This strategy is used to essentially force companies to bid against their competitors on their own branding. By Amazon restricting "Alexa" and similar, it is protecting itself against such abuse but it implicitly forces its sellers into this race
disclosure: I am a former amazon employee who did not work on marketplace at all
I stand corrected lol
How is that even allowed? 18,000 reviews? They honestly look completely legit.
That's a question best directed at Jeff Bezos and consumer protection regulators.
That indicates a totally unacceptable level of complicity on Amazon's part, and I hope they face criminal sanctions for it. But I'm not holding my breath.
Edit: Since a lot of people aren’t familiar with the details, the plan only kicks in once the company reaches 25 billion in revenue.
Valve launched Steam originally only with its own games then invited others to join. Now it’s a completely open marketplace.
 - https://store.steampowered.com/app/583950/Artifact/
Not to say HL3 wouldn't get more attention, I don't believe Valve treats their marketplace similar to Amazon.
: 6.4k likes vs 81k dislikes at https://www.youtube.com/watch?v=DA5mY8XqrHU
The game lost all of its players (something like 30 active daily users at one point), and Valve said they were rewriting it. They called it "the long haul", and that is where most of the dislikes came from. People paid for the game, paid for cards, and then were told they couldn't play anymore. The community was furious.
Sometime recently they did release a beta of the new version. I have a beta key but wasn't all that interested in trying it. I imagine most people feel the same way.
Honestly, I think the game was so bad that pushing it on everyone on Steam wouldn't have improved their numbers. It came at a very bad time -- card games were on the way out, auto battlers were on the way in. They gave up on Artifact and focused on Dota Underlords, and probably made the right decision. (I have not followed the auto battlers at all, so I don't know if people like Underlords or not. Maybe it's another Artifact, I'm not the right person to ask.)
That said given I mostly only do short game sessions , maybe they figured that I wouldn't be that interested in it?
I've mostly played VR games in 30 minutes sessions about. I get dizzy beyond that and it's the time I've got available anyhow :)
There's a reasonableness metric there that needs to be evaluated. Nothing is simple. If you're giving in-house apps special privileges because you've implemented some core functionality using mostly generic APIs and just a few special hooks.. that's one thing.
If you're giving in-house apps special access to random "nice to have" things, or participation in various contexts (e.g. sales, promotions, etc.).. in order to boost your stuff against others, that's another thing.
The details matter.
I still want Valve to still be able to sell games on Steam.
I want Epic to be allowed to make games.
I want Costco to still have the Kirkland brand.
This has nothing at all to do with socialism. In fact, those that support such an argument seem to do so because they believe it _increases_ competition. It might actually be the polar opposite of socialism.
They often only pay the manufacturers after its sold. And sometimes don’t return the units which don’t sell
This is not true at all. Costco buys everything they sell.
> They often only pay the manufacturers after its sold.
This is true, and may be where your confusion lies. They buy on net 30/60/90 terms from their vendors. This means they have 30/60/90 days to pay them. Because they move inventory so quickly, they have often sold an item before they have to pay for it.
But they are still buying it and still taking the risk that it won't sell.
> And sometimes don’t return the units which don’t sell
This is only true because as I said before, they own the items.
I don't know about Costco, but the big box stores don't carry any risk. If the product doesn't sell then they return it and deduct that off your next invoice. The same happens for a customer return.
Depending on the retailer/product category you might get charged slotting fees, pay-to-stay, plus a share of promotional costs. There are also other fees for use of distribution centers, discounts for paying early (even if it's not early), fees (or extended terms) for slow-moving products, and so on.
"Owning the items" feel less correct than "borrowing items with a promise to pay".
That clearly does not apply in many instances, otherwise we wouldn't have clearance sections. There are all kinds of scenarios where it's either not possible, not feasible, or just not economically viable to return products to the manufacturer.
I'm not making this up. There is an entire cottage industry of "product rotators" who work on behalf of suppliers to go into stores and "rotate" the product that's closest to expiration to the front of the shelf, because the supplier has to pay the retailer for any product that expires before its sold.
The model isn't common for general consumer goods retail, but it's a fairly common practice once you get into more specialty and high-priced inventory.
My source (which I understand may not be satisfactory) comes from working at two of the biggest US retailers for a total of almost 9 years.
we're only talking about a situation where the entity running the marketplace is not the seller - they're merely the facilitator between buyers and sellers. If you want to run a business where you rent a space on the shelf to some other seller, and your business is bigger than $25bn, these rules would prohibit you from also placing your own products on the shelves beside the shelves you've rented out.
To test this, go to Target and ask if you can put some items on the shelf for them to sell for you. If that's an option, it's a marketplace.
Everything sold by Target is sold by Target.
Amazon is the online version of a flea market in the parking lot of a big box store.
I don't know if that is the distinction lawmakers are making, but to me that is the difference.
The stores had already paid for the magazines, books, etc. When they returned the physical media to the manufacturer, it was because the manufacturer accepts and destroys them or attempts to resale them to discount retailers. The manufacturer usually rebates the stores for the returns because they want the stores to keep buying from them, but this usually comes in the form of rebates/discounts on new inventory purchases, not as refunds on the returned products.
One is the liability is much clearer. At least in some jurisdictions, if the manufacturer can't be located to take responsibility for a defective product, the retailer can be sued instead. IIRC, Amazon weaseled out of some hoverboard product safety lawsuits by claiming it wasn't the actual retailer.
In this case, my hope would be that Amazon would shut down the 3rd party marketplace in favor of it's own retail business. Alternatively, it could explicitly wall them off from each other so there's a much clearer distinction and the marketplace could be more easily avoided unless explicitly desired.
You'll note that I wasn't focusing on anti-competitive behavior at all. I personally don't like sites that commingle 1st party retail with a 3rd party marketplace, because I think they're a bad user experience.
I'm sure the integration is desired by many sellers , but my sympathies lie with shoppers, and Amazon Marketplace has made my buying experience worse.
 To give a slanted example: if I'm a seller trying to unload counterfeit or substandard goods, I want a trusted brand like Amazon's to hide behind. Even better if burred distinctions let me piggyback on any goodwill Amazon's first-party sales have created in shoppers.
What do you mean? Sellers can always sell on other marketplaces, like eBay, where it's clearer to the buyers what they're getting into.
If Amazon has too much power in the (retail) marketplace, the solution is to break it up, not give other sellers precarious access to its storefront via "Amazon Marketplace."
Who would buyers go to? Amazon.com or the hypothetically amazonmarketplace.com?
Until Amazon Basic gives Amazon virtual “slotting fees” to have the best placements...
P&G has been on the decline for years. Dollar Stores selling no name products have been on the rise.
Amazon touts a 'free' marketplace where anybody can sell and advertise their product. Yet it uses its monopoly on ads within their domain against others.
Amazon facilitates direct transactions between buyers and sellers. It also participates as a seller.
Walmart is still larger.
Geeks have been complaining for decades that companies shouldn’t be able to patent stuff because “it’s on the internet”. Why limit the relevant market to “on the internet”?
This is a common belief, and also mostly false. I think it's common because it used to be true, but isn't anymore.
With the economies of scale that a company like a Target or a Wal-Mart have these days, plus the ever-declining cost to manufacture goods, most store brands are actually run for those stores, and not re-labeled big brand goods, or seconds that were rejected by the primary contractor.
I don't see a problem with them selling their own banded stuff, or even if it's cheaper, in most senses.
I do see a big problem with using what most people consider to be an open market that you can get anything on (even whole computers!) and specifically using that power to inhibit competition by having different advertising policies. It's not like those products were pulling an epic and refusing to give Amazon a cut of the sale, or doing something illegal -- just being banned from visibility is ridiculous abuse of monopoly power.
This is probably bad for the brand name products but very good for consumers.
But if consumers have a choice between Advil and CVS brand Ibuprofen, they must trust the CVS brand but not some other brand.
But the question remains - is the consumer being harmed? Store brand OTC drugs have existed for decades and have been cheaper than brand names.
But there's alot of shady as fuck shit that goes on in the OTC and generic market where they are produced largely overseas in labs that intentionally cut corners and the FDA doesn't give a shit. In fact, the FDA announces their inspections ahead of time which allows the labs to cheat.
https://www.nytimes.com/2019/05/11/opinion/sunday/generic-dr... (One FDA inspector ended up quitting because of his consistent findings in unannounced inspections he made and the FDA not giving a shit and reducing violations)
Undercutting is good though. It lowers prices. Undercutting should be encouraged.
Costco has employees that oversee the QC of these white-label products.
Intels high price chips, and low price chips are often the same chip except the low priced one failed quality control and had some of its circuits turned off.
Wikipedia article, as a primer: https://en.wikipedia.org/wiki/Product_binning
a) To reduce costs by controlling the entire means-of-production
b) To ensure quality control on the product and build faith in the brand, which in turn
c) Pulls people into the store, forcing them to buy a Costco membership if they want the product.
For example, Kirkland coconut water is simply white-label Vita Coco, and the made by label indicates it is packaged for them by the same company that produces Vita Coco.
Does costco get some extra benefit if the consumer buys Kirkland from costco ?
Yes. Costco positions their store brand as a major part of their appeal. This attracts more consumers to their stores, which
A. Increases membership, for which there's an annual fee, and
B. Increases traffic, increasing sales of high margin items as well as the low margin store brand.
If they were to give away their reputation to other sellers by letting them sell their QC'd products, they would be lowering the value of their memberships.
A cheaper alternative for consumers?
Consider some consumer good made overseas produced at the same factory for both the name brand and store brand. As a consumer why should I have to pay for the huge marketing spend the name brand needs to recoup?
I don't see how harming consumers is a useful end of anti-monopoly laws.
I wouldn't mind house brands as much if supply chain information and process information was transparent across all companies, but that supply chain information is a pseudo-trade secret (and for real-time supply chain information, definitely a trade secret) , and you can forget about obtaining process information. I do use house brands for some goods personally, but this is the result of many years of a lot of careful vetting and monitoring ingredient lists that I know is not commonplace nor even feasible with many retail consumers.
House brands can be a useful tool in the market, but they can be abused in too many ways for me to relax my vigilance as a consumer. They also can be abused in too many ways in their distribution channel role to obtain highly-granular, time-sensitive competitive information that normally wouldn't be available in the open market, for me to completely accept their unregulated deployment.
I wouldn't go as far as to say ban house brands by law. But I wouldn't want to keep them completely unregulated in all contexts like we are currently doing, either.
Happy to change my mind with any new information anyone cares to share though, as this isn't an area I keep a close eye upon.
This is not true. I used to have a number of consumer products clients when I was at a firm. Store-brand products are all made for the stores by name brands as part of their white label programs (excepting clothing, since the transaction flows are different for that industry).
Usually the way it works is that the white label product is the same as the standard product, but with store-selected packaging. In most cases, the differences are purely cosmetic (as with cereals, which are made for most stores by General Mills and its competitors.) In a few instances, the store brand is usually a white label version of the brand name's discount brands, such as the store-brand products at the 99 Cents Only and Dollar Stores.
I wouldn't mind house brands as much if supply chain information and process information was transparent across all companies, but that supply chain information is a pseudo-trade secret (and for real-time supply chain information, definitely a trade secret) , and you can forget about obtaining process information.
This information is known within the industry. As 99.99999% of customers don't care about the supply chain of a store brand product, they don't include that information on the packaging. But then again, neither do the name brands. In some cases, you can the name of the manufacturer by asking the store's corporate office, and they'll usually tell you. Generally, they don't have access to "process information" for how the product is manufactured because they're just buying the product from the manufacturer. Whether the manufacturer will tell you depends on the product.
House brands are subject to the same regulations as name brands.
House brands of any product have to pass the same relevant regulations.
There is probably much, much more than meets the consumer retail eye to house branding, and I'd love to get an insider's look at the factors and considerations around the decision to roll out a house brand product.
This is because house brands are made by the name brands. In order to maintain their competitive edge for their name brands, they don't offer the modern formulations white label to the stores, and vaccines generally are not permitted by FDA regulations to be sold white-label.
In a couple of my previous links, some of the more modern formulations like Humalog came off of patent protection in the US around 2017, but no one outside the manufacturer has picked up white label manufacturing. A lot of times house branding just seems like market segmentation to me based around packaging when the original manufacturer is making the same product, but many times I've picked up a house brand and a name brand packaged food for example, and find sugar is higher up in the ingredients list in the house brand (and the nutritional panel reveals it is a significant ranking change).
Thus house brands seem like an obfuscation of the market to my uninformed eye so far. They seem to act in the macro scale as a way to prevent real competitors from arising and taking away real revenue and margin, by stuffing the distribution channel with SKU's that give a slightly larger cut to the distributors in exchange for maintaining the same vendor count (thereby making it much more difficult for a competitor to gain shelf space).
Those incentives probably all change around with an ecommerce site like Amazon. I just find this aspect of free markets fascinating as a layperson.
For drugs, generics still need to prove that their own product meets safety standards and is the equivalent to the drug coming off patent protection. It's not cheap. For biologics like insulin, it's even more expensive.
That's not how retail works. Stores are more than happy to put new products on the shelf, especially if they sell well. They don't "maintain vendor count," they allocate shelf space based on actual sales. If a product doesn't sell well, it loses space to better-selling products on a daily or weekly basis (depending on the store). New products show up all the time, and depending on the arrangement with the manufacturer have between a week and a month to show their selling power. (New products are usually on a consignment basis so the manufacturer only gets paid if units sell.)
Thanks for explaining what goes on behind the scenes! I don't have the terminology for this since I'm not in the domain, so what is it called when a Wal-Mart or Home Depot or grocery chain purchasing department selects a vendor for a product, but will not consider another similar vendor, because physical shelf space is finite? For example, I see Lincoln welding machines, but not Miller, Fronius, or some white label from China at Home Depot, and every Home Depot has the same amount of shelf space set aside for welding machines, but all Lincoln. There isn't even experimentation with an alternative brand with one model.
Based upon your description, that finite physical limitation is not able to be strategically used by incumbents to take the oxygen out of the room for other vendors. One way to suck the oxygen out is to sell more. But if I'm an incumbent, and I get a chance to sell exactly the same product in house brand packaging for slightly less margin with a greater chance that a competitor won't get to see the same shelf, I'll take those reduced margins all day long. For a marginal loss in profit, I block shelf space without having to grow my sales by some commensurate amount to take up the same blocked shelf space. So why won't that work in the real world?
I.e. it targets the most successful companies, but does nothing for new entrants who are struggling against the market power of multi-billion dollar corporations.
The plan prioritizes the needs of capital over either efficient management or innovation.
It’s a great way to guarantee the worst aspects of capitalism while eliminating its benefits.
From what I hear, she was handed this plan by strategists who hoped it would have populist appeal.
If you ban the incumbent from using a business practice that other still-big companies can use, those other companies will just use that same practice to scale up to the threshold size.
This is exactly the opposite of innovation.
Innovation would mean someone coming up with a new business of some kind that could actually displace the incumbent on its merits.
But a cap on how big you can get using that strategy, prolongs the usefulness of the strategy indefinitely. Using legislation to prolong the life of a strategy that would otherwise be vulnerable to innovation is exactly the opposite of innovation.
In what you just said:
Some = everyone who hasn’t already made it to the a higher tier.
This removes the incentive for anyone to work out how to defeat an incumbent who is using the strategy, since they are forced to stop using it by law and not because a better alternative has emerged.
Indeed you might even expect it to become more virulent.
Imagine if Apple knew in advance that at some particular arbitrary revenue level, they would no longer be allowed to operate a store.
That would create an even stronger incentive to lock in their advantages through other means.
It might well have tilted the playing field in a direction where Apple chose to adopt Facebook style addiction dynamics as a strategy or risk being outcompeted by someone who did.
The way out of the Apple walled garden is for someone to build an alternative that is better.
There are many promising ways to do this.
If my goal is to win through innovation, I would rather fight against multiple smaller non-innovating incumbents than one big one that can crush me with money.
> That would create an even stronger incentive to lock in their advantages through other means.
> It might well have tilted the playing field in a direction where Apple chose to adopt Facebook style addiction dynamics as a strategy or risk being outcompeted by someone who did.
> The way out of the Apple walled garden is for someone to build an alternative that is better.
Or they make an alternative that's Facebook style addictive...
It seems to me like one consequence of your argument is that encouraging innovation is dangerous because Apple might innovate in a bad way.
That makes most of this irrelevant to deciding whether market caps are good or bad. You came up with a scenario where caps lead to something bad, but the same kind of scenario could apply to a world without them.
And remember that if someone actually does start taking market share from Apple under the current laws, they still have the option to do the bad things you listed, and they'll be just as effective.
Is this meant to be a good faith steel-man of my argument?
Why do you think dethroning the largest companies does "nothing" for new entrants? What do you think would help new entrants?
And why do you think dethroning companies won't have benefits? If nobody has a throne, then you improve competition. This increases the benefits of capitalism, while diminishing the bad effects of a company taking over the market. How could this "guarantee the worst aspects"??
Also, that means that none of the cloud providers could have a marketplace where they sell third party solutions. ElasticCo, Mongo, and plenty of the open source companies sell software through the marketplaces of all three cloud providers. Would that be disallowed to?
Do you think any of those companies that sell through the cloud provider’s marketplace would like that outcome?
That is the expected outcome, yes. That the spin off their marketplace business as a separate entity.
> Also, that means that none of the cloud providers could have a marketplace where they sell third party solutions. ElasticCo, Mongo, and plenty of the open source companies sell software through the marketplaces of all three cloud providers. Would that be disallowed to?
Do you think any of those companies that sell through the cloud provider’s marketplace would like that outcome?
They would probably be ecstatic. Those marketplaces would either be spun out or be replaced by a third party market, that would have an incentive to feature their products above the cloud provider's own products if those products brought more money to the marketplace.
I’ve been a dev lead for a non software company. I was trying to get training for my team on AWS. I had to go through all sorts of issues and approvals and POs and making sure that they are an approved vendor.
Then I just said forget it. AWS was already an approved vendor. I signed everyone up for an ACloudGuru account through the marketplace using the authority I already had.
I needed an intrusion detection and intrusion prevention system. Again, I just went to the marketplace and bought something through the marketplace.
You think it’s hard to get consumers to use third party app stores. You have never been through a corporate procurement process.
Besides the marketplaces basically let you search the AMIs that AWS offers alongside third party AMIs. No company is going to trust random third party marketplaces.
I assure that every company on the marketplace wants to be on the same bill as your AWS bill. Half the reason departments go to the cloud is to get away from the gate keepers. Once you get approval from the powers that be to use AWS, it’s much easier to buy off of the marketplace.
But I disagree. First off, if Amazon couldn't offer their marketplace, if it were profitable, they would spin it off.
Secondly, they would almost certainly work out a co-billing deal, where approved marketplaces could bill through AWS, because they too know about the value of being already approved. It would also be a way for them to keep making money off of a marketplace if they couldn't run one anymore.
My point is, if AWS could not run their own marketplace, I'm sure solutions would come up to enable a 3rd party to work as smoothly as possible.
Also, wouldn’t AWS open itself up to more liability if it had no approval process for individual vendors?
I thought the purpose of the internet was to reduce the number of middlemen?
If supposedly technologically literate people on HN can’t think through all of the negative repercussions, how do you expect representatives in Congress - one of which grilled Zuckerberg over Twitter’s policies to do so?
Why not just get rid of this whole capitalism thing and let the state run everything with “5 Year Plans”?
- you can pay for a subscription off site
- any app can integrate with the TV app. If you search for a movie/tv show and it is available for purchase from Apple or via a subscription that you already have, it will show you your free options first.
Or would Apple be prevented from offering any apps whatsoever? I would think a rule like this would be bad for consumers, and would also lead Apple to draw different lines between what is an app and what is a built in OS functionality (i.e., migrate app functionality into the OS itself, in order to avoid the rule).
Do you think their native apps would be chosen over the others in a fair competition?
So there is a generous bootstrapping period.
This is obviously untrue. Walk into almost any store in the world, and you're in a marketplace where the owner is not also selling his own competing products.
There are vanishingly few exceptions, like garden centers, big box stores, and supermarkets.
#1 Amazon selling third party products.
#2 Third party sellers selling their products.
#3 Amazon selling their own products.
You're pointing out that #3 isn't necesary, and that's true, but my point is that #1 is necessary and is how every store starts, then they might expand into #2 and #3.
At a store (once again, generally speaking), the company buys things and re-sells them. In a marketplace you're buying directly from someone else (and they usually pay the marketplace operator a cut of sales afterwards, or an upfront fee to sell there).
How about laws the apply equally to all. Seriously, go across the magical threshold and then what? You have to leave your own market place? Do we have then a list of exceptions and exceptions to exceptions?
Mickey mouse legislation is the reason the system is in such shambles and there are legions of lawyers just to navigate it all. Government which operates off the petty whims of the politicians is subject to abuse by all sides and you just best hope you stay on the right side.
This is deliberate and not the result of the search algorithm. They even label the results: "Featured by own brands"
And this just sounds really unwise: "Roku Inc., which makes devices that stream content to TVs, can’t even buy such Amazon ads tied to its own products"
To everyone wondering how it's an antitrust issue, I think this quote right here hit the nail on the head.
Edit: On the other hand, I just looked up Roku and it's all Roku devices, I guess as long as I don't see an Amazon product on that first page that's fine. It's still weird you can't buy ads for your own product's very name though.
I can't read the full article due to paywall unfortunately, but if they didn't do a more thorough investigation I think someone might just have to, to make sure Amazon's not putting their own ads where they don't allow competitors to buy ads for products they don't actually own themselves like Roku, if they aren't then maybe they're just trying to protect the results given back.
"Smart Speaker Google" also lists just Amazon Echo devices.
"Google Speaker" just comes back with accessories, and then has a 'recommended product' which is the Echo Dot.
"Google Home" comes up with the echo dot as a recommended product...
Typing in "Google Home Hub" actually brings up the google home hub! Immediately followed by 5 alexa devices...
About the only saving grace of Amazon is shipping speed, but even then it's almost easier to pop over to a Target etc. So I always check local stores via their app.
I was worried last year about Amazon-geddon, but I think most other stores have caught on and upped their game.
1. a shopping carousel entirely full of echo products (2nd card is on Amazon.com)
2. a paid ad from Amazon
3. several videos about echo products
4. q&a about Alexa
rest of page: more Alexa related results
So, to your point, no, Google does not do anything like this.
Their tablets certainly aren’t as functional when it comes to the selection of apps available, unless you jump through weird, unsupported, highly fishy hoops to install Google Play on them.
The fire tablet is using the android os
1. buy ads for amazon product-name keywords to compete with amazon by also selling amazon products.
2. buy ads for amazon product-name keywords to compete with amazon by selling one's own non-amazon products.
I have a few chromecasts sitting around but now I have an iphone they are all useless and I have to buy an Apple TV which is 4x-5x the cost of a chromecast and only works on my apple devices.
Your phrasing definitely implies that had disagreed to include Prime at some point.
(Walmart's retail sales are higher than Amazon's retail sales, though that's likely to cross-over sometime in the next couple years.)
Target is indeed gated by a person: https://corporate.target.com/about/products-services/supplie...
Product placement (whether you need to reach high low or if it's front of your eyes) make a bigger difference than a packaging which of course dominates over the content. Fancy packaging is also something that big brands can allow and probably protected by patents. Most of stuff you buy is likely from a company which was bought by Nestle. Nestle can negotiate, they can't be removed.
Smaller producers must provide the same product that they make under the supermarket brand so that market can get customers accustomed to good value and then they start looking if somebody can make something similar enough but cheaper.
It's much worse than as if Amazon ordered products by how much money they were paid from a given company and banned products from competitors of those who paid enough.
Free market is long gone in the groceries world.
I did not do enough research, I don't have behind the scenes information, I just think about it sometimes when I'm shopping. I'd love to be proven wrong or read a good book or some article on the topic.
You can boil it down to a company having too much power and abusing this power to harm competitors which ultimately harms consumers; which is exactly what Amazon is doing in this case.
How many Bureaucrats exist? More than enough to handle a single issue at a time.
"It's OUR store, we can deny anyone for anything."
"It's a MARKETPLACE, we can't be held liable for bad behavior or fraud!"
The offline giants would love to have these same arguments.