They're betting on the regulatory force of their review system and product listing SEO, which is linked to their search algorithm. The truth is that it's easier for smaller sellers/brands who laser focus on one or a few products to outcompete bigger brands with many products, and as a consequence appear first in the search results.

The more niche a product is, the easier it is to compete. It's just hard to tell an establish brand apart from a brand that just does Amazon, if you search for something (brands) outside of your knowledge domain. Smaller private label brands can appear more professional as a result of that mentioned laser focus and having Amazon as only channel.

In my opinion it's also the fault of the bigger brands not investing enough into the optimization of their listing, they don't depend on it.