Amazon Prime's Future in Jeopardy as Bills Target Key Services
Two bills, the 'American Innovation and Choice Online Act' (AICOA) and its House counterpart, the 'American Choice and Innovation Online Act' (ACIOA), could significantly reshape Amazon Prime as we know it. These proposals target leading tech companies with regulations that may dissolve Amazon Prime's current structure.
The bills target three key activities that enable Amazon Prime: self-preferencing, conditioning preferential status on the purchase of another service, and curating recommendations for Amazon customers. If Amazon complies with the proposed legislation, it would likely be required to end its two-day shipping service, breaking Amazon Prime as we know it. A ban on self-preferencing would also require Amazon to remove Prime badges from Prime-eligible offers, reducing the value of the service. The bills' blanket rule against self-preferencing would nullify Amazon's Fulfilled By Amazon (FBA) service or require Amazon to provide it to all sellers at cost, making it cost-prohibitive. The bills' prohibition on conditioning preferred placement on the purchase of another service would significantly diminish the Prime program by either excluding third-party sellers or failing to consistently meet the two-day delivery promise. Even a trivial violation of the bills' provisions could result in billions in penalties, leading to increased litigation and investor pressure to mitigate risks.
The 'Restore Online Shoppers' Confidence Act' (ROSCA) is another law that could lead to changes in Amazon Prime's current form. These bills, if passed, would have serious consequences for consumers, including the dissolution of Amazon Prime as it is currently known. They target only American firms with a large number of U.S.-based users, excluding brick and mortar retailers and foreign technology rivals.
