Give 'em enough rope
Amazon are gradually pushing themselves down market and they should be allowed to continue. I've been automatically translating "Amazon recommends" into "garbage with a high profit margin" for a few years now.
The idea that Amazon are some behemoth that can't be competed with is simply not true. If you want generic garbage you can get it from ebay/ alibaba at a lower price. If you want reasonable quality there are numerous other retailers that are at the same or lower prices for the different market segments. What Amazon has is convenience and that will only go so far.
Government regulation targeted at a specific company isn't a sensible route to go down. Improved transparency such as "country of origin"/ "affiliation with retailer" could be applied to all retailers to benefit consumers, but the politicians are not really interested in that.