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Yeah, they are not monopolies in the classical sense, so the regulatory position has to be much more nuanced. But there are issues: + Amazon uses profits from

Yeah, they are not monopolies in the classical sense, so the regulatory position has to be much more nuanced. But there are issues: + Amazon uses profits from AWS to dump in other sectors, selling goods and services below market value. The weird situation could mean Amazon pumps many billion dollars a year into pushing major grocers (who operate on thin margins) out of business. This is not good for anyone - but it's not a case of 'monopoly' so much. + Google is dumping in adjacent areas of tech - giving away Android for free, for example. There should be some regulatory tweaks here, but it's going to be tricky. As you point out - a much easier win would be to break up value chain consolidation over all. Carriers, tech providers, content creators, content distributors - might benefit from being separate entities. I don't think there are any net benefits to society from these entities being consolidated. There are no economies of scale, no proper synergies. There are however, huge incentives for investors to have AT&T own content creation and distribution obviously, so they can subsidize their own assets and not others. There's no long win for consumers so it makes sense to keep them separate. Finally - there might be an opportunity on platforms. I think that the Apple store may be an anti-competitive issue - the notion that you don't control/own the $1K device you just bought is getting ridiculous. I would require platform makers to at allow open access to the platform. Same would apply to mobile phones being 'locked' onto a network - that should just not happen.

basch 8y ago
Predatory pricing to push companies out of business is absolutely illegal, and covered under anti-trust law. It's also very hard to prove without getting the intent in writing.
- sonnyblarney 8y ago
  "Predatory pricing to push companies out of business is absolutely illegal" It's impossible to prove in most cases because it may have nothing to do with intent. Amazon's advantage in 'groceries' is inherently structural. They can sell bananas for 10 cents less than Safeway because their opex may be subsidized, or they can transport cheaper, not 'because they are acting predatorily'. The nature of this value chain overlap is inherently problematic. The thought of 'putting grocery chains out of business using surpluses from AWS' never has to even cross Bezo's mind, or the minds of anyone in the entirety of Amazon. It can happen due simply to structural issues. For much the same way, it's impossible to have a free trade deal with China, so long as they have political controlled financial system and currency. 'Dumping' will be an artifact of the system as a whole. Nobody even needs to think it for it to happen.
  - basch 8y ago
    I really like Stratechery's analysis of Whole Foods as an amazon customer. https://stratechery.com/2017/amazons-new-customer/ https://stratechery.com/2017/amazons-new-customer/ specifcally https://stratechery.com/wp-content/uploads/2017/06/stratechery-Year-One-270.png https://stratechery.com/wp-content/uploads/2017/06/strateche... In this model, Amazon WANTS grocery stores to stick around, and buy groceries from Amazon wholesale grocery. The same way that amazon wants AWS to be everyones platform, and for their business to flourish.
    - sonnyblarney 8y ago
      Yes, in that model, they want 'other grocery makers to exist' But Amazon is going to open a regular grocery store chain soon, so it won't be just Whole Foods. What Amazon 'wants' is to make money. If they can control all of the food distribution in the US, they will make not only all the profits from that market - they'll make a 'monopolizers surplus' from having the power to charge higher prices in the long run. That cash-cow is much bigger than the partial cash-cow of owning only an intermediary layer.
wvenable 8y ago
> Amazon uses profits from AWS to dump in other sectors, selling goods and services below market value. There is big competition in cloud computing so AWS is priced according to market rates. I seriously doubt AWS profit is significant enough to influence the rest of Amazon in way that would be considered monopoly abuse. Amazon's purchase of Whole Foods did not result in WF reducing prices (as was expected) to uncut other grocers in that market. > Google is dumping in adjacent areas of tech - giving away Android for free, for example. That ship has sailed; Google effectively eliminated the market for mobile operating systems and Microsoft could basically no longer sell Windows Mobile. But the open-sourcing of Android has led to direct competition as well -- Amazon runs a completely Google-free version of Android on their products.
- mywittyname 8y ago
  AWS is 10% of sales but 58% of operating income. Margins on AWS are hovering around 30% and growth has been double-digit every quarter for several years now. AWS profits were worth a few hundred billion over the past seven years. As Amazon only as $40 billion in cash on hand, it's hard to argue they haven't put that money to good use.
  - mrep 8y ago
    You are off by an order of magnitude. AWS had an operating income of $7.296 Billion USD in the 12 months ending in 2018 [0] and has been growing at about 45% YOY for many years. Extrapolating those numbers gives them about $21.765 billion USD of operating income in the past 7 years. [0]: https://ir.aboutamazon.com/news-releases/news-release-details/amazoncom-announces-fourth-quarter-sales-20-724-billion https://ir.aboutamazon.com/news-releases/news-release-detail...

basch 8y ago

Predatory pricing to push companies out of business is absolutely illegal, and covered under anti-trust law. It's also very hard to prove without getting the intent in writing.

sonnyblarney 8y ago
"Predatory pricing to push companies out of business is absolutely illegal" It's impossible to prove in most cases because it may have nothing to do with intent. Amazon's advantage in 'groceries' is inherently structural. They can sell bananas for 10 cents less than Safeway because their opex may be subsidized, or they can transport cheaper, not 'because they are acting predatorily'. The nature of this value chain overlap is inherently problematic. The thought of 'putting grocery chains out of business using surpluses from AWS' never has to even cross Bezo's mind, or the minds of anyone in the entirety of Amazon. It can happen due simply to structural issues. For much the same way, it's impossible to have a free trade deal with China, so long as they have political controlled financial system and currency. 'Dumping' will be an artifact of the system as a whole. Nobody even needs to think it for it to happen.
- basch 8y ago
  I really like Stratechery's analysis of Whole Foods as an amazon customer. https://stratechery.com/2017/amazons-new-customer/ https://stratechery.com/2017/amazons-new-customer/ specifcally https://stratechery.com/wp-content/uploads/2017/06/stratechery-Year-One-270.png https://stratechery.com/wp-content/uploads/2017/06/strateche... In this model, Amazon WANTS grocery stores to stick around, and buy groceries from Amazon wholesale grocery. The same way that amazon wants AWS to be everyones platform, and for their business to flourish.
  - sonnyblarney 8y ago
    Yes, in that model, they want 'other grocery makers to exist' But Amazon is going to open a regular grocery store chain soon, so it won't be just Whole Foods. What Amazon 'wants' is to make money. If they can control all of the food distribution in the US, they will make not only all the profits from that market - they'll make a 'monopolizers surplus' from having the power to charge higher prices in the long run. That cash-cow is much bigger than the partial cash-cow of owning only an intermediary layer.

wvenable 8y ago

> Amazon uses profits from AWS to dump in other sectors, selling goods and services below market value. There is big competition in cloud computing so AWS is priced according to market rates. I seriously doubt AWS profit is significant enough to influence the rest of Amazon in way that would be considered monopoly abuse. Amazon's purchase of Whole Foods did not result in WF reducing prices (as was expected) to uncut other grocers in that market. > Google is dumping in adjacent areas of tech - giving away Android for free, for example. That ship has sailed; Google effectively eliminated the market for mobile operating systems and Microsoft could basically no longer sell Windows Mobile. But the open-sourcing of Android has led to direct competition as well -- Amazon runs a completely Google-free version of Android on their products.

mywittyname 8y ago
AWS is 10% of sales but 58% of operating income. Margins on AWS are hovering around 30% and growth has been double-digit every quarter for several years now. AWS profits were worth a few hundred billion over the past seven years. As Amazon only as $40 billion in cash on hand, it's hard to argue they haven't put that money to good use.
- mrep 8y ago
  You are off by an order of magnitude. AWS had an operating income of $7.296 Billion USD in the 12 months ending in 2018 [0] and has been growing at about 45% YOY for many years. Extrapolating those numbers gives them about $21.765 billion USD of operating income in the past 7 years. [0]: https://ir.aboutamazon.com/news-releases/news-release-details/amazoncom-announces-fourth-quarter-sales-20-724-billion https://ir.aboutamazon.com/news-releases/news-release-detail...