The Market Institute President Charles Sauer has a new article in Real Clear Markets looking at the situation in Europe with regulators remaking Amazon’s website for the sake of “competitiveness.”
“European Union Competition Chief Margrethe Vestager recently unveiled a new design for Amazon’s website. No, she is not moonlighting as a web designer.
Instead, Vestager redesigned Amazon’s site to bring the company into compliance with EU regulations. Vestager and her fellow bureaucrats want to ensue Amazon does not “preference” their own products — or products of vendors who have what the EU considers a “special deal” with the company — over other third-party businesses that use Amazon’s platform.
For instance, the redesigned website requires Amazon to install a second “buy box” that does not contain language the EU says discourages consumers from clicking the box. An example of such language on a buy box is “willing to wait?” which lets consumers know that by clicking that box they are linking to vendors that do not offer one-or-two-day delivery services offered by third-party vendors part of Amazon PRIME. Providing this information allows consumers who want the one-or-two-day delivery to save time. The “willing to wait” language will entice those interested in trading a longer delivery time for a cheaper price or an opportunity to purchase a version of the desired product unavailable from other vendors.
In marketing, this is the utility of time. It’s very basic business stuff.
By prohibiting Amazon from “preferencing” third-party vendors that have agreed to use Amazon’s warehousing and shipping services in exchange for receiving the PRIME designation, the EU would make PRIME designation less attractive to this business. What is the point of using Amazon shipping services if government forbids you from letting potential customers know that, unlike other third-party vendors on the site, you can guarantee the same delivery a time as Amazon products purchased via PRIME?
This unnecessary government overreach could also incentivize Amazon to stop allowing third-party vendors to use PRIME. So, this pro-small business and pro-consumer action may end up hurting small businesses, who are deprived of the ability to reach new customers, and hamstring consumers by depriving them of the ability to discover, and patronize, those businesses that offer them the utilities they’re willing to pay for.
Sadly, but not surprisingly, many in the U.S. Congress as just as eager as Margrethe Vestager to destroy opportunities for small businesses to maximize a platform like Amazon’s. One of the bills that may be considered in the post-election “lame duck” session of Congress is the misnamed “Online Competition and Innovation Act (S. 2992). Like the EU’s new (and NOT improved) Amazon website, S. 2992 forces Amazon (and other big the companies, specifically Facebook and Google), to make their platforms available to third-party vendors without requiring the vendors use other services offered by the larger company.
S. 2992 would thus disincentivize third-party vendors from using PRIME and may even lead Amazon to restrict third-party vendors from using the PRIME designation. S. 2992 would even prohibit Amazon from even mentioning that some third-party vendors may be unable to provide one- or two-day delivery, a situation that could lead to many unhappy Amazon customers!”
Read the rest of the article at Real Clear Markets by clicking here.