Amazon seems to be appealing to the court of public opinion in its critique of bipartisan legislation designed to clamp down on the e-commerce giant and other “Big Tech” firms that allegedly favor their own products and services on their platforms.
The American Innovation and Choice Online Act (AICOA), introduced by Senators Amy Klobuchar (D-Minn.) and Chuck Grassley (R-Iowa) to the U.S. Senate in October 2021, is the bill in question.
If enacted by Congress, the measure would give federal antitrust agencies the authority to issue civil penalties and injunctions against what it refers to as “covered platforms” that encompass Amazon, Apple, Google, Meta and Microsoft. The fines for violating the bill could reach 15 percent of a company’s U.S. revenue over the period of time the violation occurred.
In a blog post, Brian Huseman, Amazon’s vice president of public policy, called out two perks that he said would be most affected by legislation targeting the firm: Amazon’s selection and prices (which Huseman attributes to Amazon’s third-party sellers), and “the promise of fast, free shipping through Amazon Prime.”
Huseman also referenced similar House legislation proposed in June last year as part of a broader package of five proposals intended to address the breadth of Big Tech firms.
Under the October bill’s provisions, technology companies would be designated as covered platforms if they have 50 million monthly active users or 100,000 monthly active business users; have either annual sales or a market capitalization exceeding $550 billion; and are a “critical trading partner for the sale or provision of any product or service offered on or directly related to” their own online platform.
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Amazon rebutted with the claim that one of its chief rivals, Walmart, had annual revenues of $559 billion, nearly $90 billion more than Amazon and crossing the average sales threshold. Huseman also pointed to Walmart’s marketplace, which is populated by third-party sellers.
“In reality, Amazon’s consumer business (which this proposed legislation is largely aimed at) has much more in common with thousands of other retailers, like Walmart, Target, and Costco, all of which would be mysteriously excluded from the bill’s proposed regulations,” Huseman wrote. “Applying the same broad, vague and undefined language to all of these different market segments to regulate what are in fact very different companies would cause serious and damaging unintended consequences for American consumers and small businesses the bills purport to protect.”
The blog post was published Wednesday after Klobuchar posted an amendment to the bill, which adds language to clarify that it should not impose liability on a platform operator solely for offering “a fee-for-service subscription that provides benefits to covered platform users.”
Although the language appears to protect Amazon Prime, Huseman wrote that the changes “do nothing to address the most serious concerns with the bill.”
For one, Huseman alleges that the bill would force Amazon to allow other logistics providers to fulfill Prime orders. This would make it harder for Amazon to offer two-day shipping options.
“Were this legislation to become law, it would substantially degrade the value and quality of Prime, as many of the products sold in our store today with Prime’s one- to two-day delivery promise would be undeliverable in that time frame,” Huseman said. “This degradation of the Prime experience would materially hurt not just Amazon (which is what we believe to be the real, unstated goal of the legislation), but, more importantly, every American consumer and small business that currently relies on the Prime service.”
If passed, the bill would make Amazon guilty of what it has been accused of in the U.S. and already reportedly done in India—unfairly prioritizing one platform operator’s products, services or lines of business over another; and unfairly limiting another’s products that compete against its own interests.
There’s also the prohibition against using non-public data obtained from the covered platform, either from the “business user” or the “covered platform user”—in Amazon’s case, a third-party seller or a shopper—to offer or support the offering of its own products. Amazon has long been accused of this tactic, but has always denied the allegations.
Huseman described these restrictions as “broadly written.”
“The proposed fines for each incidence of running afoul of these rules are so outlandish and extraordinary (amounting to tens of billions of dollars that would cause us to operate at a loss) that it would make it difficult to justify the risk of Amazon offering a marketplace in which selling partners can participate,” Huseman said.
In the post, Huseman defended the small businesses that sell on the platform, noting that many benefit from the Fulfillment by Amazon (FBA) service because Prime drives higher sales volumes. Sellers can often bypass the process of storing, fulfilling and delivering products at a more affordable cost with FBA than without, he argued.
Beyond FBA, Huseman pointed to another more obvious benefit that sellers would be missing—traffic.
“We consistently hear from our selling partners that what they find most valuable in working with us is the broad distribution and traffic from hundreds of millions of consumers they get by listing their products in our store—the very benefit they stand to lose with this proposed legislation,” Huseman said. “It’s worth remembering that hundreds of thousands of American small and medium-sized businesses make a living via Amazon’s marketplace.”
The public policy chief argued that it would be much harder for these third-party sellers to create awareness for their business without access to Amazon’s hundreds of millions of customers.
The U.S. Chamber of Commerce, in a letter to the Senate Tuesday, called the bill “misguided” and said it amounts to “an overhaul of the American economy, one sector at a time.”
Conversely, small business groups like Main Street Alliance, Small Business Rising and the National Association of Wholesale Distributors have thrown their support behind the bill.
The Senate Judiciary Committee passed AICOA on Jan. 20 with a vote of 16-6. The Senate could vote on AICOA as early as this month, according to a Reuters report.
Rep. David Cicilline (D-R.I.), head of the House Judiciary Committee’s antitrust subcommittee, introduced the first set of House bills in June 2021 targeting Amazon and other Big Tech firms excluding Microsoft. The legislation was borne out of the subcommittee’s 16-month, top-to-bottom investigation into the state of competition in the digital marketplace, and included seven Congressional hearings.
If passed by the House and then the Senate, the legislation could potentially force Amazon and the rest of the applicable Big Tech firms to to restructure their operations.
Cicilline is now a co-sponsor of AICOA alongside Klobuchar, Grassley and 10 other senators across the aisle.
Amazon and the House Judiciary Committee remain at odds since the investigation, with the committee recently accusing the Seattle firm of withholding information during the probe and obstructing Congress.