It depends, if 3rd party marketplace and direct sales were split up into separate independent companies, the "sold by Amazon" items could easily flow through as

It depends, if 3rd party marketplace and direct sales were split up into separate independent companies, the "sold by Amazon" items could easily flow through as 3rd party marketplace sales. And they would also be free to sell "sold by amazon" items on any other platform, even competing directly with the 3rd party marketplace and leaving it to fester. Product listing quality is already about on parity with eBay so it's not a big stretch. Possibly a better solution is to make all of the sales and inventory movement data available to amazon internally, available to anyone externally too. For example, the private lable shenanigans would die off quickly with more competitive pressure enabled by giving external players access to the same data Amazon has internally.