Extreme alarmism is going to make the Internet an over-regulated hellscape that mostly benefits incumbents and further reinforces monopoly positions. We would all be worse off if something like what you’re describing was implemented.
The argument that Amazon's suppliers are "retailers" to avoid any liability is disgusting. Imagine if Walmart did that in stores: "our shelves are just a vehicle for other retailers, take your health/counterfeit concerns to them". It's insane.
Yes maximal regulation would lead to much higher prices, fewer options and make it more difficult to find goods. I wouldn’t call that a hellscape but it’s not what we want. I do think the only way to dissincentivise Amazons behaviour is increased accountability. I am completely open to alternative suggestions on that though.
You say this, but if it were actually a problem for people, it's not like they don't have alternatives. I think the evidence of harm here is pretty minimal.
They could ditch Amazon, but there's no guarantee any other site would be better. Trying multiple different options and getting cheated each time until you find one that isn't cheating you (yet) isn't an acceptable state of affairs. Individual consumers don't have the resources to evaluate each option available to them and make an informed decision, especially when much of the information in the form of reviews that they do have access to is poisoned by fakes.
In these sorts of circumstances, offloading that task from individuals to a delegate that regulates the market and establishes basic standards is I think reasonable.
Food trucks. Why are there any regulations? Same for restaurants. What about automobiles? Why are their safety features over regulated? Doesn’t that just benefit incumbents? I shop for prescription drugs at a pharmacy. Why are pharmacists regulated? Isn’t it a gatekeeping scam? Shouldn’t I be able to buy Oxycodin at the corner-store if I want?