The Corner Newsletter: Amazon’s Latest Move to Control Specialty Retailers ( February 14th, 2025)
Welcome to The Corner. In this issue, we look at efforts by Big Tech and the Trump Administration to disrupt European democracy, and explore Amazon’s latest move to consolidate control over online retail and advertising.
At Paris AI Summit, Open Markets’ Von Thun Urges Europe to Democratize Control of AI
Open Markets Europe director Max von Thun spoke at the AI Action Summit in Paris this week, joining a panel on "Fair Play in AI Markets" alongside EU parliament member Stephanie Yon-Courtin and executives at Proton, Mistral and Microsoft. In his remarks, von Thun drew attention to Big Tech's control of both the inputs used to develop advanced AI systems and the distribution channels needed to commercialize them. He also called for deploying a mixture of tools — including the Digital Markets Act, merger control, and structural remedies — to safeguard fair competition in AI.
At Brussels Conference, Open Markets’ Lynn Warns Europe of Tech’s Growing War on Democracy
Open Markets Executive Director Barry Lynn spoke in late January in Brussels at a conference titled “A Perfect Storm: A Time of Truth for Europe,” hosted by Cristina Caffarra and The Capitol Forum. Lynn spoke on a panel with Texas Attorney General Ken Paxton and Federal Trade Commissioner Rebecca Slaughter, among others. Referring to some members of the Trump administration, Lynn said, “They want you to be separate, they want to break your solidarity, they don’t understand that the solidarity of Europe is American solidarity and is what allows us to stand up to the Chinese and what allows us to stand up to the Russians.” Other speakers included economist Simon Johnson, who recently won the Nobel Prize, MEP Andreas Schwab, former German Secretary of State for Economic Affairs Sven Giegold, Ambassador Katherine Tai, CFPB Director Rohit Chopra, FT Columnist Rana Foroohar, UK MP Chi Onwurah, MEP Alexandra Geese, and Marietje Schaake.
Let Them Use AdTech — Amazon’s Next Move to Control Online Retail
Karina Montoya
Last week, when Amazon pledged a $100 billion spending plan in AI for 2025, it seemed to be following other tech giants in betting its future on these new technologies. But a closer look at Amazon’s plans show that the corporation remains very committed to driving growth through more traditional means — such as by licensing its online advertising system to other retailers.
In January, Amazon launched Amazon Ad Retail Service, a cloud-based platform that enables other retailers to sell targeted ads on their own websites using a version of Amazon.com’s advertising platform. At first sight the effort may not sound like a big deal. The tech giant has long devoted much effort to growing its advertising business beyond its own marketplace, as we’ve previously reported.
But this is the first time Amazon is offering an ad tech suite for other retailers with proprietary websites. In practice, this new service means specialty retailers can sell ads on their own websites to brands that are likely already selling products on Amazon.com and buying ads there as well. From Amazon’s perspective, the service simply makes it easier for other retailers to “enhance their shopping experience with highly relevant ads.”
But the picture is more complicated than that. The new line of business means that Amazon is now officially competing directly with ad tech providers such as Instacart, Criteo, or Publicis, which cater to what’s left of retail outside Amazon.com.
It also opens another front in Amazon’s competition with rival retailers, one that is likely to further lessen their independence and viability. Amazon for years now has profited by providing core services to smaller retailers — from warehousing and fulfillment to executing online sales. The latest move extends this model to the retail media market where retailers seek to sell targeted ads based on consumers’ shopping behavior. As is true of fulfillment services, this means Amazon gets deep insights into the business models and relationships of other retailers.
In certain respects, this launch mirrors the original online advertising power play by Google more than a decade ago, when it expanded its ad business from search to the rest of the open web. But Amazon today enjoys an even bigger relative advantage in selling ad-tech for retailers. This includes, in addition to its huge advertiser portfolio, its sheer dominance over the cloud services on which many retailers already rely.
This model is similar to an effort a few years back by the Washington Post — owned by Amazon’s founder Jeff Bezos — to license its Arc XP publishing software to other news organizations, as detailed in the Washington Monthly.
The move will further entrench Amazon’s control over retail media ads. The corporation already captures 77% of retail ad spending in the U.S., a market projected to hit $62 billion in 2025. The remainder is divided between Walmart, regional retailers, and potential new entrants, such as specialty retailers. Paul Drecksler, publisher of marketing newsletter Shopifreaks, told Open Markets that “the end-game” for Amazon is simple. It is “to own inventory they don’t control.”
Many observers and market participants view the effort as a clear conflict of interest. As Dresckler asked rhetorically in a recent LinkedIn post, “[Am I] effectively sending my advertisers to Amazon Ads console, where I’d ultimately be helping to build a retail media network that collectively devalues the ads on my own website, and instead just makes me another cog in Amazon's wheel?”
Amazon has tried to ease these concerns by insisting that neither Amazon Ads nor other Amazon businesses will have access to retailers’ information. This assurance is based on the fact that this new ad tech suite lives in Amazon Web Services, so ad sales data would be processed in AWS’s “clean rooms” that are theoretically designed to anonymize user data and shield it from access by other retailers.
But for Drecksler, the threat is even more fundamental. “What about [when] once Amazon reaches a certain volume of sales with retailers, it starts extracting margin? You pay a 50% fee plus the ads you have to buy” on the marketplace, he said, adding. “Bezos has said it before, ‘Your margin is my opportunity.’”
Despite concerns, specialty retailers such as Wee!, wellness marketplace iHerb, and party supplies vendor Oriental Trading Company, are testing this new service and claim to be optimistic about its benefits. Drecksler, for one, has his doubts. “There is no network effect yet,” he says. It’s simply that “companies are too scared to stay away.”
Open Markets Submits Amicus Brief in Case Involving Price-Fixing by Atlantic City Hotels
The Open Markets Institute submitted an amicus brief in Cornish-Adebiyi v. Caesars, a case before the Third Circuit court in which casino-hotels in Atlantic City allegedly used software from Cendyn Group to fix prices at high rates. Last fall, Open Markets filed an amicus brief in Gibson v. Cendyn Group, a similar case of software-enabled price-fixing among Las Vegas casino-hotels. In both briefs, Open Markets urged the courts to apply longstanding law against collusion between competing firms, regardless of whether the collusion was done directly or through software. Tara Pincock, Open Markets policy counsel and the brief’s author, noted that the collusion allowed casinos to raise rates even as occupancy rates fell. The amicus brief received coverage in MyrtleBeachSC. Read the brief here.
📝 WHAT WE'VE BEEN UP TO:
Open Markets Institute’s transportation policy analyst, Arnav Rao, published an op-ed in The Hill arguing that instead of threatening to take over the Panama Canal, the Trump administration should focus on restoring U.S. shipbuilding as well as adopt a more robust maritime policy to reclaim the seas from China and foreign corporations. “Thanks to deregulatory, laissez faire maritime policy, the U.S. has abandoned the oceans, allowing China and foreign shipping corporations full control over our channels of commerce,” Rao writes.
Open Markets Europe director Max von Thun spoke at the DMA and Beyond conference, hosted by the Knight-Georgetown Institute this month, joining a panel alongside EU parliament member Andreas Schwab that looked at the future of digital markets regulation in Europe.
Tech Policy Press cited two recent opinion pieces by Open Markets Institute, the first by Europe director Max von Thun in the Observer and the second by senior fellow Johnny Ryan in the Guardian, that called on the EU to stringently enforce its landmark Digital Markets Act.
Forbes cited an article written last fall in Tech Policy Press by Center for Journalism & Liberty director Dr. Courtney Radsch that called for breaking up data monopolies before it’s too late, in which she wrote that unless we protect privacy and competition, “innovation will be little more than a hallucination that benefits dominant incumbents at the expense of citizen and consumer welfare, choice, and rights.”
🔊 ANTI-MONOPOLY RISING:
French competition officials opened a probe into Microsoft over allegations the tech giant may be intentionally downgrading the quality of search results when rivals license its Bing search technology. (Reuters)
This week, football fans filed an antitrust lawsuit against the National Football League for forcing teams to host social media pages on X while forbidding them from hosting pages on rival services like Bluesky. (NBC)
Washington state has sued Amazon for violating its My Health My Data Act. The complaint, which also accuses Amazon of violating federal wiretap laws, alleges the e-commerce giant collected and sold medical data of tens of millions of Americans. (Bloomberg Law)
Facebook opened up its marketplace retail platform to other classified ad services after the European Union fined the corporation over $800 million for anti-competitive restrictions on listings. (Bloomberg)
Japanese auto giants Honda and Nissan abandoned plans for a $50 billion merger deal. Reporting indicates the companies assessed that merging their operations would slow their decision-making and harm their competitive prospects. (New York Times)
📈 VITAL STAT:
$3.3 Billion
The amount UnitedHealth Group proposes to pay to acquire home health care company Amedisys, a merger that is being challenged in court by the Department of Justice. The DOJ, along with attorneys general in Illinois, Maryland, New Jersey and New York, sued to block the merger in the fall, arguing it would would harm patients and labor markets by significantly reducing competition in the home health and hospice space. (Minnesota Star Tribune)
📚 WHAT WE'RE READING:
Owned: How Tech Billionaires on the Right Bought the Loudest Voices on the Left — Morning Brew tech writer Eoin Higgins explores the way a handful of increasingly extreme tech billionaires have exploited the decline in trust and readership of legacy media. His account of the ideological capture of former prominent left-wing writers Glenn Greenwald and Matt Taibbi demonstrates the powerful market incentives driving public intellectuals of all stripes to become pawns in Silicon Yalley’s quest for dominance over our information ecosystem.