Legality of Amazon Brands being featured over sellers that pay for advertising

That seems like bad practice. How is it legal for Amazon to have their products ‘featured’ at the top of search results when sellers on the platform are paying for advertising? We studied the market, found something we thought we could break in to. One of the criteria was that Amazon was not already selling their products in this market. We spent $15,000 on raw materials to make sure we had enough inventory, and then had our company manufacture the product from the raw material so there were wages on top of the cost of the raw material.

Product started to sell and week over week was growing to the point of averaging 11.8 units a day over the past 30 days with roughly 30% of sales from organic traffic (not much, but the momentum was shifting in the right direction). Then suddenly we dropped to 1 sale over the last week. When looking into it, at the exact same time our sales essentially went to zero, Amazon jumped into the market with their own brand. There was another huge established company everyone has heard of that has their products listed for $28. After figuring fulfillment, shipments, and all the costs associated with manufacturing; we priced ours around the same. Amazon jumped in and priced their product at $11. To produce and get it into Amazon, that’s already less than our cost.

When I search for the product, Amazon Brands is at the top under ‘featured product’. We’re paying to advertise on their platform and yet they put their product at the top.

No actual question, just more of a vent. And yes, we sell outside of Amazon but it’s still annoying and seems illegal. We essentially can’t compete anymore and are now going to pay to get our product shipped back to us.