If headlines about the tech industry have had a theme over the last month or so, it is this: anti-trust authorities are watching you. The extent to which regulators are willing or able to topple tech’s biggest players is up for debate. Companies like Amazon have built a host of moats around themselves, many of which are seemingly untouchable (what, for example, could they do about Amazon’s immense US logistics network? The answer is probably nothing, despite the fact that this network is among the company’s greatest competitive advantages). Now, the Federal Trade Commission (FTC) is watching another of Amazon’s moves closely: the decision to sell new Apple merchandise on its platform.
Amazon’s share price has appreciated by 23% so far this year
Source: Yahoo Finance
Ecommerce giant Amazon is planning to sell Apple’s iPhones and branded products from Apple-subsidiary Beats. The FTC is scrutinising this deal closely, responding to concerns from third-party merchants on Amazon who sell things like refurbished iPhones at cut prices. Those sellers have recently been told to shut up shop – Amazon is shifting the new stuff, and it doesn’t want to find itself in competition with small businesses selling second-hand goods.
None of the major players in this story (Amazon, Apple or the FTC) have offered a comment on it. One of the Apple resellers forced to take his business elsewhere, however, has made some public comments. Writing in a Facebook group for Apple resellers, John Bumstead wrote: “wouldn’t it be awesome if the FTC sued Apple / Amazon and actually SOLVED this problem for us?”
A sticking point for regulators in the EU in their suspicion that Amazon uses data it collects over sales to spot best-selling products with the biggest margins. Then, it can take control of those sales channels, locking out competitors and putting its own products centre stage. Amazon lawyer Nate Sutton has responded, saying that the company doesn’t use data it collects to favour its own products over third party sellers.
As oversight continues to ramp up in the tech sector, we can expect more headlines like this to emerge soon. But it’s not clear how far regulators will go, or whether they will have any significant impact on Big Tech. Meanwhile, as the story continues, Amazon is probably going to clean up selling iPhones.
Disclosure
Dominion holds Amazon in its Global Trends Ecommerce Fund.
Author: Theo Leworthy
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