Amazon, YouTube Agree to Play Nice

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Thursday’s announcement that Amazon.com Inc. (NASDAQ: AMZN) and Alphabet Inc.’s (NASDAQ: GOOGL) YouTube have reached an agreement that will bring YouTube’s official app to Amazon’s Fire TV devices, Fire-enable smart TVs and Amazon’s Prime Video app could be good news or not-so-good news. Because the app won’t be available for a few months, there’s plenty of time to sort out winners and losers.

A year ago Alphabet/Google withdrew its official YouTube app from Amazon’s Echo Show device and from Fire TV. Amazon concocted a workaround that allowed its users to gain access to YouTube, but the company did it without getting YouTube’s buy-in. The workaround was pulled too. Amazon retaliated by pulling some Google products from its e-commerce site.

Amazon has a long history of using its e-commerce dominance to promote its own hardware and software. Amazon not only did not sell Fire TV and Echo products, but Google’s Chromecast devices and Google Home products were not available through Amazon and Prime Video was not accessible to Google Cast users. Google’s Nest home automation products were also banned for a time. As for Google, the company has paid $9.32 billion in European Union fines for anti-competitive behavior. Neither firm can claim the moral high ground here.

As usual, when the giants engage in battle, a lot of innocent bystanders get stepped on. These battles often end by reducing consumer choice and could be anti-competitive. Last month, U.S. Senator Elizabeth Warren suggested that the federal government needs to end the practice of major tech players like Amazon from giving special treatment to its own brands. Amazon — and Apple Inc. (NASDAQ: AAPL), which gives preference to its own products in the company’s App Store — should be either a marketplace platform or retailer, but not both.

Under Warren’s proposal, companies with more than $25 billion in annual revenues and a third-party marketplace would be subject to being broken up. While the details of Warren’s plan are sketchy and in some cases based on incorrect conclusions, there is no question that dismantling the tech behemoths is going to be a hot topic in the 2020 election. If Democrats take control of the federal government after the election, legislative proposals will follow.

Does today’s announcement dispel the threat of legislation or intensify it? After all, it only applies to a relative handful of streaming devices and services. And because the agreement allows consumers access to items on platforms from which they haven’t had access, Amazon and YouTube can argue that this is a great day for competition.

YouTube executive Heather Rivera said, “Bringing our flagship YouTube experience to Amazon Fire TV gives our users even more ways to watch the videos and creators they love.”

Amazon’s head of business development for Prime Video added, “We’re excited to bring the Prime Video app to Chromecast and Android TV devices, and to give our customers convenient access to the shows and movies they love.”

And so the love-fest begins. How long it lasts is another question for a different day.


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