Interview with the author of “Buy Now”, a book about Amazon
thereader.mitpress.mit.edu
thereader.mitpress.mit.edu
On Facebook, I'm honestly not concerned. Just look at the last few years where facebook.com fades into irrelevance (with IG not that far behind) while TikTok has surged and honestly poses an existential threat to FB's business (IMHO). That problem, if you consider it one, will take care of it self.
On Google, I'm not concerned either. Google dominates search because it's quite simply better than everyone else. Using another search engine is easy. Making that alternative search engine obviously isn't but the modern doctrine of US antitrust is not to protect competitors from competition; it's to protect consumers from anticompetitive behaviour. You can argue all sorts of anticompetitive behaviour. I'm not yet convinced by any of it.
As an aside, it'd be foolish to engage in killing our own golden geese while Chinese competitors rise in influence, especially given the deep ties between Chinese companies and the CCP and the fact that the Chinese market is typically barred to competitors while Western markets aren't barred to Chinese companies.
And then there's Amazon. To me, Amazon is the clearest case for government action for it's effective monopoly over distribution. Yes you can sell stuff on your own website. You can ship physical products. But in doing so you cannot compete with Amazon's price-points, speed and overall logistics.
On this the Chinese too have had an advantage by taking advantage of the postage union in a way that a domestic supplier cannot.
I'm not sure this has yet reached the level that warrants government action. When it does I'm honestly not sure what we'd even do.
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>As an aside, it'd be foolish to engage in killing our own golden geese while Chinese competitors rise in influence
Harry Truman said in 1945 about the atomic bomb, "We thank God that it has come to us, instead of to our enemies". I feel the same way about FAANG (including Amazon) and Silicon Valley as a whole (and Wall Street, and Hollywood, and SpaceX/Tesla, and the Ivy League), that they are in the United States.
That doesn't mean I approve of everything they do. That doesn't mean I can't or won't decry their putting thumbs on scales toward a certain type of bien-pensant ideology. That does mean that, overall, I am very, very glad that they are American instead of Russian, Chinese, or even British, French, or German.
Around 50-60% of US e-commerce isn’t a very effective monopoly.
What would more competition do? Drive down already thin margins?
Online commerce is only 19-ish percent of total retail sales.
Amazon is a formidable competitor, but it’s hard for me to conclude they have an effective monopoly on distribution in their retail business.
Facebook only lost relevance to Instagram...then sure Tiktok is getting really big, but is economically worse for creators, and is kinda lowering the icome bottom a bit more (creators litteraly choosing by themselves to work for exposure).
If that is your example of the market regulating itself, it's a pretty grim picture.
UPS/FedEx/USPS/DHL/Walmart/Target/eBay/Best Buy/Costco/Home Depot/Lowes/Staples/the list goes on and on of businesses that have distributed goods to me many, many times in recent years and over the last 2 decades.
Ludicrous to claim Amazon has any kind of distribution monopoly. Many businesses deliver, many businesses have warehouses, and competition is so high that profit margins are low single digit margin slim. As a customer, one could hardly hope for a better situation.
>On this the Chinese too have had an advantage by taking advantage of the postage union in a way that a domestic supplier cannot.
I think this was at least partially rectified 2 years ago:
https://www.supplychaindive.com/news/cross-border-postal-rat...
Current calls for regulation of Google and Amazon, are not even about search domination, and monopoly of distribution. They're about using their platforms to promote their own products and services over others, and rent seeking and app stores.
I am also not concerned but note that in the past FB has used an embrace-and-extend strategy themselves to include features from competing networks, killing or restricting them.
How does this make Amazon a monopoly? The economies of scale are what afford Amazon these attributes. Trying to understand.
Honestly, I doubt that is true anymore. It's just as bad as the rest.
I went from Googling term once, to googling it many times, to just relying on bookmarks, if I can't satisfy the Google arcane incantation.
If you are going to say they monopolize X, then X needs to be a plausibly defined market.
Example: they have a 40% share of online retail and you want to assert that that constitutes a monopoly. Is “online retail” a relevant market as consumers see it? (Probably not, bc they retain the ability to go to stores in person!) Is it a relevant market in the sense that Amazon has the ability to exert upward pressure on prices in that market? (Surely not. The search costs in online goods markets are zero.)
You are going to have a very hard time arguing that they monopolize that market (or any other) if you can’t at least define it, show that your definition is credible, and show that they exert some market power in that market.
When you fail to engage with the issue of market definition seriously, you run into the problem the government did recently when they made a monopolization claim against Facebook. The judge specifically called them out for failing to define the market they were going to accuse Facebook of monopolizing. That was in this field an embarrassingly basic error to make. (They did file an amended complaint but I still expect they will lose this case.)
Needless to say this author is totally ignorant of this literature.
Source: economics professor who teaches antitrust to undergrads and grads.
Either, as you say, high profile year long researched lawsuits are directed by incompetent people, either the standard set to define a monopoly has become irrelevant (which could also be because of the companies adjusting for them to make them irrelevant to their activities).
Which could explain why these kind of regulation only seem to be coming from the EU and a bit from SEA.
Your insights reads to me like the US doesn't have a clear path forward at this point.
Market concentration is a huge problem in the US economy and makes many foods much more expensive. Take hospital services for example.
My claim is that a ton of time and energy is wasted focusing on Amazon as an example of a firm which is a monopoly, which it simply is not.
I would love to see vigorous enforcement of existing rules but it should be directed at markets where there is a plausible case to be made.
If you’re buying lumber then going to GameStop isn’t going to work. That alone destroys the argument that retail is a single uniform market. Instead there are thousands of different markets making up retail including everything from ebooks, cars, bedding, and so forth.
Amazon only needs to have a monopoly on any one of those and then leverage that monopoly illegally to get into hot water. Considering everything they bundle into Amazon Prime they are on serious thin ice.
Correct. Exactly my point.
> That alone destroys the argument that retail is a single uniform market.
This is not my claim. My claim is that (at a bare minimum) the market Amazon competes in includes Walmart, target and other large retailers. The market is not “online retail.”
> Considering everything they bundle into Amazon Prime they are on serious thin ice.
No. Bundling is a totally separate antitrust issue. Also none of the items in the Prime bundle raise antitrust concerns.
If you want an example of a tech firm taking a serious antitrust risk with a bundled good, the best example right now is Microsoft teams.
Walmart and Amazon do compete in many markets, but that doesn’t mean Walmart competes in every market that Amazon does. Rare books are available from Amazon but not Walmart.
Also online retail is the only market in areas that are only served by online retail. Just as it’s irrelevant if there are multiple ISP’s nationally or internationally if only one ISP serves your island.
> Also none of the items in the Prime bundle raise antitrust concerns.
It’s not that Prime is inherently a problem, the issue is it meets the second half of an anti trust case where if they have any actual monopoly then proving unfair competition becomes easy. Free shipping is a great tag line, but risky from a legal standpoint.
> These missteps suggest a failure to appreciate two critical aspects of Amazon’s practices: (1) how steep discounting by a firm on a platform-based product creates a higher risk that the firm will generate monopoly power than discounting on non-platform goods and (2) the multiple ways Amazon could recoup losses in ways other than raising the price of the same e-books that it discounted.
> On the first point, the government argued that Amazon was not engaging in predation because in the aggregate,Amazon’s e-books business was profitable. This perspective overlooks how heavy losses on particular lines of e-books (bestsellers, for example, or new releases) may have thwarted competition, even if the e-books business as a whole was profitable. That the DOJ chose to define the relevant market as e-books—rather than as specific lines, like bestseller e-books—reflects a deeper mistake: the failure to recognize how the economics of platform-based products differ in crucial ways from non-platform goods. 254 As a result, the DOJ analyzed the e-book market as it would the market for physical books.
> One indication of this failure to appreciate the difference between physical books and e-books is that the government and Judge Cote treated Amazon’s below-cost pricing as loss leading,255 rather than as predatory pricing.256 The difference between loss leading and predatory pricing is not spelled out in law, but the distinction turns on the nature of the below-cost pricing, specifically its intensity and the intent motivating it. Judge Cote’s use of “loss leading” revealed a view that “Amazon’s below-cost pricing was (a) selective rather than pervasive, and (b) not intended to generate monopoly power.”257 On this view, Amazon’s aim was to trigger additional sales of other products sold by Amazon, rather than to drive out competing e-book sellers and acquire the power to increase e-book prices.258 In other words, because Amazon’s alleged short-term aim was to sell more e-readers and e-books—rather than to harm its rivals and raise prices—its conduct is considered loss leading rather than predatory pricing. What both the DOJ and the district court missed, however, is the way in which below-cost pricing in this instance entrenched and reinforced Amazon’s dominance in ways that loss leading by physical retailers does not.
[1] https://www.yalelawjournal.org/note/amazons-antitrust-parado...
The big difference between Ma Bell and now is that antitrust is graded on the consumer welfare standard, which hilariously says that as long as prices go down, it's not an antitrust violation.
I'm not so much concerned about the abstract idea of Amazon as a monopoly, as I am about my complicity in creating terrible, coercive working conditions for a huge number of people.
I'm sure I'll still order the occasional hard to find item from them, but I'm going to at least make it harder for myself.
Not only does it not matter, the next time you try to order something from amazon they're going to try to trick you 3 times in the checkout process to opt back into prime. You can go back easily.
Myself I noticed without prime I'm a lot less likely to randomly decide to buy things, and often when I look on amazon a local retailer is the same or cheaper.
If I do order something its ok to not get it the next day. Its convenient but its really not the end of the world.
Water is everywhere, much like commerce. Aquafina like Amazon might be the leader but the 2 companies global marketshare in their respective businesses is maybe 1%, probably even less when measured in volume/quantities exchanged and not in dollars