market in the US, criticisms levied against the retailer of undue monopolization aren’t entirely unfounded. But EPMA is the first time their increasing growth rate in the logistics industry has been subject to potential regulatory oversight, despite reported promptings from the Trump administration of rate increases specific to Amazon in 2017 and 2018.
It’s been estimated that Amazon 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 Amazon doesn’t have a disproportionate advantage in eCommerce, fewer still can argue that it’s not directly the result of consumer demand. FBA helped revolutionize retail logistic delivery by filling a void; a detail not lost on the 200 million Amazon Prime members who rely in no small part on expedited shipping and delivery options included as part of their membership.
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 their internal systems will be favored through product placement and search results; a trait hardly exclusive to Amazon.
“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.”
Color More Lines provides white glove, global account management of your eCommerce platforms so mission-driven companies can focus on new product development, branding and growth strategies. Find out more at Color More Lines.