The EU has passed a law that will affect Amazon and other big tech companies. The law will likely make it harder for Amazon to promote its own private label products on its website at the expense of others.
While this is welcome news to many, this is a small victory as Amazon’s ambitions are grand as well as its ability to outpace laws. For the first 25 years of the Internet, Amazon, founded in 1994, rode on the rails of the government being too slow to enforce online tax collection. Essentially, everyone got an 8% discount by shopping at Amazon because they dodged state sales taxes. With the 2018 Wayfair Supreme Court decision, that advantage would gradually bleed out. But, Amazon had already been preparing for that via its private label products. For the last 10 years, Amazon has grown its private labels at the expense of regular brands sold on the platform. Want Duracell batteries? “Too bad, we’re gonna tell you to get Amazon Basic batteries.” (Scott Galloway famously mentions this example in his book The Four.)
Even with the tax loopholes shrunk and private label getting punched here by the EU, Amazon has been able to stay ahead of the closing loopholes. Amazon has been building a massive shipping business. Much like Amazon used tax loopholes and private label, Amazon will next use its massive personal shipping fleet to obtain a disproportionate advantage.
To think that just four years ago 250 U.S. cities competed to give Amazon tax dollars to select their city as an HQ. Today, Amazon is in the cross-hairs of many governments and being called to account.