Apple iBooks lawsuit by the US government is relevant here. Book publishers and Apple made a deal to change pricing to an agency model, where the publishers dictate the price. The US government sued them on the basis of anti-competitive price collusion. This slapped Apple and let Amazon go back to it's race-to-the-bottom pricing. In fact the US government is right that Amazon's methods are the essence of a free market. They are just bad for every other player and lead to Amazon expanding it's market share and thus making Amazon more of a monopoly.
Very interesting twist.
It gets bad for consumers if:
1. Once Amazon has all the market it raises prices.
2. The price pressure on manufacturers, publishers, and other producers of goods causes those businesses to fail and stop making their products, or to produce lower-quality products.
3. Amazon gives preferential treatment to merchants using their auxiliary services. They already give preferential treatment to merchants using Amazon Fulfilment by writing off (at least some of) the bad merchant feedback caused by fulfilment issues. This effects customers (as well as merchants) because from the customers perspective failed fulfilment is the same no matter who does it.
The thing is, though (1) largely hasn't been broadly observed and (2) consumers should be able to dictate to the market whether or not they are willing to pay for quality.
Very interesting twist.
It gets bad for consumers if:
1. Once Amazon has all the market it raises prices.
2. The price pressure on manufacturers, publishers, and other producers of goods causes those businesses to fail and stop making their products, or to produce lower-quality products.