I think we have to see the bigger picture. Growth, momentum, and investments should be a good thing.
Dominance is not illegal. Nor technically is a monopoly. Using a monopoly illegally is.
Having said that we would have to fundamentally change the definition of a monopoly in order to break up the party responsible for 4% of the market -- and have a record of reducing prices.
All that stuff is great, far better than companies run by finance degree holding businessmen that haven't invented anything in 3 decades and keep existing purely through rent seeking or quarter-to-quarter profit pumping.
To bring Amazon down now, before its had a chance to reap the benefits of its prudence feels like the worst possible signal we could give the market. It'd basically be saying "Don't bother actually focusing on technical improvement, because if you ever do get really big as a result the government will step in and take it away from you".
Though the article does kind of share this sentiment, so kudos to Tom Harford:
>If that is a worrisome state of affairs — and it should be — then Amazon is the shining counterexample. The online retailer’s strategy is driven not by short-term profit but by investment, innovation and growth. If only there were a few more companies like Amazon, capitalism would be in a happier spot.
I suppose the core disagreement then becomes I don't think the threat of Amazon becoming abusive is worth the negative signal going after them would generate, and he does. I'd be interested in reading a 2nd article from him that delves more specifically into this part of the issue.
Bezos obviously has an incredible nose for business, but he's mainly shown that he's not incompetent and just by being that he's run circles around others.
I've had too many bad experiences with Amazon that it tells me that his genius businessman mythology doesn't extend to the details. Went searching for a new smartphone recently. Was seconds away from spending $300 for what seemed like a new device only to see review after review from people who had been shipped poorly refurbished phones (shipped by Amazon) that would break a few months later.
There's too much stuff like that. That's their own damn site, an Apple product, and it shows that people are getting regularly ripped off and they are powerless to stop it (or won't). I see that and I see them getting into groceries and healthcare and it scares me. How can they possibly keep quality up?
There's too much mythology there, too much obvious greed, and not enough care that they appear to be building the world's greatest monopoly and we're patting them on the back.
EDIT: Typo fixed. And full disclosure, I host reviews of my products on my own site.
Edit: I’m not an amazon fan. I’ve had issues with their delivery and I would definitely prefer ups or fedex to them in that area. I also prefer Apple products to kindle fire series, and so on. I’m not against intelligent regulation either. I’m really against a rush to regulate or calls to regulate in the absence evidence.
Except Bezos provided an extremely logical explanation for that. He transformed himself physically because he wants to live as long as possible and be physically fit enough to travel into space when it becomes possible. Bezos is 54, which means his window is closing physically, he's attempting to delay that as long as possible.
Cutthroat, with what? The way he's taking on Walmart? The way he's taking on Apple? The way he's taking on Google? The way Amazon routinely gets voted as one of the best customer service companies?
Their customer service ratings might be high, but those ratings are inflated by the same people who, if they managed to notice that their new phone was actually refurbished will get a quick turn around on it, nevermind that they shouldn't have to deal with that at all.
The customer service is also inflated because they'll screw over sellers to do that. Maybe I'm too vindictive over my really negative experience, but there's plenty of stories of them screwing over sellers. It's also a notoriously bad place to work (friends and HN stories attest to that).
That stuff combined suggests a company that will do what it wants to win, cracked eggs be damned. It's admirable in a way, but it doesn't seem there's much in that company except a desire to dominate.
The idea of regulating on a hypothetical is insane to me. If Amazon becomes abusive, the US Government will still be able to take them. Let's not start prosecuting pre-crime because Bezos is super rich.
I agree that we shouldn't preemptively act, that "but what if they attack us first" mentality, but I contest the accuracy of that statement.
Amazon has the resources to entrench themselves into the political system and are surely already doing so in ways we cannot yet see.
Also, if the company that runs the sweatshop is in fact making huge profit margins from it (I assume that's one thing "exploitation" implies), and if the company isn't especially unusual, then that suggests there's a lot of room for some other company to set up another factory, offer a slightly higher wage or better conditions to attract workers away from the first one, and still make great profits. If there are no artificial barriers to this, then foreign companies competing for workers may end up really improving matters after a while. Contrariwise, if there are significant risks to setting up more sweatshops—e.g. suffering bad PR, running afoul of new or newly interpreted legislation—then the few sweatshops will tend to remain few and miserable, and be run by companies that are more immune to the above dangers (probably large, with good legal departments and/or political pull, and those that don't depend as much on a good reputation).
This implies that people who manage to cause serious problems for companies by protesting their use of sweatshops are probably making things worse for the workers. It is interesting to reflect on.
That isn't an Amazon problem though, that's a "the smart guys are on the wrong side of the table" problem, big business pays better than government.
And all my Amazon packages to London had Luxembourg return addresses.
Sorry, Europeans, you can blame big American tech companies for dodging taxes all you want, but it's hypocritical when you legally allowed the conditions for them to do so.
There are a dozen nations in Europe that are notorious for intentionally encouraging tax shenannigans. What are you planning to do to the nice people of Ireland and Switzerland to correct that situation? Their extraordinary GDP per capita figures are directly related to said tax conditions.
Traditionally, the market has not supported this. Government parties need funding now not some time in future. That said I do not know about the US. I think if you run a big business, you need to keep everyone happy which includes investors and governments for that you need money today. The easiest way always has been to extract more money from customers.
Are you seriously saying you've never heard anyone call for ending Walmart's dominance?
> I think we have to see the bigger picture. Growth, momentum, and investments should be a good thing.
The big picture for involves looking outside of the myopic view of growth, momentum, and investments, and seeing how it affects people. Growth, momentum, and investments are only a good thing when the gains benefit society, which only happens if they occur throughout a diverse market. Growth, momentum, and investments for Amazon only benefit Amazon, and if they're only in Amazon, it's at the expense of the rest of the market.
> Dominance is not illegal. Nor technically is a monopoly. Using a monopoly illegally is.
The implication that companies with monopolies don't use them, in direct opposition to incentives, is incredibly naive.
Also, this is a conversation about policy should be, so telling people what policy is, isn't really very relevant.
> Amazon accounts for 4% of ALL retail sales.
> Having said that we would have to fundamentally change the definition of a monopoly in order to break up the party responsible for 4% of the market -- and have a record of reducing prices.
On what basis have we decided that "retail sales" is the most relevant market segment? Why not "book sales" or "online sales"? It should absolutely be concerning to us that Amazon is dominant even in these smaller markets, with little hope of competition.
And yes, this is what I think the policy should be. We don't want to punish success. We want to protect consumers.
What is it that I can only buy from or using Amazon and where there is no ready substitute in the market? (Saying I can't buy Amazon Basics AA batteries or an Echo doesn't count [IMO] as I can buy Duracells or Google Home things.) Almost invariably when I look for something on Amazon, I also do a Google shopping and Ebay check.
https://www.antitrustcriminalattorney.com/antitrust-defenses...
I never said it was a naive understanding of American antitrust law.
> And yes, this is what I think the policy should be. We don't want to punish success. We want to protect consumers.
What is naive is thinking that current American antitrust law adequately protects consumers.
Serious question. Why? Every market has a leader, a dominant player, and sometimes a couple of them vying for the top against myriad smaller players. Why should I be "concerned" about this natural state of affairs?
The problem is that when you get one dominant player, they use their dominance to change the market so that it's no longer fair, buying any competitors that approach relevance, lobbying for laws that no competitors have enough voice to combat, etc. In a fair market, consumers benefit because companies compete to provide better products/services/prices. But a single dominant player can compete in other ways, which don't benefit the consumer.
One example of this: Amazon allows third-party sellers to sell on Amazon. If you create a product, such as Iron Gym pull up bars[1], you can create an online store for it. But your store is competing with Amazon, and even though the Iron Gym pullup bar was better than the pull up bars on Amazon which required you to screw them into the wall, people would likely buy an inferior, more expensive product from Amazon simply because they didn't know your product existed. You can easily compete in the home gym equipment market, but Amazon's dominance in the online retail market forces you to sell through their platform. No big deal, you're trying to compete in the pull up bar market anyway.
So you sell your Iron Gym pull up bars on Amazon[2]. Now Amazon has all the market data on your product, and sees that it's doing well. So they release an AmazonBasics version of your product[3], price it automatically cheaper than your product because they don't have to pay a cut of their profits as an Amazon third-party seller, prioritize it higher in their search results, and wait for you to go out of business. Amazon's dominance in the online retail market lets them completely reverse dominance in the pull up bar market, without any real competition in the pull up bar market.
It might seem that this is good for consumers, because Amazon provides a cheaper product, but keep in mind that if Iron Gym goes out of business, Amazon is free to hike the price of the pull up bars up to whatever they want.
[1] https://www.irongym.com/products/total-upperbody-workout-bar...
[2] https://www.amazon.com/Iron-Gym-Total-Upper-Workout/dp/B001E...
[3] https://www.amazon.com/AmazonBasics-Pull-Upper-Body-Workout/...
Reading his article, he seems to be saying Amazon does everything good for the American economy and consumers, and he's against false positives (wrongly calling out anti competitive behavior). But at the very last paragraph he suddenly waves his wand and concludes "Amazon is too dominant, we should split them into two, after all two Amazons would be better then one". It just seems like he forgot or got lazy to consider the pros and cons of having two smaller Amazons for the sake of it.
I would also not really consider search and ads narrow verticals. Those are broad industries that drive and direct large scale consumer behavior.
Everywhere you look. They have been criticized for decades about their business practices, the way they treat their employees, their usage of scale to crowd out small-town retail, then jack up prices once they are the only place left in town... all because they are big enough to make it work.
If you haven't heard complaints about Walmart, you haven't been listening.
This is tautological. Legality the wrong question to ask when we're talking about what laws we need.
A good question to be asking is whether net harm outweighs net benefit. Another is whether we can get the same benefits with less harm.
Walmart doesn't carry criterion releases or foreign films, and there is potential for local art movie stores or houses to exist to fill the need. Amazon carries movies at a much lower price than a local business ever could, and streams them too, again at lower prices than a theater. They try an get their fingers into everything, even service-based businesses, while walmart just does low prices on a selection of goods.
https://www.walmart.com/search/?query=criterion%20collection...
Why? As a an a-priori assertion?
A good way to make a profit is to make something people need at a price they can afford while paying your employees well. But you can't work that backwards. Not everybody making a profit is creating value or contributing to society. If you don't have a conscience, or even if you're just not thinking very hard, it's easy to privatize a gain and socialize the losses. It's our job as citizens to make sure that is minimized.
"Respect for People" was at the core of the Toyota Production System, and by that they meant both workers and customers. Their extensive investment in workers let them create better products for less money. Their refusal to lay people off cost them in the short term, but gained them substantial competitive advantage in the long term.
This only becomes more true the more we automate things. If machines are doing the dumb stuff, that only leaves smart stuff. And unhappy, underpaid people don't do smart stuff very well.
For those interested in how a different philosophy can lead to a deep competitive advantage, check out the This American Life episode on NUMMI: https://www.thisamericanlife.org/radio-archives/episode/561/...
That said, lines are hard to draw. When is a company lowering prices to strangle the competition and when is the competition being strangled a side-effect of efficiency? Is it okay if amazon intends to always stay cheap, and use retail as a loss-leader? What should happen when supermarkets dampen price fluctuation, taking a loss when prices spike to appease their customers.
It's a hard problem, but we should be careful about companies operating at a loss just to strangle their competition. However, should this come at the cost of companies that strangle their competition by just being more efficient?
If that strategy really worked in the long run, you would see countless examples of it. So called "price dumping" can actually be illegal, but it rarely needs to be enforced.
Retail isn't really that high, if you count anyone who chooses to open up online, and value additions other than price- shipping policies, returns, service and so forth- are important.
If Amazon drops prices to a significant loss on a single product to specifically undercut a new competitor, that might be an issue. Running one side of a business at a loss and propping it up with another is quite common, though perhaps not at this scale. Either way, splitting it now could only harm customers.