1) Amazon has the kind of market power that triggers anti-trust concerns. You can't get anti-trust concerns when you're a small player.
2) It sounds like Amazon is not offering to buy units at a set price. They're offering to give the supplier $X if they sell the item. That means that Amazon can decide whether or not they want to sell the item - and the supplier has agreed not to compete with Amazon.
3) Amazon isn't saying, "we'll buy 1...don't worry, we'll make 200 more offers soon." It's more like, "we'll buy 1...if we don't buy any more, you're now prohibited from selling directly on our platform."
Let's take it to the extreme and, for a moment, assume Amazon is trying to be evil. Amazon wants to push AmazonWidget and wants to push YourWidget out of the market. They want to price AmazonWidget at $25. They see that you're selling YourWidget at $25. It's a brand-name that customers will want at $25. Amazon calculates that you're probably making $18 in profit so the come to you and say they're willing to give you $20 per sale. You accept. Amazon then sets the price of YourWidget at $1,000 and not a single customer orders it. AmazonWidget becomes a huge seller.
Let's say that AmazonWidget costs Amazon $15 and they want to sell it for $25. You've been selling YourWidget for $25. By taking control of the pricing of your item, they can make sure that AmazonWidget doesn't have to compete with YourWidget on price. They can price YourWidget at $30 so that they make $10 whether someone buys an AmazonWidget or a YourWidget. Previously, they would have had to price AmazonWidget below $25 to deal with the fact that you were selling YourWidget at $25.
The legal difference is about using market power against someone and against consumers. Amazon is also trying to play both sides - as a marketplace where anyone can sell and as a direct seller. If you get someone to say that they won't compete with you in exchange for a deal where they sell your item and then they take steps to lower the sales of your item, that's a big deal.
By controlling the selling price of the item and prohibiting the supplier from competing with that price, Amazon controls how many get sold and whether it's more profitable for them to push users to different products.
As the article points out, the big issue is that the prices stabilized at higher levels. If the price was usually $25 before and is now usually $30, Amazon has taken steps to raise the price level by taking out competition. This hurts consumers (with higher prices) and suppliers (because it lowered the number of products sold and offered a way for Amazon to replace purchases of their third-party products with Amazon products).
How is this different from a supermarket deciding to raise prices on a third party product to favor its own? I think the key difference is that Amazon is both a marketplace for sellers to sell directly and a retailer. Amazon's dominant position in online shopping has been fueled by third-party sellers on their platform. If you the use that dominance to hurt those sellers and consumers, you're changing the game after people have gotten locked into using your platform. For example, sellers need Amazon because consumers have Prime. Consumers got Prime because of the wide array of third party sellers. When you then take steps that work against those consumers and sellers due to your now-strong market position, that's a problem.
Let's say that Amazon said, "we should be able to do what we want like anyone else!" I'd say they should - but every person that currently has Prime should see that subscription canceled immediately and be prohibited from being a Prime subscriber for 2 years. That way, Amazon wouldn't have the market power over sellers and consumers that it currently enjoys and alternatives might become a big platform. The problem, in my mind, is when a company creates rules, builds market power, and then wants to change those rules when it's in a dominant position. If they want a reset on that dominant position, that's fair - but they never want a reset on that dominant position.
I don't actually think Amazon really meant to do wrong in this case. I think it can be an area where it's not intent that matters. I'm guessing that their algorithms likely started adjusting the price due to the realities of their profit margins. Before, they had their AmazonWidget priced at $22 because it needed to be at least $3 cheaper than YourWidget. They wanted a $10 margin, but couldn't get it. Once they were in control of YourWidget pricing, it settled on $30 which is the $10 margin they want - and then there was room for AmazonWidget to be $25. That seems like the most likely scenario to me. Amazon started identifying good-selling products and thought they'd be better at optimizing sales and profits by controlling the pricing of them. They probably are better. The problem is that it started optimizing for Amazon and not for that seller and so if sales went down 75% on YourWidget, they didn't care.
But the issue is that Amazon took steps to reduce/prohibit competition and it ended up raising prices after they had built up enormous market power under different rules.
1) Amazon has the kind of market power that triggers anti-trust concerns. You can't get anti-trust concerns when you're a small player.
2) It sounds like Amazon is not offering to buy units at a set price. They're offering to give the supplier $X if they sell the item. That means that Amazon can decide whether or not they want to sell the item - and the supplier has agreed not to compete with Amazon.
3) Amazon isn't saying, "we'll buy 1...don't worry, we'll make 200 more offers soon." It's more like, "we'll buy 1...if we don't buy any more, you're now prohibited from selling directly on our platform."
Let's take it to the extreme and, for a moment, assume Amazon is trying to be evil. Amazon wants to push AmazonWidget and wants to push YourWidget out of the market. They want to price AmazonWidget at $25. They see that you're selling YourWidget at $25. It's a brand-name that customers will want at $25. Amazon calculates that you're probably making $18 in profit so the come to you and say they're willing to give you $20 per sale. You accept. Amazon then sets the price of YourWidget at $1,000 and not a single customer orders it. AmazonWidget becomes a huge seller.
Let's say that AmazonWidget costs Amazon $15 and they want to sell it for $25. You've been selling YourWidget for $25. By taking control of the pricing of your item, they can make sure that AmazonWidget doesn't have to compete with YourWidget on price. They can price YourWidget at $30 so that they make $10 whether someone buys an AmazonWidget or a YourWidget. Previously, they would have had to price AmazonWidget below $25 to deal with the fact that you were selling YourWidget at $25.
The legal difference is about using market power against someone and against consumers. Amazon is also trying to play both sides - as a marketplace where anyone can sell and as a direct seller. If you get someone to say that they won't compete with you in exchange for a deal where they sell your item and then they take steps to lower the sales of your item, that's a big deal.
By controlling the selling price of the item and prohibiting the supplier from competing with that price, Amazon controls how many get sold and whether it's more profitable for them to push users to different products.
As the article points out, the big issue is that the prices stabilized at higher levels. If the price was usually $25 before and is now usually $30, Amazon has taken steps to raise the price level by taking out competition. This hurts consumers (with higher prices) and suppliers (because it lowered the number of products sold and offered a way for Amazon to replace purchases of their third-party products with Amazon products).
How is this different from a supermarket deciding to raise prices on a third party product to favor its own? I think the key difference is that Amazon is both a marketplace for sellers to sell directly and a retailer. Amazon's dominant position in online shopping has been fueled by third-party sellers on their platform. If you the use that dominance to hurt those sellers and consumers, you're changing the game after people have gotten locked into using your platform. For example, sellers need Amazon because consumers have Prime. Consumers got Prime because of the wide array of third party sellers. When you then take steps that work against those consumers and sellers due to your now-strong market position, that's a problem.
Let's say that Amazon said, "we should be able to do what we want like anyone else!" I'd say they should - but every person that currently has Prime should see that subscription canceled immediately and be prohibited from being a Prime subscriber for 2 years. That way, Amazon wouldn't have the market power over sellers and consumers that it currently enjoys and alternatives might become a big platform. The problem, in my mind, is when a company creates rules, builds market power, and then wants to change those rules when it's in a dominant position. If they want a reset on that dominant position, that's fair - but they never want a reset on that dominant position.
I don't actually think Amazon really meant to do wrong in this case. I think it can be an area where it's not intent that matters. I'm guessing that their algorithms likely started adjusting the price due to the realities of their profit margins. Before, they had their AmazonWidget priced at $22 because it needed to be at least $3 cheaper than YourWidget. They wanted a $10 margin, but couldn't get it. Once they were in control of YourWidget pricing, it settled on $30 which is the $10 margin they want - and then there was room for AmazonWidget to be $25. That seems like the most likely scenario to me. Amazon started identifying good-selling products and thought they'd be better at optimizing sales and profits by controlling the pricing of them. They probably are better. The problem is that it started optimizing for Amazon and not for that seller and so if sales went down 75% on YourWidget, they didn't care.
But the issue is that Amazon took steps to reduce/prohibit competition and it ended up raising prices after they had built up enormous market power under different rules.