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Facing intensifying criticism from politicians and sellers on Amazon’s aggressive policies quite for a while, the company finally decided to let third-party sellers offer lower prices on other sites.
A source said that the internet heavyweight has stopped telling third-party sellers that they’re forbidden from offering lower prices at rival sites. The insider didn’t explain why Amazon made the move, and Amazon declined to comment on the decision. However, it follows political inquiries that might have put pressure on the company to take action.
Senator Richard Blumenthal wrote to the FTC Commission Chairman in December arguing that Amazon’s policy could “stifle” competition and “artificially inflate prices” for shoppers.
While it’s not certain that the FTC intended to investigate, Amazon’s relaxed approach could address potential criticism by allowing sellers more flexibility in where and how they pitch their goods – and, of course, lower prices for customers in the process.
“Amazon’s wise and welcome decision comes only after aggressive advocacy and attention that compelled Amazon to abandon its abusive contract clause. I remain deeply troubled that federal regulators responsible for cracking down on anti-competitive practices seem asleep at the wheel, at great cost to American innovation and consumers.”
Amazon has been facing intensifying criticism from politicians and sellers on their aggressive policies that tend to benefit Amazon the most. The move to toss the price parity provisions in the United States, also known as “most favored nation” clauses, comes after political pressure to investigate Amazon under antitrust laws.
The clauses prevented sellers who listed on Amazon’s marketplace from listing their products more cheaply on other websites. Third-party sellers on Amazon’s marketplace now account for half of all Amazon items sold, according to the paper.
Amazon already removed price parity provisions in the U.K. and Germany back in 2013 after the two countries also launched investigations into the practice. Germany’s antitrust authority launched an investigation into whether Amazon is exploiting its market dominance in its relations with third-party retailers in November last year.
Last week, presidential hopeful Sen. Elizabeth Warren (D-MA) announced a sweeping antitrust proposal and said that if she’s elected in 2020, she will work to break up big tech companies like Amazon, Google, and Facebook. Warren’s proposal is only part and parcel of a larger movement among lawmakers questioning the market power of these large tech firms. She said:
“Today’s big tech companies have too much power – too much power over our economy, our society and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else.”
If there’s one thing you can rely on Amazon for, it’s the low prices. Due to its aggressive pricing strategies and massive distribution network, Amazon has managed to repeatedly undercut the price tags of items on its online retail rivals – while its scale allows it to offer a staggering range of gadgets, books, and lifestyle purchases.
Not to mention Amazon’s highly profitable range of smart speakers – the Amazon Echo, Amazon Echo Dot, and Amazon Echo Plus, to name but a few – or its Amazon Fire TV streaming top-box, all of which are solely available through Amazon’s online site.
Former Amazon manager James Thomson said that he thinks the decision to toss the provision could result in slower growth for Amazon. He said:
“The Marketplace has been historically a cash cow for Amazon. If it becomes less competitive on price and consumers become less loyal, does that mean the third-party business is going to slow down?”
Mexico’s Central Bank Partnering with Amazon About New Mobile Payments
Last week Mexico’s central bank announced that they are in talks with Amazon to launch a new government-backed mobile payment system that would allow consumers to pay for online purchases using QR codes. The CoDi payment system built by Banco de México will let users make online and in-person payments through a smartphone without an additional charge. A pilot of the system is expected later this month.
Jaime Cortina, Banxico’s director of operations and payments then said:
“Amazon and Argentine rival MercadoLibre have approached the bank about adopting the system. They have also said that they could implement it relatively quickly.”
Amazon shares were down slightly to $1,668.12 in pre-market trading on Tuesday. They are up 11% so far this year.