Amazon’s Advertising Restricts Competitors

Amazon is limiting some of its competitors’ ability to promote products and devices that rival Amazon’s own products.

The Wall Street Journal reports that Amazon is limiting competitors’ ability to promote rival smart speakers, video doorbells, and other devices on the Amazon marketplace platform, according to Amazon employees and executives at rival companies and advertising firms.

This strategy puts competing products at a significant disadvantage and gives an edge to Amazon’s own devices, which the company regards as central to building consumer loyalty.

Typically, Amazon routinely allows companies to buy ads that appear inside search results, including searches for competing products. However, the company will not allow some rival device makers to buy sponsored ads tied to Amazon’s products. These products include the voice-activated Amazon Echo Show, Ring Doorbell, and Fire TV. This new restriction comes even though Amazon allows these companies to buy ads tied to other competitors’ products on the site.

Netgear, who produces Wi-Fi routers, said that it can buy the keywords of rival makers of Wi-Fi routers on Amazon. However, for the past year and a half, the company hasn’t been able to purchase search ads keyed to “eero.” Eero is Amazon’s brand of router that appears on the first page of search results.

Facebook has also reported not being able to buy ads geared towards Amazon products. Facebook makes a device called Facebook Portal that competes directly with Amazon’s Echo Show device. According to The Wall Street Journal, Facebook hadn’t been able to buy sponsored ads using Amazon Echo-related keywords for some time; however, Facebook can purchase keywords geared towards non-Amazon competitors.

According to Amazon’s advertising website, sellers are supposed to be eligible to buy keywords for sponsored-search advertisements. There are some types of products that are prohibited from being advertised in sponsored products, according to the website. However, Amazon does not list its own products on said list of keywords or categories restricted for sponsored-product advertisements.

The companies put at a disadvantage by this policy include Roku, who offers a streaming device like the Fire Stick, the Google Home smart speaker by Alphabet, and video doorbells by Arlo Technologies, which rival Amazon-owned Ring Doorbell.

The sale of ads on the e-commerce marketplace is a growing business for Amazon. The company’s “other” revenue, which is composed primarily of advertising, grew 39 percent year over year in 2019. The same category of revenue had seen triple-digit growth in 2018. According to The Motley Fool, this growth makes Amazon the third-largest digital advertiser in the U.S., behind only Google and Facebook.

This development reveals the discrepancy between Amazon’s policies and the conflicts between Amazon’s massive e-commerce marketplace for sellers and the company’s role as a product manufacturer in its own right.

In response to The Wall Street Journal’s request for comment, Amazon responded with hostility toward the newspaper’s investigation.

“News flash: retailers promote their own products and often don’t sell products of competitors. Walmart refuses to sell [Amazon brands] Kindle, Fire TV, and Echo. Shocker. In the Journal’s next story they will uncover gambling in Las Vegas,” said Amazon spokesman Drew Herdener in a written statement.

The Wall Street Journal conducted a test to see to what extent the policy disadvantages rival companies. The results found that products sold directly by Roku are often not appearing atop search results for Roku’s products. When looking at Roku products, the probe found that Amazon often displayed sponsored product advertisements for Roku competitors, and Rokus offered by resellers. Additionally, many of the searches showed Amazon’s Fire TV product at the top of the results, with a banner saying, “Featured from our brands.”

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