Amazon Is a Monopoly
marketplacepulse.com
marketplacepulse.com
The biggest problem is `agreements that restrain trade` is a monopoly practice that happens across the board. They're a black box AND have tiny support systems for their marketplace.
One recent example. A client was on track to be selling $X-million this year of some appliances. Our client was forced to to stop selling because of trump tariffs. Amazon won't accept a "higher price" from our little company that only sells $Xm/year. I guarantee they're talking everyday to the teams at frigidaire/honeywell/GE/etc.
If their systems would transparent this wouldn't be a problem but their algorithms have blackbox variables for the big brands.
Whenever I asked about this, they said you still had to provide product for sale wherever the customers were. The large retailers all want you to believe that you can make up for the lower price in vast quantities their store front provides.
I mean there are areas where peoples only choice of ISP is Comcast and equally the Government wasn't forcing people to buy Standard Oil.
Any monopoly is bad because it allows them to ignore consumers as there is no competition.
Telecoms were totally built by govs. Back in the days govs were obsessed with controlling the means of communication, so all the related biz was due to the monopoly right.
> AT&T established a network of subsidiaries in the United States and Canada that held a government-authorized phone service monopoly, formalized with the Kingsbury Commitment, throughout most of the twentieth century.
> With $18.8 million spent in 2013, Comcast has the seventh largest lobbying budget of any individual company or organization in the United States.[62] Comcast employs multiple former U.S. Congressmen as lobbyists.
Sure, nothing to do with the government. Go ahead, try to bypass FCC and establish a new telecom company. It's literally pushed by the gov, as in any heavily regulated domain with patents and other monopoly rights.
As for robber barons, that's mostly an antitrust myth to scare people
> After 1900 it did not try to force competitors out of business by underpricing them.[37] The federal Commissioner of Corporations studied Standard's operations from the period of 1904 to 1906[38] and concluded that "beyond question ... the dominant position of the Standard Oil Co. in the refining industry was due to unfair practices—to abuse of the control of pipe-lines, to railroad discriminations, and to unfair methods of competition in the sale of the refined petroleum products".[39] Due to competition from other firms, their market share had gradually eroded to 70 percent by 1906 which was the year when the antitrust case was filed against Standard, and down to 64 percent by 1911 when Standard was ordered broken up[40] and at least 147 refining companies were competing with Standard including Gulf, Texaco, and Shell.
What? Your local Cafe does lobbying? Only magacorps do that, and yes, they use it to protect themselves from competition.
And no, protecting yourself from competition using lobbying, monopoly rights, patents, regulations means exactly this: big biz uses government to ensure its monopoly/oligopoly, aka governments creating monopolies.
>Comcast like that is weird to prove a point of government and telecoms
Comcast is using government to ensure its marketshare is not an example of government forcing people to use the service?
It exactly is IMHO.
Then articulate your point more clearly.
Sure, many the American megacorps are using the government for their own sake. That's exactly proving why US is such a crony state, where big corps are protected from competition by a huge apparatus of bureaucracy.
What's your point? If they use the government it's not the government's fault? Government is literally a mean of establishing oligopolies and shifting the bargaining balance from people to corporations.
You can't buy a competitor if he don't want to be sold. Neither can you threat somebody with violence if the government does its job. I don't even comprehend how the absence of interventionism presume allowance of such violent measures. Don't confuse violence with "non-competitive practices". The latter are seldom harmful, or at the very least much less harmful than those leveraged by the allowance of interventions.
So they've provided a worse service? I'm fine with it, if it means lower prices.
Of course they had a choice. And not only "to sell or become worthless", but also invent or innovate, as Amazon did, when it swallowed a huge chunk of Walmart's pie.
I don't know if Amazon is good or bad, neither myself nor anybody around ever used it, but if its service would not be good enough, any competitor could easily use it to conquer the market (as Amazon itself did), until Amazon would protect itself via regulatory capture.
I don’t buy that you didn’t know I didn’t mean everyone because of articulation. As if such a basic point needs to be specified so much.
There's plenty of problems with market capture by a single entity, government or no.
"Our milk supply expires at the end of the week? 50% off!"
And then they raise the price of eggs, bread, peanut butter, and other frequently purchased items by 5 cents each.
There is no "moving into the market", because as soon as a market consolidates around one or $very_small_number of players, cost of entry and market capture make competition impossible. So competition ends.
This is where we are now with tech. It's basically impossible for anyone new to compete with Amazon, Google, Facebook, etc. It's also where we are with established players in other sectors such as Airbus.
The only two things that can break the logjam are government action to split up monopolists, and the invention of a new market space with a viably low cost of entry.
Not market mechanism, governments protecting big biz. Without legislative protection a monopoly doesn't last long, as Standard Oil example shows.
A typical cycle of crony-capitalism is: build big biz on a new market -> lobby heavy regulatory framework and a set of monopoly rights which make entering impossible for any new competitor -> push your shills in some agency like FAA, FCC or FDA -> enjoy your unconditional domination.
> The only two things that can break the logjam are government action to split up monopolists
This factoid has failed so many times it's astonishing it keeps being repeated. A century of anti-trust failures without a single example of a decent outcome, yet people still bring this up.
Are prices high, or are prices so competitive, so low, so good for consumers, that competitors have literally been complaining about it for years?
Now, tell me again why you think prices aren't competitive?
It wasn't always that way... or, at least, not for such a large proportion of the economy. The problem is that economic models and resulting policy is still based on assumptions that, due to technological change, no longer hold. The logic is usually sound, but the assumptions are ridiculous (see, e.g., abuse of the Coase Theorem).
It's far past time to re-evaluate this perspective, but we keep running into that Upton Sinclair quote: "It is difficult to get a man to understand something, when his salary depends on his not understanding it."
(No fan of Amazon here, just trying to understand what you're saying.)
Source: Have built price optimization software for Amazon Marketplace sellers in the past
Ford motor company is huge and may have, for all I know, abusive practices towards it's suppliers. But Ford is certainly in the oligopoly, not monopoly category. Ford could be absolutely the only game in town for a given small or medium sized company but this doesn't mean Ford controls markets on the supplier end, which I believe is the measure of monopoly control.
If you look at Amazon guidance, $X-million / year means you don't hit the threshold to get an Amazon rep. If you're over $10 million / year you do get a rep. Either increase sales to get a rep or stop being a vendor.
A devil's advocate view: perhaps the supplier was buying low cost appliances from China, built in factories with who knows what labor standards or whether the work was compulsory, made almost certainly to a lower quality than appliances made in North America, taking advantage of China's currency and trade manipulation to mark up the price and make a larger profit than if they had distributed appliances made in a western nation with labor and wage standards.
Now the U.S. is putting the same tariffs on Chinese imports that they put on U.S. imports to their country and the supplier is having difficulty getting Amazon to bear the cost of the supplier's desire to keep the same margin.
OP is framing this like it's wholly Amazon's fault and not just a common failed negotiation.
At the previous company I worked for, they were very careful about this issue. It was a fintech company that had 20+ different lines of business/revenue. Due to the nature of the fintech space, certain business units wanted information/data/services from the other divisions. For example, the index and ETF team wanted corporate actions data from the team that monitored all corporate actions globally and delivered it via a standardized feed. The ETF and index teams were forced to take money from their budget and actually buy the service from the other team to avoid legal issues. They knew that if other ETF and index providers found out they had to pay for the product but our internal team got everything for free and could then undercut them and charge less for the ETF and index products, I guaran-fucking-tee you they would have sued us. Every division in the company was financially separated for exactly this reason. There should be some sort of class-action lawsuit on this basis from all sellers against Amazon, in my opinion. Amazon should be forced to separate that business that actually sells its own products into a new legal entity and have to pay the fees.
I think you're on to something about the competitive advantage that comes from those fees though. Matt Levine (who writes for Bloomberg) often mentions how odd it is that it's illegal for, say, two plumbers with their own companies to get together and agree to set their prices higher, but it's perfectly legal for those same plumbers to form a company together and then set their prices wherever they want. What's "anticompetitive" for two individuals is ok for a firm, unless the firm gets too big... It definitely makes you wonder if the definition of too big is actually set too high.
Has Amazon come up with a way to dominate markets without controlling prices or excluding competition? Right at this moment, my answer is, "maybe?"
Cartels are also bad for markets, but aren't monopolies either. Monopolies have become a deprecated technology, but vertical integration lives on in new ways that resemble a feudal system more than a single empire. The economy as a whole has gotten so big that there is room for more than a single player at the top, and so we get cartel-like behavior between the largest players instead of full-blown monopolies. Each of them is large enough that they can ignore unrest from their customer base, and as a result they have more incentive to cooperate than to compete. The difference between Microsoft and Apple isn't the quality of their product anymore, it's a brand of tribal identity.
As abusive, anti-competitive practices continue to be improved on, we should not be constrained by outdated theories that only focus on 19th and 20th century phenomena.
The same applies to censorship. Manufacturing Consent described how the western powers could have the effect of censorship without outright censorship, and that's from over 3 decades ago.
Amazon got this big because no one wanted to be as customer obsessed as Amazon. Not because they stifled competition.
Competition breeds innovation - lower prices, better customer service, new ways of doing things... none of those things happen without competition, because there is no incentive to improve.
Look at Comcast / AT&T regional monopolies, which started out promising lower prices until they cornered markets then started raising prices while lowering service quality... or, even before that, Bell Labs suppressed inventions like early hard drives out of fear it would hurt their telephone monopoly.
Those are the three things Amazon has done amazing at (lower prices, better customer service, new ways of doing things). Isn't that a paradox? You take the stance that only competition can breed this but in this case Amazon has done those things while still reducing competition. In fact, it is helping consumers that has led to people buying things on Amazon and it getting this big. Not the other way around.
Is it that people are afraid that at some point Amazon might stop doing these things? I agree that if what amazon is doing has lead to higher prices, worse customer service, and stagnant methods of doing things that would be bad. But thats not whats happening here.
It's neither.
It wasn't active competition (or the lack of it, or it being reduced) that generated that outcome. It was Bezos (just as it was Sam Walton before him), he dictated that approach as the basis for Amazon's best likely ability to reach massive scale. There were no possible alternatives, if the goal was to get very large as a retailer. Amazon is Jeff Bezos, he has raised it like a child from day one, totally in control of what it is and what it became.
Bezos was facing a scenario of: approach it that way, or Walmart will take care of it for you eventually and make you redundant.
More precisely it was Bezos looking at the future and having to compete with a Walmart that fully awakened to online retailing. In that future forecast sense it was motivated by the threat / fear of competition that would inevitably crush a smaller Amazon. And if it wasn't Amazon or Walmart, someone would have done it most likely, Bezos surely understood that; that the Internet would make a mega platform like Amazon possible.
For another example of this premise in action: Microsoft wasn't so wildly aggressive and competitive due to the marketplace, or other competition or animal spirits in the water, it was solely due to the personality of Bill Gates. It mirrored his personality, aggressive nature and competitiveness. Gates ultimately made Microsoft in his image (that earlier version of Microsoft anyway). He dictated what it became, he controlled the growth and nature of its culture (and once you set that in order, it flows in that mold forward, a persistent mimic, until something breaks it).
Because - I believe - people are overwhelmingly reactionary, easy to excite and short-term focused. Microsoft was the end of the world. Google is the end of the world. IBM before them. Yesterday Walmart was the destroyer of worlds that was going to kill every small business in every town in America. Countless articles were written for a decade espousing that as fact, inevitable, unstoppable. They were pure evil, everyone knew it. Nobody could compete with them. That reactionary emotionalism against The Corporate Overlords, is now retrained on Amazon as the destroyer of worlds, the evil entity that will crush everyone. Tomorrow it will be someone else.
The most interesting story about Amazon - which is being almost universally ignored - is that the growth in their retail business has already mostly stopped (some shareholders are finally noticing). In the next few years that growth will continue to trend toward between zero and low single digits. The mighty retail conquerer of worlds is running out of retail growth and mostly that is being ignored because it doesn't bolster the story of the moment that Amazon is going to eat everything.
Because it doesn't matter who ultimately made an anti-competitive world marketplace, it's still anti-competitive and ultimately impossible to run morally when you participate in it in parallel. eg if ebay was undercutting other people's auctions via buyout prices under their own brand
In that scenerio, and captialism in general, eBay doesn't owe sellers on its marketplace the right to sell items at all. They've just been given a chance to make hay while the sun shines.
I feel like a lot of people jump to attack Amazon on the basis of what they could do (because they're so big) instead of what they're doing currently.
Not if they are reducing competition by virtue of causing less-competitive businesses to lose market share. I feel like there's some cart-before-horse going on in your perspective on this. Competition is wonderful. Competition is amazing. Competition is good for consumers because competitive businesses drive less competitive businesses out of business. Amazon is a perfect example of everything we want to see, panning out in just the way we want. Amazon has materially raised the bar of customer satisfaction, and if Amazon's competition wants to stay in business, they will have to do even better. I look forward to seeing what they come up with!
For the later if there is a proprietary format on something major and it shuts out competition for no benefit like say "screws only they manufacture and cannot easily take other standards" that would be "anti-competitive" as it does nothing to compete better.
For the previous say "better infastructure to lower per unit cost" and producing at an industry standard percentage profit margin could be called hypercompetitive as it does nothing to stop those with sufficient capital from scaling up.
In practice however both are classically anti-competitive. The later would by definition reduce the number of potential competitors to those with more resources.
There could be some arguements about how they are relatively bad they are and should be treated. Even if both should be "illegal" they are two different types like say arson and murder.
Wikipedia has a long but layman-accessible section on Europe's competition laws: https://en.wikipedia.org/wiki/Monopoly#Law
Amazon very often competes directly with sellers on the Marketplace, and often undercuts them on price.
There are products they sell below the purchase cost, sometimes below manufacturing cost. You can't compete with that unless you have piles of money to burn.
They sell at a loss until they shake everyone loose from a product, then dominate all sales of that products on the Marketplace, raising prices to profitability when they feel like it.
Don't forget they get all product sales information and statistics from every seller on the Marketplace - basically all the market research necessary to pick only "winner" products to sell. Then, when they feel like it, they require sellers to produce original invoices proving purchase of the items. These invoices conveniently contain all necessary information for Amazon to start buying the items directly themselves so that they can sell the item at a loss until you can't compete anymore, leaving Amazon as the sole source for the product.
Wanna be part of Vendor Central - selling directly to Amazon? They dictate the pricing and strong-arm you into selling exclusively to them in many cases. There is no negotiation - there is no adjusting pricing based on quantity ordered. And as much as people might want to think Amazon just buys enough quantity to get what they want - they don't. They just tell you what it will be.
> or exclude competition to that extent?
They can ban you from their Marketplace (the largest consumer Marketplace in the world) at will, with little to zero recourse on your part, via an opaque "Seller Performance" team that only responds to email, sometimes, and provides vague responses to what policies you might have broken.
That is, if you somehow get the eye of the Seller Performance team upon you. The reasons they go after certain sellers and leave others alone are as mysterious as the team behind the decisions.
If Amazon can actually compete with you in a given product niche, then you're not bringing any value to the table (since they own the customer relationship, the fulfillment, the logistics, etc.), so why do you deserve to make money? There are a gazillion product categories on Amazon. There's no way they can bring products to market in all of them. They focus their attention on markets where brand differentiation isn't very important. Usually those markets are that way because what consumers care about is price, convenience, and surpassing some minimum level of quality. Those are the spaces where Amazon puts forward their own product. And if your livelihood is tied to being a relatively generic brand in a product category where consumers really only care about convenience and price, then you need to find a different way to make it in the world.
Then Amazon requires the seller to produce invoices showing purchase of the items, usually with some sort of vague threat of suspending your account if they can't "verify the authenticity" of your products. The invoice, of course, has everything needed for Amazon to start sourcing the product themselves - and now they know your cost.
So they proceed to purchase the product, sell it at a loss until you can't hang anymore, and now Amazon is the sole source for the product.
It's brilliant, actually. But it's definitely Anti-Competitive.
Just like the "dumb pipes" argument with Net Neutrality - If you wanna run a Marketplace, you shouldn't be allowed to "compete" in the very same Marketplace. You should not be allowed to collect and then abuse all the data the Marketplace produces.
No, it does not. They are missing the most important piece of information: Cost of Goods Sold. They also don't know where you sourced the product. Or which features are important to customers and which are not.
> Then Amazon requires the seller to produce invoices showing purchase of the items, usually with some sort of vague threat of suspending your account if they can't "verify the authenticity" of your products.
This is only for trademarked products where the trademark owner has registered with Amazon. And the purpose is to protect consumers: by requiring proof that a product has been sourced from an authorize reseller, rather than some factory making knock offs or somebody buying stolen goods.
> So they proceed to purchase the product, sell it at a loss until you can't hang anymore, and now Amazon is the sole source for the product.
The only sellers this alleged strategy would harm are sellers who are selling a trademarked brand for which they are not authorized. But why should those sellers even be on Amazon? And how would this be any different than Amazon buying these products directly from the manufacturer and being the only seller on their website? In other words, they don't need to do what you're alleging. They are free to just claim certain products as 1st party only.
Separately:
I sell speaker wire on Amazon. I compete against their Amazon Basics brand. I have a viable business that is growing. Because I know more about this market and its weird little crevices than Amazon ever will.
I can tell you first hand, this is not true. This is the "official party line", as it were, but not true in practice. Particularly if you FBA anything.
Get enough returns of a product and Amazon will freeze the listing until you provide an invoice - FBA and FBM.
For us, "enough" returns was 4 on a single ASIN in a week, out of the thousands we carry. It's a totally random system.
> I have a viable business that is growing
I wish you best of luck! In our case, we're an ecommerce company operating our own warehouse and multiple sales channels including our own websites. Amazon is but one of those channels, and we don't rely on it for company livelihood. I would be terrified to live solely off Amazon, knowing the rug can be yanked out at any time for any reason and with zero recourse. You can do everything right and still get canned.
Is there evidence of Amazon driving a company out of business by abusing this position? If there is then that could be a problem.
No, it really is not a problem. Amazon does not have a monopoly on consumer purchases. If your livelihood is dependent on selling on Amazon, a company which sells tons of products first party, then you need to be prepared from day one for the possibility that Amazon is going to bring a product to market in your category under the Amazon Basics brand, or that they will go directly to the manufacturer whose products you are selling.
Period.
Amazon isn't running their business so you can make money. They're running it so they can make money. As long as they think their interests are aligned with yours, then there's a chance for you to participate profitably on their platform. The minute that changes, you better have a plan B.
To operate a 3rd Party Marketplace while also harvesting said marketplace's data and then deliberately targeting top products, killing those 3rd parties in the process?
I just don't get it. Do you think someone selling a generic product that only differentiates on price has some unalienable right to make money on Amazon.com? Or that some wholesaler buying branded products has an inalienable right to somehow not get squeezed out when the only value they provide is placing POs with a vendor?
It's not about what intrinsic value any particular seller can bring - it's whether or not Amazon has become a defacto monopoly and/or practices anti-competitive behaviors.
It's not anti-competitive behavior, it's just ordinary competitive behavior. Sometimes Amazon decides to compete with the sellers on its platform, and woe betide them when it happens because Amazon is an extremely competitive business.
Anti-competitive behavior is when you interfere in someone else's ability to compete with you. No amount of outcompeting competitors can make a business anti-competitive. It's almost a tautology.
Is it theoretically possible? Yes. Practically? At scale, its hard to say for sure.
People have also been saying Walmart is quite anti-competitive for years for what that's worth too.
No? When exactly did they start selling large numbers of items on their website that aren't in stores?
Hell, Frito even has their own employees stock the shelves, which is why the chip aisle tends to look immaculate compared to the rest of the store.
Something sounds odd, because I interviewed with a no-name company that handles this sort of thing close to a decade ago, and while I don't remember if they did it for Walmart, they provided similar fulfillment services for several large e-commerce websites.
At what point is it a defacto monopoly? A huge share of people shop exclusively on Amazon, particularly when compared to 10 years ago. There's no sign it'll stop growing any time soon.
Choosing not to, or being prohibited from selling on Amazon effectively blocks you out of a significant share of ecommerce sales. There's no way around that.
If the argument is that Amazon might become a monopoly in coming years, I can totally see that. But I don’t see how it is one now.
> The first quarter 2019 e-commerce estimate increased 12.4 percent (±1.1%) from the first quarter of 2018 while total retail sales increased 2.7 percent (±0.4%) in the same period. E-commerce sales in the first quarter of 2019 accounted for 10.2 percent of total sales
I don't think e-commerce is the right market. Most companies selling widgets just want to get their goods in consumer's hands. They don't really care how. Amazon makes it easy and does a lot of the work but sets the terms. Otherwise they'd be going after that 87.6% that's not done through e-commerce.
[0] https://www.census.gov/retail/mrts/www/data/pdf/ec_current.p...
People should ask why. Is it the prices? No. Is it the discoverability? No. It's because when you have a problem with whatever you bought you get reimbursed. No "call Samsung hotline", no "we'll add this totally not free warranty package in your cart".
Consider for comparison my recent experience purchasing a wedding gift from Bed Bath and Beyond. They had done everything right to capture my purchase: They hosted the wedding registry, kept the new couple's address hidden, and by not allowing me to select "I'm buying this somewhere else" made it difficult for me to get the item cheaper from another retailer.
Despite all of that, I still abandoned the cart and came back to Amazon. BB&B requires Verified By Visa, and I require my credit card provider to not be stupid about security, so my card was declined with no recourse.
Mind you, Amazon has declined my payment before, too. But they only did it once, more-than paid for their mistake, and haven't troubled me since.
Amazon is a monopoly like Visa and Mastercard are monopolies. They enrich themselves while facilitating commerce. While I'm uncomfortable with that power they hold, I wouldn't want to be without it.
Whether or not any individual sells on Amazon has absolutely nothing to do with their anti-competitive practices.
But my argument was poor.
Even ignoring that, do you have an example of products that don’t exist outside of amazon (other than amazon labeled products).
Is there any report from sellers that were banned just because? I mean, authentic sellers, not fake etc.
Edit: still googling, but it seems in many cases there is a ToS violation, like multiple accounts, or shady practices. One seller got kicked because "we grew up too quickly and we were unable to deliver in time". I am really wondering which sellers got kicked despite being respectful of the rules. All of them, including the user experience, because I think that's main reason amazon kicks you out - if I can get scammed or my items don't ever make it on time, why would I even bother using their service, instead of buying elsewhere?
This has actually happened? Can you point me to examples with price charts?
If I look at this article[1], they have a screenshot of size 4 pampers for 22 cents each, in 2010. In 2019 dollars that's 26 cents. The current amazon brand is 23 cents each, and the same pampers are 26 cents.
It doesn't seem like they've abused any dominance here. It's very possible they could do it in the future, but that's not the same thing.
[1] https://www.businessinsider.com/amazon-diapers-price-war-201...
Not only did Amazon not carry it, but Amazon also prevented third party sellers from listing the competing devices as well. That is textbook anti-competitive behavior, which is probably why Amazon finally started selling them again recently.
Apple also sells third party hardware on their site. Should they be forced to sell Dells besides their Macs?
- If Apple banned the Amazon app from iTunes, then that would be anti-competitive behavior.
You can still access Amazon in all these situations at amazon.com, and just like with the chromecast and Apple TV, whether or not there is access somewhere is irrelevant to the nature of the behavior being anti-competitive. Amazon was being anti-competitive by banning competing devices on it's - platform.
Google removes and deprioritizes sites all the time that breaks rules. CVS stop selling cigarettes in their stores.
CloudFlare just kicked off 8Chan.
Spotify bans musicians. Which one of these are anti competitive and which ones aren’t?
If Apple opened stores that sold a wide range a goods, including from other sellers, and then banned Dell, then yes, your hypothetical would be anticompetitive.
Does a physical store have to sell every product imaginable?
This type of question has already been answered. Are you aware of what sea-lioning is?
https://news.slashdot.org/story/19/08/05/2129248/amazon-sque...
In the case of Amazon there are sufficient barriers to entry that if Amazon were to make profit maximisation its goal, then it could increase prices and enjoy above market returns for a significant period even in spite of the eventual 'possibility' of competition.
To suggest that regulators should wait until the market is fully captured before considering a firm a monopoly is patently absurd since by then the efficiency losses would have already been realised and the remedy becomes harder to implement.
Also, I urge you to find anyone who agrees that there has been an increase in the quality of products available on Amazon. On the contrary, there are countless stories of people lamenting the decline in product quality.
> at what point does it become problematic?
I don't know , probably at the point where that company becomes a net negative to the economy.
"Monopolization Defined"
https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
>the exclusive possession or control of the supply of or trade in a commodity or service.
It is maybe under the Sherman Act:
>“Monopoly power” is generally understood to mean “the power to control prices or exclude competition”.
I wish when people use words in a different way to the dictionary meaning they'd say so. Otherwise it leads to a whole lot of pointless "Oh yes it is" vs "oh no it isn't" in discussion.
The trouble is those are uninteresting questions. "Is Amazon a monopoly?" immediately takes the more interesting discussion "what should we do about the size of Amazon" off the table and leaves us to bicker about what words mean. We likely won't reach an agreement about what officially constitutes a monopoly, but we can reason about what we should do in the future.
There's a DoJ memo, or something similar, that spurred this recent-ish change in policy but i can't seem to find it.
The antitrust laws prohibit conduct by a single firm that unreasonably restrains competition by creating or maintaining monopoly power. Most Section 2 claims involve the conduct of a firm with a leading market position, although Section 2 of the Sherman Act also bans attempts to monopolize and conspiracies to monopolize. As a first step, courts ask if the firm has "monopoly power" in any market. This requires in-depth study of the products sold by the leading firm, and any alternative products consumers may turn to if the firm attempted to raise prices. Then courts ask if that leading position was gained or maintained through improper conduct—that is, something other than merely having a better product, superior management or historic accident. Here courts evaluate the anticompetitive effects of the conduct and its procompetitive justifications.
"Market Power"
Courts do not require a literal monopoly before applying rules for single firm conduct; that term is used as shorthand for a firm with significant and durable market power — that is, the long term ability to raise price or exclude competitors. That is how that term is used here: a "monopolist" is a firm with significant and durable market power.
https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
(How would "the market" know the fair price without healthy competition?)
Someone (you? chubot?) previously equated laissez faire with pro-monopoly. Facepalm. Terrific insight, framing.
https://hn.algolia.com/?query=dredmorbius%20laissez%20faire%...
https://news.ycombinator.com/item?id=11677735#11681574
https://news.ycombinator.com/item?id=8261411#8278705
What I'd just (re?) realised is that the term laissez faire itself originated with Quesnay, though arguably in a different context -- he was arguing against merchantilist tarrifs and protectionist practices.
I've been pursuing the old question of cui bono in looking at the situation of market and financialised commerce, as opposed to other systems (communal, tribal, feudal, socialist). No firm conclusions though it's an interesting inquiry.
"...subsequently published by the anti-regulation, pro-monopoly Cato Institute, and earlier, judge Robert Bork, dating to earlier."
https://news.ycombinator.com/item?id=18436387#18436772
"...pursuing the old question of cui bono..."
You're made of sterner stuff than me.
The final user.
Personally, I've never used Amazon before seeing a friend ordering a fairly huge amount of stuff from there. Prior to that, I was a not-so-obsessed-from-ecommerce eBay user, where I placed an order maybe every 4-5 months. I've started using Amazon because of its returning policy, which is better that eBay's, but by doing so, i've also increased the amount of stuff bought on the platform, because of time. Getting older and having more responsibilities, you've to save some time, then Amazon comes to rescue when it comes to generic stuff.
I guess now it's really late to blame Amazon for the monopoly, as well as Microsoft did in 90s with PCs and Google is doing nowadays with Android+Chrome.
Sure, there are alternatives, but the final decision on who gets the monopoly is the user
Probably it's the same idea with Uber: We can have really nice rides at good prices because rich people are co-paying our rides. When it's only Uber out there, they can start testing our patience while maximising the profits.
Amazon and Uber are not really selling some high margin tech products, their core innovations are not in the product but the business operations and strategies.
No, they aren't. They publish their financial statement every quarter. Generally their revenue is very close to their expenses. Given that, it's impossible that "operating at loss" is an accurate characterization of their business strategy. Jeff Bezos has a saying; "Your margin is my opportunity." It lays out pretty clearly what Amazon's actual business strategy is, and it lines up well with their financial statements. Target a very small profit margin, move into every possible market by accepting a lower profit margin than incumbents, make money by leveraging scale and network effects to drive down costs in ways that other businesses can't replicate.
Anyway, what happens when there are no competitors because the margins are too slim to be profitable without being at Amazon scale? If they are not a charity these margins will get fattier as much as their hearts desires. Their potential competitors won't be able to say "your fat margins are my opportunity" because Amazon will be able to do all kinds of anti-competative things.
Thanks god we have laws that keeps monopolies in check but sometimes these laws can move quite slowly and the damage may not be possbible to repair. Like with the case with Mocrosoft and Google.
If Amazon significantly raises their prices, then suddenly their prices aren't particularly hard to compete against.
> Amazon will be able to do all kinds of anti-competative things
I think we can cross this bridge when Amazon starts doing anti-competitive things.
Anyways, this is just the hip thing of today. How about making a service better than Amazon? No that's impossible?? Well you can bet there are a million people trying right now so there are and will be plenty more alternatives.
Observing that Amazon may be monopolizing isn't a new observation.
When they began competing against their vendors is when they crossed the line, in my opinion. The same goes for any marketplace. It is one thing to provide your vendors the tools and information they need to operate better, but then to act on that information yourself - the operator of the marketplace - that is pretty shady.
In fact customers are already trained for this. I walk into a store and I immediately price compare against the store brand. So if people doing the same on Amazon, why shouldn't Amazon be allowed to fulfill that? This was a thing in retailers a long time before Amazon started doing it.
If you look around in retail stores today its easy to see how everyone strong arms vendors just the same. For example, ever notice that all of Target's pen section all have a certain color and text printed on the bottom of their packaging indicating the type of pen (Gel, ballpoint, etc)? Target has forced every single vendor (massive companies like Bic, Sharpie, etc.) that sells writing implements in Target to change their packaging, create new SKUs, do different production runs, and handle the logistics of different versions of the same pen. All to be undercut in price by the Target brand pen.
Antitrust law used to address this. Monopolies are not allowed to do things that non-monopolies are allowed to do, because the effects of monopolies doing them are different than the effects of non-monopolies doing it.
Of course, Bork rewrote monopoly policy in a way that opens the door to exactly the sort of monopolies we now have. But it isn't as if this is some new notion invented because people hate Amazon; it used to be the rule.
Suffice to say this is a recent legal innovation, and many, many people believe ignoring other monopoly effects is myopic.
Amazon is a very big business. It doesn't need your sympathy.
Not saying it's correct by any measure, but it doesn't seem like an unusual practice.
I have a friend who has been an online merchant for many years selling through their own website, Ebay, and Amazon.
I suspect they would burst out laughing, fall down, and start rolling around on the ground in hysterics if I repeated that to him.
If you sell a product on Walmart and Amazon, Amazon forces you to sell it at the same price or they will not offer it immediately for sale. They change the page to make it look entirely out of stock.
Well then what do you bring to the table for their consumers and why on earth would they pay more for yours. Don't like it? Try ebay.
"More like"? That is a completely different scenario.
Someone did try. Jet.com. Walmart bought them almost instantly.
1. Amazon requires you to sell your products at the price that is not higher than at any other channel you use to sell.
Even if there was a competitor that allowed you to offer a lower price because of lower fees (important on high price, low margin stuff like computers) you can't.
2. Access to many traffic/buyer driving features of Amazon is conditional on the product being offered at the lowest price it was ever sold
3. Buy box algorithm, which is a black box, is known for kicking out sellers who raised their prices.
Sellers are forced to cut deeper and deeper into their margins to account for inflation, new duties, new requirements from Amazon (prepaid return shipping) and Amazon fees (new long term storage fees, being charged a refund fee, even if Amazon shipped your product late from their warehouse).
> How about making a service better than Amazon? No that's impossible?? Well you can bet there are a million people trying right now so there are and will be plenty more alternatives.
How about creating a better mobile carrier or ISP? All US options are inferior and much more expensive than what you'd get in Europe.
Haven't happened because it's next to impossible to compete with big guys without first sinking many billions in infrastructure? who would have guessed..
Why should you continue to win the buy box if you raise your prices? Another supplier didn’t, so now they win.
> 2. Access to many traffic/buyer driving features of Amazon is conditional on the product being offered at the lowest price it was ever sold
Amazon has lots of products to choose from to feature. It is no surprise that the best deals they can feature are at the lowest price a product has ever been sold.
That is no longer the case, Amazon dropped the price parity requirement on US marketplace in March 2019 (and in EU in 2013).
However, I read recently that some sellers have instead started receiving notifications that they have been suppressed from buy box for selling at lower price elsewhere.
I'd like to point out as well that sanctions (not necessarily well-deserved) against Amazon will just destroy some workplaces, mostly lower-qualified ones, which will cause quite a bit of a problem.
> Is Amazon a monopoly?
> Yes, monopoly power is defined as the power to control prices or exclude competition. Amazon has the power to do both. But being a monopoly on its own is not illegal under the antitrust laws. Illegal monopolization requires both 1) monopoly power and 2) that the firm acquired, enhanced, or maintained that power by using exclusionary conduct.
No they don't.
If Amazon significantly raises prices it charges customers, or lowers prices it pays suppliers, to above/below what Walmart or a hundred others do, are the customers and suppliers going to stay with them? No. When they don't put you in their store, can they also prevent you from reaching the same customers through any other store? No.
The fact that they can choose not to buy from you, or won't pay more than a given price, doesn't make them a monopoly. Anybody can do that. The mom and pop coffee shop on the same corner with six other mom and pop coffee shops, a Dunken Donuts and two Starbucks can do that. But the fact that they won't do business with you doesn't mean you can't sell your goods for a similar price to the same end customers through a hundred competitors, which is why they're not a monopoly.
When other big chains like Walmart do similar things, it does not have the same effect because people don't go to Walmart to buy just one item. Amazon is different; if they lower the price of an item, consumers react quickly and that can put other websites which specialize in that item out of business. Then when all major competitors within the item category are out of business, Amazon can increase the price to any amount it wants and use the extra proceeds to continue the process with different item categories.
Selling below cost can be illegal dumping. But do you have any evidence that they're actually doing that, rather than them merely negotiating a better price for it than you and then selling it with thin (rather than negative) margins?
> Then when all major competitors within the item category are out of business, Amazon can increase the price to any amount it wants
Notice that this only works if nobody is willing to reenter the market when the price increases, which is rarely the case. Otherwise they have to maintain the lower prices forever.
Comparing them to the mom and pop coffee shop is absurd - unlike the coffee shop, there are not hundreds of Amazon competitors that you can sell your product through. You are literally comparing textbook definitions of perfectly competitive markets (e.g. coffee shops - hundreds of competitors and low barriers to entry) to oligopoly markets (e.g. Amazon - very few competitors and high barriers to entry), and somehow reaching the conclusion that they are the same? This is obviously nonsense and goes against the most basic of economic principles.
[1] https://www.cnbc.com/2019/03/19/heres-why-retailers-should-b...
There are though. Not only major ones like Walmart, eBay, Esty, Target, Craigslist, etc., but the fact that anyone can create their own website and then get customers through price comparison sites by having the most competitive prices. On top of which, brick and mortar retailers can reach the same customers for most products, and there are a zillion of those you can sell through, or a slew of wholesaling companies that will do the retail distribution work for you.
That's assuming you're manufacturing the products; if you are the wholesaler then what did you think your job was? It's to negotiate with lots of retailers to buy through you. "I want Amazon to provide 100% of the value but I still make money and never get cut out" is not a sound business model.
> the loss in exposure means there a significant costs associated with suppliers moving to another platform/store - the very definition of market power
You can set up with eBay in like an hour, probably the same for most others. It would be more if you have a lot of different SKUs, but that implies you're doing more volume and it's still a small fraction of your total costs.
Exclusionary conduct includes things like predatory pricing, exclusive agreements, refusing to deal with a company, most-favored nation clauses, designing your product or service in a way that excludes competition, and more types of anticompetitive behavior.
How is the above different from "having a moat?" Isn't any company that starts and maintains a curated "ecosystem" engaging in some of these behaviors? Isn't Apple guilty of refusing to deal with certain companies and designing their product or service in a way that excludes competition? For that matter, aren't most of the tech giants?
>Apple guilty of refusing to deal with certain companies
Apple does not have anywhere near a monopoly in any of the markets they are in [+], hence the anti-trust rules do not apply to them. By contrast these rules do apply to Microsoft and Google, for example.
[+] in the eyes of the law monopoly means control of a market, and market is comprised of interchangeable goods. In this case iPhones and Androids are interchangeable - a consumer is free to buy a Samsung or an Apple phone and neither company is running the risk of excluding the other. Hence the consumer is in no danger of being deprived of choice, and there is no monopoly.
Having a "moat:" All of the benefits of being a Monopoly, with none of the penalties!
The the sellers on amazon are customers of their marketplace. Much like Colgate and Crest might fight over ideal shelf space in a supermarket (and be changed accordingly by the market), the sellers on amazon must pay the price to be on amazon. Amazon has the power to set prices of appearing in their marketplace, where, and for what keywords. Amazon is also now selling their own merchandise on those same (digital) shelves. There are few alternatives to amazon for online retailers. So, to reach customers, many retailers must use amazon, despite the rent-collection they do. The next marketplace for online retail is walmart.com, which, and lets be honest, when was the last time any of us went to walmart.com...
If Amazon has the power to set prices, why are their prices the same as everyone else’s?
The reality is that amazon overs good prices and people like to shop there.
And yes, suppliers are gone complain, that amazon is evil, just like suppliers complain that walmarket is evil, just as suppliers always claim whatever larger reseller they sell to is a evil monopoly.
The definition of a monopoly in economics is if that seller can essentially employ monopoly pricing, but amazon prices are not incredible higher compared to the competition.
The wider use of definition in economics is a company that dominates a market to the extent that is has control over the market. For example, when suppliers have little actual choice in dealing with the company.
Higher prices are not necessarily a product of a monopoly and are not needed to define one.
In the past it was just politics and any big company could get hit with anti-trust. Presidents routinly used anti-trust to go after their political enemies.
And if you don't use this 'pure' definition you are essentially just saying 'this is a big company'. Every single large company would be a 'monopoly' by those definition.
For example, imagine if amazon caves to the consumer group and makes toothpaste $1. Then suddenly the other sellers of toothpaste all charge $1. That would show amazon had pricing power over the market and that amazon is in fact a monopoly. Further it would show that amazon was using it's monopoly power to gain excess profits.
Note: I'm not an expert in economics and have a habit of being wrong.
Airlines and gas stations are most, most definitely not monopolies.
Also, such collective bargaining could be used to bargain with companies other than amazon.
Isn't AWS way more profitable than everything else they do combined?
> We should not allow a company to have a share over around 10% of any market. If in a certain field a single dominant company is beneficial for society, that means it is a natural monopoly, and should be served by a regulated utility.
The problem isn't that you weren't clear on his personal views on the matter, but that you comment on "all his proposed solutions" when even a cursory reading of his political articles would reveal that he is very much not a libertarian.
But they became one only because they are great at doing business
They built an empire from an online book store....
I recently bought a razer blade stealth through amazon, but the speakers were messed up and there was coil whine. I installed the recommended firmware upgrade but that caused Linux to crash with non-standard ACPI behavior. I decided to go through razer support because I know it's better for them.
After over a week and maybe ten hours of emailing back and forth with support, I was asked to reinstall windows and see if that worked... Instead, I just clicked a few buttons on amazon and dropped the laptop off at the local UPS store and was done in ~20min.
There's a reason Amazon is in its current position. If I had bought from the razer store directly, I would've had an even worse time.
Why would I pay $4.99,at Sobeys, for a jar of nescafe if I can get it from Amazon for $3.97?
Amazon can price lower than Target/Wallmart/B&N/Local Stores, lose money every year while the competition slowly dies.
Uber can price lower than local taxis, lose money every year while the competition slowly dies.
Tesla can price lower than Ford/Toyota/Merc, lose money every year while the competition slowly dies.
AirBnB can price lower than Hilton/Marriot/Locals, lose money every year while the competition slowly dies.
WeWork can price lower than office buildings, lose money every year while the competition slowly dies.
The problem is low interest rates and another tech bubble.
If I don’t take the cheap fare today, it doesn’t buy me anything in the long run anyway. Present dollars saved are a certainty, and if history repeats, there is a reasonable likelihood of future disruption being my easy-our for an anticompetitive Uber.
That being said, your individual boycott will have a minuscule effect, and money in your pocket is good. I just can't imagine that capitalism is meant to work like this; paying people to use your product until all the competition is gone, then once you're a monopoly jacking prices up to infinity, ditching quality, and regulating or buying out any potential upstarts.
In terms of killing competition, price wars almost always benefit consumers. Prices go down during a price war, and if the industry is susceptible to them, then another one will occur after the war is over. Look at the airline industry, it’s full of price war cycles. A carrier will try compete on a route, drive prices down, and sometimes this will result in carriers leaving the competition, and prices going back up again afterwards. When that happens, some time will pass, and it will happen again.
The worst outcome for consumers is that the market returns to a non-competitive state when the dust settles. In that case, consumers are just back where they started, after having temporarily enjoyed the benefits of the price war. If the market ends up in an unreasonably non-competitive state after the price war, then the victor has just set themselves up for anti-trust action.
Every mainstream capitalist economist I’ve ever heard of has firmly believed that regulating competition is an essential part of a capitalist economy. So if you think that’s not happening, it would seem to be a failure of government more that a failure of capitalist economics.
I don't think that Uber is a good example in the original context.
(Assuming Lyft or other companies are no longer viable competitors.)
There’s also an issue that theoretically Uber and Lyft compete, where in every city in the US, pretty much, taxis don’t compete on price once it is set for a market.
Uber/Lyft might start having anti-consumer prices once they kill all the taxis, but I think they will be subject to closer scrutiny than trying to take on local taxis.
Teslas are priced higher than Fords and Toyotas, Tesla loses money every year while its competition rakes in billions in profits every year, and sell more cars each month than Tesla in a year...
Wework also rents all of its locations (either from its CEO or from third-party landlords). It has massive liabilities on its books that it can't leverage; the landlords have large liabilities as well but they have the type of liabilities they can (and do) borrow against.
That was a bad example.
On the other hand, many years ago, I thought there was a complaint about foreign "dumping" to destroy domestic minivan production.
I was looking for office space last week in London, WeWork is the most expensive one on the market by far.
Sorry to be harsh, but this "no profit" trope specifically when it comes to Amazon needs to die in a hot fire.
"“Percentage margins are not one of the things we are seeking to optimize. It’s the absolute dollar free cash flow per share that you want to maximize, and if you can do that by lowering margins, we would do that. So if you could take the free cash flow, that’s something that investors can spend. Investors can’t spend percentage margins.” “What matters always is dollar margins: the actual dollar amount. Companies are valued not on their percentage margins, but on how many dollars they actually make, and a multiple of that.” “When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows.” Jeff Bezos is very focused on this “absolute dollar free cash flow metric.” You will see many people talk about Amazon’s focus on “growth” vs. margins, but the right focus is instead absolute dollar fee cash flow."[0]
Amazon optimizes for FCF and continually reinvests its "profits" back into the company. Check out their FCF: https://www.marketwatch.com/investing/stock/amzn/financials/...
> Amazon is similar to many of the modern tech companies in that they're super well funded
So you mean Amazon is funding their growth with their customers cash flow? I don't get how that's a problem.
If you want to talk about Uber, Lyft, WeWork...that's another thing. The unit economics are just simply not there. Amazon should not be in the same discussion as those companies.
[0] - https://25iq.com/2014/04/26/a-dozen-things-i-have-learned-fr...
Amazon is otherwise doing a masterful exercise of long term planning and competition.
The investors are paid back by the rising stock, which means by more investors who want to buy the stock and raise the price by their demand.
This is indeed brilliant, and overpowers any org that needs to return part of its profits back to investors, lenders, etc.
That is just wrong. Tesla can lower prices (or rather get more profit from EV) because they have strategically invested in the necessary supply chain.
The idea that Tesla is systematically losing money from their sales and thus undercutting the competition is seriously wrong.
I don't know about those others, but the idea that all those companies are just living of debt sound pretty wrong to me. These companies are more efficent, and that is where they make up the difference.
They all suck. Stop trying to use one to justify another.
Pointing out competitors to a supposed monopoly is not derailing the conversation. It is the conversation.
http://gs.statcounter.com/search-engine-market-share
https://www.cnbc.com/2018/07/12/amazon-to-take-almost-50-per...
And that's e-commerce, if you add in offline shopping:
https://www.thebalancesmb.com/compare-brick-and-mortar-store...
So yes, Google has a much larger market share of "search" than Amazon has a market share of "commerce".
The 'anti-trust' and 'monopoly' arguments strike me as hypocritical and self-contradictory in the context of capitalism. We encourage businesses to compete and succeed, yet when they do so disproportionally, everyone suddenly feels entitled to intervene in their structure, policies & processes - and best of all, we have no objective guidelines or criteria for when this should happen.
The question then becomes: who gets to decide when to bring forth these concerns, and what's their agenda? Food for thought.
In reality, Microsoft was accused of several different acts - monopolisation, unlawful tying arrangements, unlawful exclusive dealing arrangements. It was not merely the fact that Microsoft bundled a browser, but the whole ecosystem and market position around that action. It is perfectly possible for two people or companies to perform the same action, and for it to be unlawful for one of them, because of the other circumstances surrounding the action.
It n a modern context, Google is not in the same position as Microsoft of the 90s. Microsoft, as the only viable provider of consumer operating systems, was in a unique market position. This alone is reason enough to scrutinise decisions to bundle products.
That’s straight from the wiki. It was mainly about bundling. Yes market dominance was a factor but Google has dominance in the search market and they were never forced to unbundle any of their services in the US. They also “bundle” search with Chrome so how is that any different?
But bundling can become a problem when the company doing the bundling has an outsized effect on the market generally. This means that when a company (e.g. Microsoft) has total market dominance in a category, then bundling software for which there is already a third-party market, using privileged access to your own APIs—particularly when you talk about wanting to "extinguish" and "smother" rivals–it can become a problem where it otherwise wouldn't be.
Note that Google has had several antitrust investigations launched against it, including the ongoing US one.
Also note that Google's market share in search isn't relevant. Chromebook's market share in OSes is what matters for this particular case.
Google, arguably, has an effective monopoly on search. That's their X. They do not have a monopoly on PC operating systems, or portable operating systems. They are using their Y to try to maintain their X, which, so far as I know (but IANAL) is not an antitrust issue.
It's not the same at all. Microsoft were forced to unbundle IE from Windows because they were using their market dominance in one area (operating systems) to give themselves an artificial advantage in another area (web browsers). This bundling shielded IE from competition and squeezed other players out of the web browser market. Apple are within their rights to bundle Safari with MacOS, because MacOS only has a minority market share; same goes for ChromeOS. You can't be sanctioned for exploiting a dominant market position if you don't have a dominant market position.
https://www.computerworld.com.au/article/273591/eu_microsoft...
Microsoft controlled Windows, an operating system. A browser is a thing that can be included in an operating system. Google controls google.com, a website. A browser is not something that can be included in a website.
https://www.theverge.com/2017/6/27/15872354/google-eu-fine-a...
Microsoft's grip was so tight that they prevented IBM from bundled OS/2 on IBM pc's, windows was alwasys installed and OS/2 needed to be a separate line item.
United States v. Microsoft Corporation, 253 F.3d 34 (D.C. Cir. 2001),[1] was a noted American antitrust law case in which the U.S. government accused Microsoft of illegally maintaining its monopoly position in the PC market primarily through the legal and technical restrictions it put on the abilities of PC manufacturers (OEMs) and users to uninstall Internet Explorer and use other programs such as Netscape and Java [0].
[0] https://en.wikipedia.org/wiki/United_States_v._Microsoft_Cor....
How is different than what Chromebook does? Or what Google does bundling Google search with Chrome as the default search engine?
ChromeOS doesn't have a dominant position in the operating systems market, so there's no case to answer - you can't exploit dominance that you don't have. Android does have a dominant position in the mobile OS market, so Google are being forced to unbundle Chrome and Google Search from Android.
https://www.nytimes.com/2018/07/18/technology/google-eu-andr...
It's an interesting topic: https://en.wikipedia.org/wiki/Monopoly#Law
You're not buying toilet paper from Apple.
You're not searching the internet with Amazon.
For the discussion to make sense, you have to specify which market you're looking at -- a company can have a monopoly in one market (e.g. search) but not in another (e.g. mobile phones).
Alphabet does absolutely the same but have more power in advertising & page ranking plus collects petabytes users data using Chrome browser and Android platform.
Walmart, Google Clouds, Azure are alive and still grows up, so this article use over-dramatic effects like TV show.
Amazon has enough monopoly power in certain categories to abuse that power to harm competition, and Amazon chooses to do so.
Would you still disagree?
This generalizes nicely!
What if a company has enough power in certain categories to abuse that power to harm competition, not directly for itself, but for its clients and advertisers? I'm thinking about YouTube here. YouTube has enough power in certain categories to abuse that power to harm media enterprises on the YouTube platform. Some people argue that YouTube does so to the benefit of other media enterprises who happen to pay YouTube for advertisement.