Amazon's third-party sellers have long had a love-hate relationship with the e-commerce giant. Some have hit their breaking point.
On Tuesday, a coalition of more than 20 independent business groups representing Main Street businesses, including booksellers, office supplies sellers, and hardware stores, kicked off a joint effort aimed at breaking up Amazon. The group--known as Small Business Rising--is pushing lawmakers to enact stricter antitrust laws and enforcement measures, as first reported by The Wall Street Journal.
Specifically, the merchant coalition wants the e-commerce giant to separate its retail business from its marketplace of third-party sellers, says Stacy Mitchell, the co-director of the Institute for Local Self-Reliance, a nonprofit organization in Washington, D.C., that advocates for sustainable community development and is a key organizer behind Small Business Rising. She adds that the coalition hopes to achieve this by creating opportunities for independent businesses to speak with lawmakers and the media, share their experiences, and talk about the need for policies to level the playing field.
The effort is the latest sign of increased pressure on Amazon from merchant groups and lawmakers who believe the Seattle company has crushed smaller competitors through unfair tactics. Amazon is currently the subject of multiple antitrust probes by the Department of Justice, Federal Trade Commission, and Congress.
A spokesperson for Amazon called the coalition's agenda a "misguided intervention." "Amazon and third-party sellers complement each other, and sellers having the opportunity to sell right alongside a retailer's products is the very competition that most benefits consumers and has made the marketplace model so successful for third-party sellers," wrote the spokesperson in an emailed statement to Bloomberg.
Amazon is far from the coalition's sole target; it is also campaigning against tech monopolies as a whole. On its website, Small Business Rising laid out a list of goals for antitrust enforcement, which includes stopping tech monopolies by breaking them up and regulating them, blocking dominant corporations by making antitrust laws easier to enforce, and banning mergers.
Senator Amy Klobuchar (D-Minn.) has introduced legislation that would beef up the antitrust divisions of the FTC and DOJ and hold companies to a higher burden of proof when reviewing anticompetitive mergers. The Senate bill, known as the Competition and Antitrust Law Enforcement Reform Act, is currently awaiting markup by the Senate Judiciary Committee. On the House side, Representative David Cicilline (D-R.I.) is working on a series of smaller antitrust bills.
Legislation from Congress would be a significant step toward reining big tech in. Amazon's treatment of third-party sellers on its platform has raised scrutiny from both small-business owners who rely on its platform and lawmakers. The tech giant regularly uses data from its third-party sellers to create its own private-label products, according to a Wall Street Journal investigation from last year.
Experts in the e-commerce and antitrust space have cautioned that Amazon's problems won't solely be solved by antitrust enforcement alone. Sucharita Kodali, principal analyst at Forrester, said small-business groups should lay out specific goals beyond merely breaking up big tech.
"Small Business Rising needs to be open to more than just a full breakup. They need to be crystal clear on their goals and open to different ways to achieve those goals," Kodali tells Inc.
She said such goals should include making sure Amazon keeps counterfeit products off its platform, improves the integrity of ratings and reviews, keeps the product detail pages of sellers from being sabotaged by competitors, and ensures rogue products can't compete with authentic products.
Kodali said she hopes at least one state will put such mechanisms in place, if not Congress. "Congress needs some smart people advocating on behalf of the sellers. They are up against very smart libertarians, Amazon, as well as an ecosystem of vendors that are reliant on the status quo," she said.