Amazon is the largest online marketplace in the world. The name itself has become synonymous with ordering products online, just like Google has become synonymous for looking up something on the internet. It goes without saying that brands not selling on Amazon are missing out on a significant revenue stream. Customers prefer buying from Amazon not because it always has the lowest prices, you can find better prices elsewhere, but because of the convenience.
The Prime membership program is the backbone of Amazon's business. The two-day Prime shipping, included with the membership that costs as low as $9.99 per month, is the biggest draw for customers. Amazon even offers one-day Prime shipping across the United States and in other markets. Nobody likes waiting for packages to arrive and Amazon's logistics juggernaut gives customers the reason to order what they want from its online marketplace.
Then there's also the element of convenience and safety. Just ask anyone who's ever had a package stolen off of their doorstep. That's a combined experience for many of us. Amazon has a vast network of package lockers where you can have your packages shipped. You just need to go and pick them up within the pickup window. Amazon's acquisition of Whole Foods has expanded the number of retail locations inside the US where customers can go pick up their online orders and make hassle-free returns.
That's why so many people prefer buying from Amazon even though its web store isn't the most aesthetically pleasing and the app also leaves a lot to be desired. Search for something on Amazon and the results page will likely be littered with ads for products that may not even be truly relevant to what you're looking for. It's also bad for companies that sell on Amazon since their competitors can target those keywords to promote their products. For example, Samsung could run a campaign to promote the Galaxy S23 Ultra every time someone searched for iPhone 15 on Amazon.
The Federal Trade Commission has alleged in an ongoing antitrust lawsuit against Amazon that these “junk” ads are inserted on purpose to extract “billions of dollars through increased advertising revenue despite worsening its service for customers.” What that means in simple English is that the FTC is saying Amazon pushes these ads to irrelevant products on purpose just so it can make a lot more money, even if it negatively impacts the user experience.
You can imagine that this doesn't sit well with Apple, a company that strives to maintain a clean and minimal aesthetic across its sales channels. Just compare the online product pages on Apple's store to Samsung. The Korean giant's product pages have way too much going on while Apple's look minimal. Both companies also sell their products through Amazon.com but Apple had a later start.
Apple finally struck a deal to officially sell its new iPhones and iPads, MacBooks, and other products through Amazon.com in 2018. All Apple products available on the platform previously were sold by third-party sellers. As a company that's also a bit of a control freak, you can imagine that Apple didn't particularly like this. The pricing from third-party sellers could vary significantly and the sourcing wouldn't be reputable.
If a customer bought an Apple product from Amazon but received a damaged or otherwise unsatisfactory unit, they wouldn't blame Amazon or the seller. They'd blame Apple. That's why Apple struck a deal with Amazon. Since 2018, only Apple or Apple-authorized resellers can sell Apple and Beats-branded products on Amazon.com. However, as we're only just finding out, there was also a secret element to this deal, one that ensured Apple's products wouldn't have to share screen space with junk ads.
Business Insider reports that Apple inked a secret deal with Amazon to stop competitors' ads from showing on its product pages. Consequently, you see very few ads below, above, and between results for Apple's products. The other benefit of this arrangement is that Apple's product pages look a lot cleaner in comparison to its rivals.
Let's compare the product page for the Galaxy S23 Ultra with the iPhone 15 Pro Max. There's an entire section here that either showcases similar products or actively promotes sponsored products. You can even see the OnePlus 11 5G and Motorola Edge+ in the sponsored recommendations.
On the iPhone 15 Pro Max's page, this entire section is taken up by a comparison of different iPhones.
Searching for the iPhone 15 Pro Max on Amazon.com brings up a results page that doesn't have any ads on the margins. You also have to scroll much further down to see an add for a case.
For the Galaxy S23 Ultra, it's just one swipe down and you have multiple ads for third-party cases and an ad for the Motorola Edge+. Motorola is evidently running a campaign to promote its phone to people searching for the Galaxy S23 Ultra so Samsung's flagship has to share screen space with it. You can also notice a banner ad on the left margin.
The report mentions that Amazon's former retail boss Jeff Wilke wrote in an email that “Apple does not want to see any product placement that recommends non-Apple products.” A spokesperson for Apple confirmed this deal with Amazon to The Verge but it remains unclear how much, if at all, Apple is paying Amazon for this privilege. That email from Wilke does mention that Apple would either need “to purchase these placements or compensate Amazon for the lost ad revenue.”
This arrangement works well for Apple. The company is able to maintain its aesthetic even on an online retail platform it doesn't own. It also gets a leg up on its rivals since there are fewer chances of its customers being distracted by irrelevant products when they're buying an Apple device from Amazon.
Samsung can learn a thing or two from this deal. It stands to gain a lot more than Apple. If one were to hazard a guess, Samsung likely sells a lot more products through Amazon.com compared to Apple, since its lineup also includes low-end and mid-range phones. Since it's an Android OEM, Samsung products also face a lot more competition on Amazon. It's highly unlikely that someone who's on Amazon to buy an iPhone is going to be persuaded to buy an Android. On the other hand, someone who's on Amazon to buy an Android phone can easily be persuaded to buy a Motorola over a Samsung.
The Korean giant is in a similarly dominant position as Apple to have this conversation with Amazon, as the company would certainly want Samsung to continue selling its devices through the online marketplace. If the opportunity exists, it should be capitalized upon. It's hardly fair for Samsung to spend millions on advertising to promote its products and then for people to look for them on Amazon before ultimately being persuaded to buy a competitor's product that's being shown alongside a Galaxy phone with a flashy red box telling how much money they could be saving.
