So basically, Amazon is not allowed to look at what products are selling well on Amazon before they decide which products to make. However, Amazon is still allowed to sell products, and presumably market research firms are going to give them the same results, more or less. So what did this accomplish, really? It seems like some UK lawmaker is up for reelection and wants a feather in their cap.
It strikes me as very similar to the ever present conflict of interest in the securities world between clients and broker-dealers.
A business like Amazon’s retail one is quite like the latter, and I would be totally unsurprised to see more and more legislative pressure applied to force them to segregate if not choose between their ‘agency’ and ‘prop’-type franchises; especially outside the US. Stuff like the EU’s DMA are just first steps; in securities trading a lot of this stuff sails into criminal rather than civil law.
Well, actually, I think this is increasingly being highlighted as a problem.
For example a few years ago in Australia it was a big issue that the supermarket duopoly was intentially making their brands of milk too cheap. There was a kind of spiral where expensive brands weren't selling well, so farmers had to sign restrictive contracts with the big supermarkets, but the rates were too low to be profitable or even viable.
The conflict of interest sort of "broke" the free market for milk. I'm not sure if retailers should be forced to be "brokers or producers but not both" but I am sure that if they were purely "brokers" then we wouldn't have experienced this particular problem. (The fact that the supermaket business is so centralised is another related issue).
I wasn't familiar with the Australian "Milk Wars", and went down a bit of a rabbit hole. This $1/liter pricing appears to have started on Australia Day in 2011, and continued until 2019.
But in this summary [1] of the report that Australia's competition regulator released in 2018 we can see that the price/liter that farmers were getting during this period doesn't seem to have been affected by the $1/liter pricing.
The ACCC found (quoting [1]): "no direct relationship between retail private label milk prices and farmgate prices", and that neither the rate at which farms closed down, or their profitability was affected by the $1/liter milk.
There's a lot more healthy competition between grocery store brands than in e-commerce. If Amazon weren't so dominant then they wouldn't be the target of this kind of regulation.
I'd say the cost of switching in real life is a lot more expensive than going to a different URL. Amazon is dominant because it fights to provide a good value to its customers. It's easy for them to type in a different URL.
Most supermarkets do not rent out a significant proportion of their floorspace to third party retails which they directly compete with? (and therefore have an arguably unfair advantage because they have full access to their sales data but not the other way around)
As the market makers they have data which is otherwise only available to the sellers themselves. If they have to buy market intelligence from third parties it won't be as good, plus those third parties now have intelligence about what intelligence Amazon is willing to pay for which I'm sure they can sell on to the highest bidder.
Well, yes, and that's not some circumvention of measures like this, but the intent of these sorts of anti-competitive laws.
Amazon can use the same data they've been using all this time, but they must not put themselves in a special position in acquiring that data. If they want to publish their sales data for free or for a price that they themselves pay, that's fine, as long as others can also get the data.
Wouldn't selling it, perhaps not be particularly fair. Like, couldn't they sell it at a price that would eat up all potential profits from the company using the data. But it'd be fine since they could run that segment of the company at a loss to bolster profits in other parts of the company?
They'd have to sell the data to a third party, who would only be willing to pay market rates (they'd profit more from reselling that data to multiple parties).
Colluding to increase the base rate would be a kind of price fixing (i.e. illegal) and having the third party increase the margin wouldn't benefit Amazon at all.
EDIT: remember if the data is actually valuable, then Amazon could sell it for MORE than it costs to buy it back, since the third party can recoup its costs from multiple purchasers. (So the market mechnism helps make the data more accessible and broadly useful.)
I agree. There are similar laws for many other industries already that either prohibit or put operational restrictions such that their "on the platform" subsidiaries are on equal footing with competition.
Enron was breaking this principle when their energy traders would call up a power plant they also owned and ask for an unscheduled outage. I don't remember if this was specifically illegal in this case, but I used to have to take an online class once a year to remind me not to share any non-public data with marketing in one such regulated industry and that there would be serious consequences if this rule was broken.
Ok, honest question. Wouldn’t this just encourage conglomerate interests to capture the value outside the company? Seems like a logical place for a large PE funded wedge company if the opportunity was made available like that. Going from one player to two is very possible if we do something simplistic — it’s a big juicy target and a land grab if it’s simply divested. How can we insure a healthy diversity instead of the immediate reconsolidating that would come with a simple separation of interests?
I am for these changes, just asking the question I honestly worry about.
The distinction between platform and product is much hazier in software compared to physical industries.
For example, it’s taken for granted that most personal computing platforms have built in PDF viewers, but this wasn’t always the case and used to be a distinct product category (and still is to some extent). Similar for media players, some networking software, and spreadsheet apps.
Should Cloudflare be allowed to offer reverse CDN services for uploading content? Or would that unfairly compete with companies like Mux?
This doesn’t appear to be a response to or at all related to ISPs either owning the infrastructure or selling the service. What exactly is your point about ISPs here?
I love this question. Supposedly, Walmart does a significant amount of profit from their house brand which is, inspired by their suppliers in a similar way to Amazon.
As a Costco shopper, I am also quite likely to grab the Kirkland brand instead of the competitor.
Costco is maybe not the best example, because nearly every Kirkland product is a main name brand with a different name. It's almost never the case that Kirkland coffee (often made by Starbucks) is on the shelf next to an identical/equivalent coffee from, say, Folgers. Costco often only stocks one type of each product: they have Kirkland batteries (Duracell) but no Energizer (though they do sell other Duracell batteries at a higher cost).
Most supermarkets, on the other hand, work with manufacturers that aren't name brands, and almost exclusively sell their store brand alongside name brand products.
While I don't know what makes Amazon's practices different from what supermarkets do, my assumption is that placing two products adjacent on a shelf is very different then highlighting and promoting the store brand above and ahead of the competition. The store brand doesn't appear exclusively in recommendations or ads or come with a "Preferred" badge. The store also doesn't use sales data to decide which products to make a store brand for, with the goal of overtaking the name brand.
From what I understand most of those "house brand" products are made by the same factories of the on-brand stuff, probably but not necessarily with the same recipe and QC standards.
Product branding has almost no relationship to which company actually made the product, consumers are intentionally blinded to this information. I would appreciate regulation requiring products to be branded with the factory that made it; I think this would be a huge win for both consumers and workers but it would be firmly counter to the interests of major brands with a lot of political influence. Also many consumers would probably oppose this against their own rational interests because they have personal attachments to brands.
Grocery stores used to be marketplaces. Then in-house brands came along. The current iteration of grocery stores is Aldi, where everything they sell is an in-house brand.
There's a really interesting analogy here with the LLM platforms that both are a vendor to companies that use their APIs, but also potentially compete with those companies as well as they evolve their offering over time. It would be interesting to see if this kind of regulation could be applied in that context as well.
This is why I don't understand new LLM start-ups. They hope their low-hanging integration or LLM-flavor-of-the-day fruits do not attract attention long enough.
Can this be monitored? Up until now, Meta hasn't allowed scraping (see Meta Bright Data lawsuit), and has been benefiting from the data, maintaining its monopole status.
sad that el reg is also doing this:
"In Amazon's case, the e-commerce giant used vendors' sales figures to decide which items it should sell, and how much to price products to get an edge over everyone else. The internet behemoth also promoted its own products with its Buy Box feature and it further cut into retailers' margins by charging extra costs if they wanted to use Amazon's Prime delivery services, the CMA said.
It’s not lauded. Suppliers hate the power the big supermarkets have over them. But stores’ data is probably down the list after the payment terms they dictate, not being paid, and payment for in-store product placement etc
It's not hard at all. We can say the same about someone coming round to smash up your business if you don't give them money. Just give them money, it's not that hard.
Just because something is easy doesn't make it okay.
They don't need to. They have such a big chunk of the market that if you don't sell how THEY want you to, you lose access to a huge chunk of the market. That's the problem. That's the complaint. That sellers who want to sell to buyers who want to buy are forced to do it how Amazon states, for the benefit of Amazon, which means the seller has to put their prices up to cover Amazon's Danegeld, but then may NOT also sell elsewhere at the lower, non-Danegeld price.
