Consumers will not benefit from Amazon being forced to allow merchants to free ride off its services. If allowed, sellers could list their products at artificially high prices on Amazon, essentially using the platform as a free advertising tool, and then offer a lower price on their own website or those of Amazon’s competitors. At best, that would result in Amazon shoppers paying the same price they would have otherwise, but only after first having to navigate to a different website. But some customers would still make the purchase at Amazon, where they would pay more than they would under Amazon’s current policies.
Likewise, consumers would not benefit from Amazon being required to give sellers its valuable Prime status for free. Amazon sets high standards for products labeled Prime, and allowing third-party sellers to use the Prime label while evading Amazon’s quality standards is just another means of free riding off the company’s reputation for delivery quality, reliability and speed. Some large merchants selling on Amazon’s Marketplace might take advantage of this, but it is hardly in the best interest of the consumers who rely on the Prime designation for a guarantee of fast and reliable service.
Despite the claims by the Michigan attorney general that the “illegal monopolistic practices of the behemoth Amazon hurt both its own customers and its marketplace sellers,” Nessel’s lawsuit against Amazon will do nothing to protect those customers and marketplace sellers. More likely the opposite is true: The Michigan lawsuit is targeting conduct by Amazon that is actually beneficial for Michigan’s consumers and small businesses. The main winners from the lawsuit will be Amazon’s competitors, like Walmart and Target, along with the largest third-party sellers on Amazon’s Marketplace. And last but not least, government regulators would benefit by expanding their power to include calling the shots on how Amazon operates its business.