This leaves a lot of uncertainty about how exactly the law will play out. In that zone of uncertainty, tech companies have issued dire warnings.
Perhaps the scariest point is that the law, if enacted, would kill Amazon Prime. According to eMarketer, more than 150 million Americans, more than half of the adult population, are Prime members. That’s a lot of people who might hate losing their “free” two-day delivery. (Of course, it’s not really free if you have to pay a subscription fee.)
The bill makes no mention of Prime anywhere in the text. But according to the Chamber of Progress, an industry lobbying group whose sponsors include Apple, Amazon, Meta and Google, the ban is implied. Adam Kovacevich, the group’s CEO and former executive director of public policy at Google, says the issue hinges on what Amazon calls Fulfillment, or FBA. Amazon is not only a retailer but also a marketplace. The majority of products for sale on Amazon.com come from third-party sellers who rely on Amazon’s marketplace to reach customers. For merchants to qualify for Prime shipping, they must use FBA, which means they must store their inventory in an Amazon warehouse and let Amazon handle two-day shipping.
In addition, these sellers must pay for the FBA. The Senate bill prohibits a company from offering “preferred status or placement on a covered platform” dependent on “the purchase or use of other products or services”. Kovacevich argues that this will kill Prime, because you can’t have Prime without FBA. “Ensuring one or two day shipping is closely linked with controlling as much as possible the shipping and fulfillment process,” he said.
But the bill does not outright ban the FBA. It just says that Amazon cannot force sellers to pay for their completion program to get the Prime label. If the bill becomes law, the company will have to let third-party sellers choose other logistics providers.
“What the bill would do in that case is force Amazon to develop a system in its marketplace where sellers can choose physical partners,” said Sumit Sharma, a senior research fellow at Consumer Reports. alternative, like DHL or FedEx or USPS or whatever”. . “And then they’re going to have to make sure what they show up in the search results isn’t affected by who’s making the order, as long as I get it within a day or two or whatever. what. They can still have a Prime membership.”
Amazon may say this isn’t possible, but it has allowed some sellers to manage fulfillment themselves through a program called Seller Fulfilled Prime. (Currently, the Amazon website speak, “The Fulfilled Prime seller is not accepting new signups at this time.” It doesn’t say when the program will reopen.)
Opening up to Prime will at least create competitiveness, as logistics companies will have a chance to win the seller’s business. This helps explain why Amazon opposes the bill. Amazon doesn’t publicly share its revenue from FBA fees, but according to a report of the Local Self-Reliance Institute, an antitrust group, the figure rises to about $57 billion by 2021 — up from just $3 billion in 2014.
