So if Amazon plays unethically, and plays well, and you are competing, you are going to be seriously hampered by not playing along too. And you will have a hard time justifying it to your shareholders or potential investors. Amazon couldn't even win this argument and the game's just starting.
I think ethical companies like the kinds of regulations that keep the playing field level and make ethical transgressions illegal. It gives them a strong support to make their ethical stand.
Look at all of the information that's being gathered today with no respect for the individual's privacy. I'm old enough that this is outrageous, and I really can't believe that people are standing for it. Yet it seems that every new app builder has to enter the market with a data-collecting free offering. If this were illegal, then they could compete on quality and price.
One thing I've learned as I've gone through some things is that if you're the only one in the game who's playing by the rules, you're going to lose.
The idea of outsourcing your company's ethics to the government seems very shortsighted to me. Facial recognition may never be banned, yet privacy tech could become a strong factor in where developers want to work. Consequently Amazon are right to consider this sort of thing long before the government steps in.