This sounds very simple in the commercials…. But it’s a lie, S. 2992, or the American Innovation and Choice Online Act the bill aims to prohibit dominant platforms from “abusing their gatekeeper power” by favoring their own products over competitors that use their platforms. In essence, shopping platforms like Google & Amazon would no longer be able to weight results and services for their own products in a marketplace environment.
Amazon for example wants your products to be listed in their “marketplace” so they can be the giant marketplace they claim to be. As a result they pull in TONS of consumer traffic to which they present their own products more favorably than the vendors who list in the marketplace.
The trick in understanding this is to understand the nature of a marketplace, digital or otherwise. Merriam-Webster “an open square or place in a town where markets or public sales are held”.
If Amazon only sold its own products, there would be no issue. However, Amazon defines itself as a marketplace. A place where vendors can come to publically sell their wares. Generally, marketplaces charge some sort of fee for vendors to sell there. This is all good, except they have their hand in the cookie jar by also selling there… Worse yet creating algorithms which give their own products advantages over the other vendors in the marketplace.
Google for example, allows all products from all vendors (save a few that violate their TOS) to list their products in Google Shopping. However, their own products as well as paid advertisers are given a steep algorithmic advantage. Google allows these vendors to list for free, simply to increase the size of their own offering and make it seem like a true marketplace selection.
Google’s regular search listings work pretty much the same, offering paid results a considerable advantage over organic listings. They need all of these smaller websites to increase the size of their offering so they can make more money from the paid listings they push to the top.
I realize many consumers either have no idea or don’t understand…. But we are being gaslighted.
The legislation’s central idea is that a company that controls a marketplace shouldn’t be able to set special rules for itself within that marketplace, because competitors who object don’t have any realistic place to go. No business can afford to be left out of Google’s search index, and few online retailers can make a living if they’re not listed on Amazon. So the Klobuchar-Grassley bill, broadly speaking, prohibits self-preferencing by platforms that hit certain size thresholds, like monthly active users or annual revenue. To take a simple example, it would mean Amazon can’t give its in-house branded products a leg up over other brands when someone is shopping on its site, and Google can’t choose to give YouTube links when someone does a video search unless those links are objectively the most relevant.
Gilad Edelman APR 7, 2022 7:00 AM. Gilad Edelman is a senior writer for WIRED, covering the intersection of tech, politics, and law. Before that, he was executive editor of the Washington Monthly. He has a degree from Yale Law School.
The commercials about breaking Amazon Prime are grossly misleading. I know some people will say Amazon allows sellers to ship via their own choice through the “Seller Fulfilled Prime” program which is closed and their is a waiting list. More gaslighting… smoke & mirrors.
This is not the first time Amazon has used it power to force industry to play to its own advantage. Remember when Amazon was using the USPS to ship packages while they aggressively built their own shipping and delivery capabilities?
USPS was shipping packages for Amazon at a cost that worked out to roughly $2.00 per package, whilst smaller vendors where paying more than 1000% over that cost. Worse yet, Amazon packages were given accountability services and handling priority over smaller vendor’s packages.
We all know why USPS took the deal… They were already in financial trouble. Honestly, I’m sure USPS was starting to breath a little easier with operating revenue from Amazon. Amazon then exponentially expanded its reach by increasing the number of Amazon delivery centers in the US from 163 in 2019 to 278 in 2020.
Amazon pretty much dumped USPS in a classic move we’ve seen from powerful companies in the past. USPS, who had bought equipment, expanded, hired additional personnel etc. suffered losses which have nearly bankrupt them.
In 2018 USPS showed $3.9 billion loss fiscally, but when Amazon was done using them to bankroll their own delivery… the losses rose astronomically more than doubling in 2019 over the previous year.
- 2018 – $3.9 billion losses
- 2019 – $8.8 billion losses
- 2020 – $9.2 billion losses
- 2021: $6.9 billion in losses
So, think twice about… You know what’s next right? When these big powerhouses finish destroying smaller businesses they will raise prices, limit included services and bolster their own profits on our backs. If you think for one second this isn’t going to happen…. Pick up a history book. This is why power plays like monopolies are illegal.
