- The US House of Representatives' Antitrust Committee released a report outlining the market dominance of big tech companies, including Amazon.
- And the proposed reform policies to combat big tech's market dominance may hurt the etailer's business.
- Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Payments & Commerce industry with the Payments & Commerce Briefing. You can learn more about subscribing here.
The US House of Representatives' Subcommittee on Antitrust recently released an in-depth report on the dominance of Amazon and other big tech firms in the US market, per The Wall Street Journal.
The report alleges that Amazon amassed its market power by undercutting sellers and buying out key competitors, including online retailer Zappos. Amazon has since responded to the committee's report findings, denying the allegations and further stating the reputability of its marketplace and practices.
The committee's report also includes recommended reform policies—which have the potential to pass through legislative review—including prohibiting the use of bargaining power, implementing equal terms on equal products on its platform, and the prohibition of further merger and acquisition (M&A) activity.
The renewed scrutiny places increased emphasis on Amazon's practices and treatment of competitors. Amazon has faced regulatory scrutiny in the past, but mounting reports have pushed it even further into the congressional limelight. Following a report regarding AmazonBasics products, its private-label brand, starting fires and burning consumers, three US senators requested information from Amazon about what it's doing to ensure consumer safety.
Furthermore, some Amazon employees were also found to be using third-party seller data to create competing products. Amazon has mostly denied wrongdoing pertaining to product malfunctions and has managed to avoid significant legal troubles with other allegations. However, given the committee's new in-depth report, Amazon may find it harder to operate its marketplace.
If the congressional committee's recommendations come to fruition, Amazon may be forced to comply, which could limit further growth potential and cut sales.
- It may have to limit its private-label business. AmazonBasics products, many of which are among the marketplace's bestsellers, have likely contributed to Amazon's success in recent years. But the etailer has been accused of copying successful products from sellers and startups and making them into AmazonBasics products with a lower price, undercutting competitors. The committee's recommendations include prohibiting dominant players from engaging in self-preferencing activities, and this may hurt Amazon's volume since it could lose sales from top products.
- Ceasing further M&A activity could stifle Amazon's growth potential. Amazon has acquired a number of brands and companies over the years, including Zappos and, more recently, grocery chain Whole Foods. Amazon has used these acquisitions to grow its brand and extend its reach into different consumer segments. But further growth could be hindered since the committee's recommendations would prohibit M&A activity, which could limit Amazon's revenue potential as well as its options to combat competitors in the market.
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