I do understand, but what you're describing is bad for Amazon's customers, as you note yourself.
Furthermore, again, no one is obligated to sell with Amazon. There are thousands, if not tens of thousands of sellers who do not sell their stuff on Amazon. It's not some requirement to do business in the 21st century.
In any case, we can come back to this case a year from now, and we can pretend to be shocked when nothing meaningful happens to Amazon.
I think you're looking at the short term and small scale instead of the long term and large / societal scale.
Yes I'm the short term Amazon's customers don't get the discount they could get om Foo retail. Bit then they become Foo retailer customers and they benefit. Too many things optimize for the small scale.
Similarly Amazon's upon losing customers to Foo retailer has to become more efficient overall (or reduce its rent seeking fee) to stop losing customers. So now all of Amazon's customers for that product benefit, even those that didn't move. And potentially even those customers for other Amazon products.
This is the purpose of capitalism - marker competition. Nobody wins with laisse-fair capitalism except rent seekers. Society benefits from market competition in capitalism and this is pushing for it.
You must be aware that producers can sell their own product and not be dependent on neither Amazon, nor any other middle man.
If I make light bulbs and sell them to customers through my own channels – exactly who is the rent seeker?
In my industry there are actors that are as dominant as Amazon are in retail, but there's also a huge part of the industry who just sell directly to the customer. It's your own choice. If you don't accept Amazon's terms, you don't have to do business with them. And vice versa.
Furthermore, again, no one is obligated to sell with Amazon. There are thousands, if not tens of thousands of sellers who do not sell their stuff on Amazon. It's not some requirement to do business in the 21st century.
In any case, we can come back to this case a year from now, and we can pretend to be shocked when nothing meaningful happens to Amazon.