Amazon's drone delivery plans appear to have been shot down by U.S. regulators, who have proposed new rules that would require operators to keep the flying machines in their line of sight.
The Federal Aviation Administration (FAA) said that operators of commercial unmanned aircraft would need to see the drone with "unaided vision," in draft rules published on Sunday.
It also said that small drones must not fly over people - denting Amazon's plans for its Prime Air drone delivery service.
The FAA is now consulting with the public and interested parties, and stressed that the rules would be flexible, giving hope that future revisions to the rules that could benefit companies planning to use drones for commercial purposes.
"We have tried to be flexible in writing these rules," FAA administrator Michael Huerta said in a statement. "We want to maintain today's outstanding level of aviation safety without placing an undue regulatory burden on an emerging industry."
Amazon began testing drones in 2013 with the aim of delivering packages to customers in 30 minutes or less. To date, the e-commerce giant has been conducting tests at an indoor facility in Washington State and has been pushing the FAA to allow it to do outdoor trials . At the end of last year, Amazon warned that "key jobs and economic benefits" were at risk if the FAA didn't loosen its regulation.
In a rebuke to the FAA's proposals, Amazon threatened to take the development of its drone capabilities abroad.
"The FAA needs to begin and expeditiously complete the formal process to address the needs of our business, and ultimately our customers," Paul Misener, Amazon vice-president of global public policy, British newspaper The Guardian.
"We are committed to realizing our vision for Prime Air and are prepared to deploy where we have the regulatory support we need."
The FAA proposed limiting drone flights to an altitude of 500 feet and a speed of no faster than 100 miles per hour. An operator would have to be at least 17 years old, passed an aeronautical knowledge test and obtained an FAA operator certificate.
Amazon is not the only company developing drone delivery capabilities. In China, e-commerce titan Alibaba tested drone deliveries earlier month, and last year, German-based company Deutsche Post DHL said it was also carrying out trials .