Daily Update: Amazon vs. Regulators – A Shifting Battlefield

    Amazon Gets Go-ahead To Build Two More Data Centres In Dublin

    Amazon launched in 1995 as a startup with an unusual business plan – sell books online, rather than through bookstores.

    The scrappy underdog has since transformed into a world-beating conglomerate and has drawn the attention (and occasionally the ire) of antitrust regulators. Amazon has responded to potential regulation much as it might respond to a challenger of its e-commerce or cloud hosting business — with energy and focus.

    Now, the regulatory battles are shifting to the state level and Amazon is pivoting to meet the new challenge.

    For years, Amazon has had a reputation as an unstoppable force that swallowed competitors and entire markets between quarterly earnings calls. The company has always disputed this characterization, attributing its success to low prices and a range of products to meet customer needs.

    Regulators, responding to complaints from some of Amazon’s competitors, have taken a hard look at the company from an antitrust perspective. The key anti-competitive claim, according to S&P Global Ratings, is that Amazon’s private-label sales compete against and undercuts third-party sellers in its marketplace. Amazon has visibility into third-party seller data and uses it to inform its own private-label brand strategy.

    In 2021, S&P Global Market Intelligence analyzed Amazon’s lobbying expenditure, finding that its lobbying costs had increased steadily every year since 2011. During the first quarter of 2021, Amazon spent an estimated $5.1 million on lobbying, according to the Center for Responsive Politics, a Washington, D.C.-based nonprofit that tracks money in politics.
    “They know they are going to be regulated,” Alex Petros, policy counsel for nonprofit public interest group Public Knowledge, said at the time. “They are trying to grow, and at the same time, Congress is waking up to the power of dominant digital platforms.”

    Read Also:  Like Nigeria's eNaira, Tanzania Set To Launch Its Digital Currency

    The American Innovation and Choice Online Act, a bill sponsored by Sen. Amy Klobuchar, D-Minn., and Sen. Chuck Grassley, R-Iowa, has stalled short of a vote on the Senate floor.

    If the U.S. House of Representatives switches to a Republican majority during the upcoming midterm elections, it is unlikely that the bill will come to a vote. While Republicans are ambivalent toward Big Tech, their criticisms center on censorship rather than antitrust concerns.

    With a divided federal government looking likely, state politicians are increasingly looking to their own laws and resources to take action, according to S&P Global Market Intelligence. California Attorney General Rob Bonta filed a lawsuit in September alleging that Amazon violated California business competition laws in requiring third-party sellers and wholesalers to offer the lowest prices for their products on Amazon.

    Texas, New York and Colorado are also considering cases against the e-commerce giant.
    Amazon has contested the claims in the California lawsuit. But it is looking increasingly like Amazon may be fighting a multifront and multistate battle with regulators.

    Today is Thursday, October 6, 2022, and here is today’s essential intelligence.

    – Written by Nathan Hunt.