Amazon has long been in the spotlight, and not always for the most positive reasons. The COVID-19 pandemic has renewed Amazon antitrust scrutiny. It is not surprising that the European Union, California and Washington, among many others, are investigating its practices.
COVID-19 a.k.a. the China Virus has highlighted the critical role that Amazon plays in delivering supplies. But it has also drawn unwelcome attention – Amazon antitrust scrutiny – to the competitive and far-reaching nature of the company (a great read that shows just how pervasive it has become).
Amazon antitrust scrutiny is not just that Amazon’s search algorithms may favour its products, or give it an advantage over third-party marketplace sellers. It is more the commercial might it exerts in every area from warehousing, distribution, delivery, and its sheer market dominance.
Our US correspondent Sam Bocetta has made a hobby of observing FAANG – has researched and documented the Amazon antitrust issues. After all, he and it were ‘Born in the USA.” Sam writes
It is ironic that Amazon is turning 25 this year and that it has taken this long for Jeff Bezo’s “Get Big Fast” ethos to catch up with him.
First, let me say that as a typical consumer, I treat Amazon the same disdain as I treat any online supplier. With a healthy dose of cynicism, because deep down, I know that free-freight and online convenience has to cost someone – usually me – in the long term.
Instead, I try to shop locally and favour brick and mortar stores – lest we see the end of them. I find local stores prices on comparable goods just as appealing, can see and touch them, and get prompt support if I have an issue.
But unlike any typical consumer, I understand the behemoth that Amazon has become. It is a big-tech platform that is razor-focused on getting every last cent from you by selling you stuff even before you knew you needed it. One minute you buy toilet paper and that starts a tsunami of offers you can’t refuse.
Amazon is first and foremost a data harvester with an incredible AWS cloud AI-based shopping analytics engine behind it. Everything else is a by-product.
Amazon antitrust allegations grow stronger during COVID-19
The essence of all allegation is the enormous power it wields, and that is an abuse of consumer and merchant trust.
Most capitalist-based economies have antitrust legislation to prevent or at least control monopolies and to promote fair practice and competition. You can read about the US Antitrust laws here (and its very complex).
In essence, anti-competitive behaviour hurts consumers and business. And to be fair to Amazon, it is in good company as Facebook, Alphabet, Netflix, Apple et al. are all facing antitrust allegations. Here is why.
#1 – Unfair search advantage
It wasn’t too long ago when you typed the name of any product in Amazon’s search engine bar it would return with a variety of different brands in the first page of results.
The first page of search engine results is gold when it comes to online marketing. Why? Because up to 92% of all clicks come from a first-page listing. If you are on the second, third, or more, it is sudden death.
Now there are numerous accusations that Amazon usually ranks its products ahead of other brands. Regardless of whether other brands and online marketers pay Amazon for preference rankings.
A search for AA Energiser Batteries yields this citing Amazon as the Best Overall and runner up and Energiser as Best AA batteries. Which would you buy?
For years brands have bought higher rankings on Amazon by bidding on search terms. Such products are more likely to gain sales from Amazon customers.