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Amazon accounts for 4% of ALL retail sales. Where are the calls about Walmart? I think we have to see the bigger picture. Growth, momentum, and investments sho

Amazon accounts for 4% of ALL retail sales. Where are the calls about Walmart? 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.

deleted 9y ago
[deleted]
voidlogic 9y ago
When you compare Amazon to say Walmart or Google, I think the real consideration is that the later two have narrow verticals of dominance and Amazon's dominance spans e-retail, compute, storage, etc and is expanding. Having one entity control 60% of 50 verticals is much more dangerous for the economy anti-competitively than one company that controls 80% of say two verticals. The reason is simple they can use their multi-vertical footprint to apply pressures on a small competitor that a large competitor who was limited to a single vertical could not.
- beeflaw 9y ago
  I wouldn't be surprised if the shareholders eventually got their way and have Amazon split its profitable businesses (like cloud infrastructure) from the unprofitable ones.
  - ahtu123 9y ago
    Alphabet is already taken so I guess they'll be the Numeric Table or something.
    - MaxBarraclough 9y ago
      A pity 'Bigtable' is also taken.
- moosekaka 9y ago
  I don't understand why the author and many here consider splitting Amazon only AFTER they display behavior that is harmful to consumers (such as exorbitant prices and/or poor service). 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.
- dpark 9y ago
  Walmart has a narrow vertical? In many areas, Walmart is the main place people shop for everything, from groceries to clothes to electronics to tools to hobby equipment. I would also not really consider search and ads narrow verticals. Those are broad industries that drive and direct large scale consumer behavior.
nsnick 9y ago
The mistake you are making is that you are only looking at the harm that monopolies do to their competitors. You should also look at the harm that monopolies do to consumers. If you are a monopoly you can effectively set the price of whatever you are selling. Just operating is using your monopoly.
- beeflaw 9y ago
  Amazon has been consistently losing money on retail since its inception. If they raised prices, they would lose their dominant position. The main reason you don't see more competition is that retail (online or offline) simply isn't very profitable to begin with.
  - rocqua 9y ago
    Such selling at a loss is really weird from an anti-trust perspective. As a worst case, it allows a company to 'invest' in market share by selling at a loss to strangle the competition. Once this is done, they can entrench themselves and raise prices. If you only look at anti-trust as consumer protection, the above scenario only becomes problematic when its to late. 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?
    - beeflaw 9y ago
      "Once this is done, they can entrench themselves and raise prices" 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.
    - zdragnar 9y ago
j9461701 9y ago
I think you hit upon a really important idea. Amazon has been investing in itself for years, and focusing on longer term growth and success even at the cost of short term profit maximization. Which is... exactly what we as a society want. We want companies to think long term, to be investing in innovative new ways to succeed and relying on growing outward and always trying to be on the cutting edge. 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.
- aaron-lebo 9y ago
  You ever seen that Swole Bezos picture? He's that doughy, slightly nerdy guy who transformed himself into a hard assed cutthroat. This is Amazon. 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.
kerkeslager 9y ago
> Where are the calls about Walmart? 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.
- Erik816 9y ago
  That is not a naive understanding of American antitrust law; it's perfectly accurate. It's not illegal to have a monopoly, it's illegal to abuse your monopoly position to harm consumers. This is in contrast to EU 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.
  - sbov 9y ago
    Which is odd, considering the plain language of the Sherman Anti Trust act not only makes monopolies illegal, but makes pursing a monopoly illegal. Has there been any laws passed that override this, or have the courts been unwilling to enforce the law as it's written?
    - 9y ago
codingdave 9y ago
> Where are the calls about Walmart? 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.
coldtea 9y ago
>I think we have to see the bigger picture. Growth, momentum, and investments should be a good thing. Why? As a an a-priori assertion?
- wpietri 9y ago
  Agreed. I'm a big fan of free markets. But the modern tendency toward a sort of fundamentalist capitalism is repulsive. 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.
  - Digit-Al 9y ago
    Unfortunately, If you make something people need whilst paying your employees well you'll have to charge more than your competitors for it and most people simply will not buy it.We all pay lip service to wanting employees to be paid well (after all, we're all mostly underpaid employees ourselves) but the reality is that most people just want to stretch their meagre wages as far as possible. Which means compromising on quality, and ethicality.
    - wpietri 9y ago
      That can happen, but it's not the only thing that can happen. Look, for example, at the way Toyota easily beat American carmakers for decades. "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/nummi-2015 https://www.thisamericanlife.org/radio-archives/episode/561/...
wpietri 9y ago
> Dominance is not illegal. 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.
Noos 9y ago
Walmart carries a very narrow range of goods, and leaves tremendous room for local businesses to still exist. Amazon will compete with everything at any time. 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.
- sib 9y ago
  Sure Walmart carries Criterion series films: https://www.walmart.com/search/?query=criterion%20collection%20blu-ray&typeahead=criterion https://www.walmart.com/search/?query=criterion%20collection...

deleted 9y ago

[deleted]

voidlogic 9y ago

When you compare Amazon to say Walmart or Google, I think the real consideration is that the later two have narrow verticals of dominance and Amazon's dominance spans e-retail, compute, storage, etc and is expanding. Having one entity control 60% of 50 verticals is much more dangerous for the economy anti-competitively than one company that controls 80% of say two verticals. The reason is simple they can use their multi-vertical footprint to apply pressures on a small competitor that a large competitor who was limited to a single vertical could not.

beeflaw 9y ago
I wouldn't be surprised if the shareholders eventually got their way and have Amazon split its profitable businesses (like cloud infrastructure) from the unprofitable ones.
- ahtu123 9y ago
  Alphabet is already taken so I guess they'll be the Numeric Table or something.
  - MaxBarraclough 9y ago
    A pity 'Bigtable' is also taken.
moosekaka 9y ago
I don't understand why the author and many here consider splitting Amazon only AFTER they display behavior that is harmful to consumers (such as exorbitant prices and/or poor service). 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.
dpark 9y ago
Walmart has a narrow vertical? In many areas, Walmart is the main place people shop for everything, from groceries to clothes to electronics to tools to hobby equipment. I would also not really consider search and ads narrow verticals. Those are broad industries that drive and direct large scale consumer behavior.

nsnick 9y ago

The mistake you are making is that you are only looking at the harm that monopolies do to their competitors. You should also look at the harm that monopolies do to consumers. If you are a monopoly you can effectively set the price of whatever you are selling. Just operating is using your monopoly.

beeflaw 9y ago
Amazon has been consistently losing money on retail since its inception. If they raised prices, they would lose their dominant position. The main reason you don't see more competition is that retail (online or offline) simply isn't very profitable to begin with.
- rocqua 9y ago
  Such selling at a loss is really weird from an anti-trust perspective. As a worst case, it allows a company to 'invest' in market share by selling at a loss to strangle the competition. Once this is done, they can entrench themselves and raise prices. If you only look at anti-trust as consumer protection, the above scenario only becomes problematic when its to late. 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?
  - beeflaw 9y ago
    "Once this is done, they can entrench themselves and raise prices" 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.
  - zdragnar 9y ago

j9461701 9y ago

I think you hit upon a really important idea. Amazon has been investing in itself for years, and focusing on longer term growth and success even at the cost of short term profit maximization. Which is... exactly what we as a society want. We want companies to think long term, to be investing in innovative new ways to succeed and relying on growing outward and always trying to be on the cutting edge. 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.

aaron-lebo 9y ago
You ever seen that Swole Bezos picture? He's that doughy, slightly nerdy guy who transformed himself into a hard assed cutthroat. This is Amazon. 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.

kerkeslager 9y ago

> Where are the calls about Walmart? 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.

Erik816 9y ago
That is not a naive understanding of American antitrust law; it's perfectly accurate. It's not illegal to have a monopoly, it's illegal to abuse your monopoly position to harm consumers. This is in contrast to EU 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.
- sbov 9y ago
  Which is odd, considering the plain language of the Sherman Anti Trust act not only makes monopolies illegal, but makes pursing a monopoly illegal. Has there been any laws passed that override this, or have the courts been unwilling to enforce the law as it's written?
  - 9y ago

codingdave 9y ago

> Where are the calls about Walmart? 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.

coldtea 9y ago

>I think we have to see the bigger picture. Growth, momentum, and investments should be a good thing. Why? As a an a-priori assertion?

wpietri 9y ago
Agreed. I'm a big fan of free markets. But the modern tendency toward a sort of fundamentalist capitalism is repulsive. 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.
- Digit-Al 9y ago
  Unfortunately, If you make something people need whilst paying your employees well you'll have to charge more than your competitors for it and most people simply will not buy it.We all pay lip service to wanting employees to be paid well (after all, we're all mostly underpaid employees ourselves) but the reality is that most people just want to stretch their meagre wages as far as possible. Which means compromising on quality, and ethicality.
  - wpietri 9y ago
    That can happen, but it's not the only thing that can happen. Look, for example, at the way Toyota easily beat American carmakers for decades. "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/nummi-2015 https://www.thisamericanlife.org/radio-archives/episode/561/...

wpietri 9y ago

> Dominance is not illegal. 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.

Noos 9y ago

Walmart carries a very narrow range of goods, and leaves tremendous room for local businesses to still exist. Amazon will compete with everything at any time. 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.

sib 9y ago
Sure Walmart carries Criterion series films: https://www.walmart.com/search/?query=criterion%20collection%20blu-ray&typeahead=criterion https://www.walmart.com/search/?query=criterion%20collection...