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- Amazon had its best Prime Day yet, announcing on Wednesday that it was the largest in the company’s history.
- But the achievement comes as Amazon, along with other major tech firms, is under increased scrutiny over whether its business practices harm competition.
- Amazon Prime Day has become just as synonymous with shopping events like Black Friday, and it provides more incentive to purchase a Prime subscription as well as other Amazon products.
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Amazon had a blockbuster, record-breaking Prime Day — the largest in the company’s history. But it’s a win that comes as the tech giant is under increased scrutiny over antitrust concerns as regulators question whether its size and role as both a storefront operator and a seller makes it difficult for rivals to compete.
Prime Day, a deals event that ran this year from July 15 through 16, is essentially Amazon’s version of Black Friday in July. Except for Amazon, it’s even bigger than the annual post-Thanksgiving shopping event; the company said sales surpassed that of Black Friday and Cyber Monday combined. During the sale, the company offers thousands of deals for members of its Prime subscription service across a variety of categories including electronics, toys, fashion, home, and many more.
But of course, there’s a major difference between Black Friday and Prime Day. The former is a widely-recognized shopping holiday that many retailers large and small participate in through their own stores and platforms, while the latter is specific to Amazon’s store and its Prime members. Since Prime Day’s introduction in 2015, it’s become just as synonymous with online spending and bargains as Black Friday, and its popularity has been growing since.
As the inventor and proprietor of this shopping holiday, Amazon obviously stands to benefit tremendously. It’s true that many of the deals available on Prime Day were from third-party companies, and that Prime Day’s status as a new shopping holiday benefits other retail platforms too. Amazon said independent sellers surpassed $2 billion in sales on Prime Day, and worldwide sellers that predominantly included small and medium-sized businesses saw the biggest 24-hour sales day in Amazon’s history. Large retailers in general saw a 72% increase in online sales compared to an average Tuesday, according to data from Adobe Analytics reported by MarketWatch.
But the record-breaking sales and massive success of Prime Day — the fact that it’s become a shopping holiday just as big as Black Friday — also proves just how influential Amazon is when it comes to the way people shop. Prime Day has become so popular that competitors like eBay, Best Buy, and Target have even launched their own special sales events in response.
It also gives Amazon an opportunity to further expand its Prime and Alexa services and provides shoppers with more incentive to pick up an Echo, since those using Amazon’s voice-activated speaker get early access to deals. More people signed up for Amazon’s Prime service on July 15 than on any other day, and Prime Day was the biggest sales event ever for Amazon’s own devices, with the Echo Dot and Fire TV sticks ranking as some of the top-selling deals. Amazon sold more than 175 million items to Prime members during the two-day event.
Amazon’s size and success certainly invites scrutiny among critics. The company is expected to account for 38% of online commerce in the United States in 2019, according to e-Marketer, which represents a decrease from a previous estimate of 47%.
But what matters is whether or not Amazon is leveraging its position as both a major player in the online retail market and a seller on that same platform to gain an unfair competitive advantage. "In principle, there is nothing wrong with doing both," said Nicholas Economides, a professor of economics at New York University’s Leonard N. Stern School of Business. "But the crucial question is whether Amazon used its dominant position in the electronic commerce to thwart rivals."
As Amazon was breaking Prime Day sales records on Tuesday, David N. Cicilline, chair of the Subcommittee on Antitrust, Commercial, and Administrative Law, grilled Amazon on just that. Nate Sutton, Amazon’s associate general counsel, litigation and regulatory legal, testified along with executives from Apple, Google, and Facebook before the House Judiciary Antitrust Subcommittee in a hearing held to examine the impact large tech firms like Amazon have on innovation and entrepreneurship in the industry. During the hearing, Cicilline asked Sutton whether Amazon uses sales data from sellers to compete with others products on its platform, which he said Amazon does not do.
On Wednesday, the European Union also formally announced plans to launch an investigation into Amazon over the same issue, following reports that it would do so on Tuesday. The Commission will examine how the seller data that Amazon gathers affects the competition, and it will specifically look at the agreements Amazon has made with third-party sellers as well as how it selects items for its "Buy Box" feature. Amazon could potentially face a fine of $23 billion if the investigation finds that Amazon violated European competition laws.
It’s not the first time firms like Amazon have been scrutinized over competing on the same marketplaces in which they operate. Democratic Massachusetts senator and 2020 presidential candidate Elizabeth Warren proposed a sweeping plan in March that would prevent big tech firms like Amazon from participating in the same stores that they operate.
Those who subscribe to Amazon’s Prime membership, which provides the foundation for Prime Day, get many perks, such as access to Amazon’s streaming video service, its photo storage app, and discounts at Whole Foods grocery stores among others. The inclusion of such services like these that have nothing to do with package delivery and e-commerce, particularly video streaming, could also raise antitrust concerns, says Economides. "Once you start bundling irrelevant stuff like [a] video service, which [smaller] retailers cannot match, that creates the possibility of an antitrust issue and this is something that may be investigated," he said.
It’s unclear what will come of the EU’s investigation of Amazon. But the success of promotions like Prime Day and Amazon’s continued growth is sure to only invite more scrutiny amongst critics and antitrust regulators.
- The EU just launched a big antitrust probe into Amazon, and it could lead to a fine of up to $23 billion
- It looks like people are canceling their Amazon Prime membership after browsing Prime Day deals, revealing a flaw in the sales bonanza
- Facebook, Google, Amazon, and Apple are testifying today about antitrust concerns as the battle cry to break up ‘big tech’ gets louder than ever