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Amazon’s Antitrust Paradox (2017)

67 points by diggernet 7y ago

AmericanChopper 7y ago
> The Note closes by considering two potential regimes for addressing Amazon’s power: restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties. The common carrier approach always seemed like the most rational way to address problems like this. One of the ways companies like Amazon dominate markets is by offering the best products/services. I don’t think there’s an effective way to regulate that away. But if they’re forced to offer their services as common carriers, then the risks of them actually monopolizing their position is greatly reduced.
- Nasrudith 7y ago
  Really I think if anyone should be forced into common carrier behavior it should be the financial system because of their involvement in payment transfers and power of abuse in cutting off avenues of donation and payment. While Amazon's infastructure is neat and useful curation is still a valid task which is incompatible with a common carrier status and would be appropriative as it would raise serious questions if they could remove listers for anything not illegal. Like say "autism cures" involving bleach enemas or a guide to engaging in pedophilia. Not to mention functional integral aspects like search ranking would be a matter of "fairness" instead of trying to serve the customer or the company. I can see no way that a forced common carrier on Amazon will be anything but a disaster.
  - tracker1 7y ago
    Absolutely agreed on financial institutions and common carrier services.
- tracker1 7y ago
  Except as it stands, they're both a market and a seller directly. Similar to Facebook is both a platform and a publisher. The problem is that a lot of the time the rules are in stark contrast depending on which you are. In the Amazon case, I think product commingling, without distinct labeling is a significant muddy water scenario.
urs2102 7y ago
Great piece! For reference, here’s the comment thread the first time posted: https://news.ycombinator.com/item?id=13562968 https://news.ycombinator.com/item?id=13562968
- remarkEon 7y ago
  That was a weird trip back in time. Really curious how people feel today, especially in the light of potential anti-trust action against Google.
  - ikeboy 7y ago
    Amazon needs to be broken up. Marketplace should be distinct from Amazon retail. They can compete on the independent platform like anyone else.
    - Nasrudith 7y ago
      Serious question - why are store brands okay for every other chain then? It is a popular slogan-meme but I am puzzled as to why that common practice which predates them is suddenly abusive for them aside from cynical pretexts.
      - ikeboy 7y ago
        Stores don't run marketplaces. They buy outright from their suppliers.
      - mrep 7y ago
        Idk, but I find it especially funny because the ones Amazon basics is competing in are the silliest businesses to try and protect. Almost all of them just buy the same product from china and have the manufacturer slap their label on it. There are dozens of these "brands" whose only function is to handle the batch ordering, shipping it to amazon who then actually handles the logistics, and customer support which usually just involves trying to bribe anyone who gives a bad review into changing their rating. It's not even like Amazon bans the other brands from selling on their store. They are free to keep competing with amazon for the same exact product. It sounds like they just don't want more competition for their low value add business.
throwayEngineer 7y ago
I find it odd people call Apple, and Amazon a monopoly, when it's very easy to not use Apple and Amazon is inferior to Walmart Online. I don't have a reason to use either company outside obscure niche circumstances.
- nine_k 7y ago
  One such niche is buying books.
- chumali 7y ago
  Neither are perfect monopolies, however to deny that they wield significant monopoly power is patently absurd. Monopoly power is not simply an issue of consumer choice - there are considerations around prices, coercion, competitive barriers and other outcomes, not just for consumers, but for competitors, suppliers, workers, investors, citizens, etc.
  - simonh 7y ago
    Right, so Microsoft holding a near-monopoly on desktop operating systems was not found to be illegal, but leveraging that power in anti-competitive ways was. Similarly Amazon doesn't have to control a monopoly on online retail, web service hosting, etc. It just has to be found to use it's dominance in illegal ways and it's not clear to me that it has done so. Similarly with Apple. One nuance I'm not clear on is power gained through the monopoly ownership of a proprietary technology. So for example Apple was able to exert considerable influence over AT&T and later get unprecedented concessions from carriers in order for them to support the iPhone. Arguably their power over the App Store gives them similar leverage. But is that anti-competitive if it simply flows from the superiority of their proprietary software? Arguably no, it's entirely fair enough. They are not using dominance of the market, but legitimately exploiting their ownership of their platform. But couldn't Microsoft have used the same argument for Windows? I'm genuinely conflicted on this. Simply gaining advantage by being 'better' can't be enough to be illegal surely? That would create truly bizarre and user-hostile incentives. However when you gain a monopoly position and then exert that power, it becomes anti-competitive. How do we tell when a company crosses the threshold? Nobody in 1997-2010 could argue Apple had monopoly power in the phone market and it had almost exactly the same policies back then. Now maybe it does hold some form of monopoly or at least market dominating power, but applies basically the same policies, so is that now illegal? Maybe policies appropriate for a smaller player can be inappropriate beyond a certain scale. That might be true, I'm willing to accept that. As a customer in 1998 I chose to by an iPhone and accepted Apple's controls over the platform as beneficial, but a new purchaser now might feel compelled to do so due to Apple's dominance of the App ecosystem and resent the locked down nature of the system. That person might legitimately cry foul and maybe have an honest grievance. How does that work? How are Apple supposed to know that their existing, standing policies have now become a violation of the law where previously they were not? It genuinely perplexes me.
zombiemeat 7y ago
When I worked at Amazon I was required to take legal training on the used of the words 'market', 'marketplace', 'market segment', and how to frame speech about Amazon's relationship with competitors. I was an individual contributor programmer. I always wondered how much of that training was really about CYA and how much was indoctrination.

67 points by diggernet 7y ago

> The Note closes by considering two potential regimes for addressing Amazon’s power: restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties. The common carrier approach always seemed like the most rational way to address problems like this. One of the ways companies like Amazon dominate markets is by offering the best products/services. I don’t think there’s an effective way to regulate that away. But if they’re forced to offer their services as common carriers, then the risks of them actually monopolizing their position is greatly reduced.

Nasrudith 7y ago
Really I think if anyone should be forced into common carrier behavior it should be the financial system because of their involvement in payment transfers and power of abuse in cutting off avenues of donation and payment. While Amazon's infastructure is neat and useful curation is still a valid task which is incompatible with a common carrier status and would be appropriative as it would raise serious questions if they could remove listers for anything not illegal. Like say "autism cures" involving bleach enemas or a guide to engaging in pedophilia. Not to mention functional integral aspects like search ranking would be a matter of "fairness" instead of trying to serve the customer or the company. I can see no way that a forced common carrier on Amazon will be anything but a disaster.
- tracker1 7y ago
  Absolutely agreed on financial institutions and common carrier services.
tracker1 7y ago
Except as it stands, they're both a market and a seller directly. Similar to Facebook is both a platform and a publisher. The problem is that a lot of the time the rules are in stark contrast depending on which you are. In the Amazon case, I think product commingling, without distinct labeling is a significant muddy water scenario.

urs2102 7y ago

Great piece! For reference, here’s the comment thread the first time posted: https://news.ycombinator.com/item?id=13562968 https://news.ycombinator.com/item?id=13562968

remarkEon 7y ago
That was a weird trip back in time. Really curious how people feel today, especially in the light of potential anti-trust action against Google.
- ikeboy 7y ago
  Amazon needs to be broken up. Marketplace should be distinct from Amazon retail. They can compete on the independent platform like anyone else.
  - Nasrudith 7y ago
    Serious question - why are store brands okay for every other chain then? It is a popular slogan-meme but I am puzzled as to why that common practice which predates them is suddenly abusive for them aside from cynical pretexts.
    - ikeboy 7y ago
      Stores don't run marketplaces. They buy outright from their suppliers.
    - mrep 7y ago
      Idk, but I find it especially funny because the ones Amazon basics is competing in are the silliest businesses to try and protect. Almost all of them just buy the same product from china and have the manufacturer slap their label on it. There are dozens of these "brands" whose only function is to handle the batch ordering, shipping it to amazon who then actually handles the logistics, and customer support which usually just involves trying to bribe anyone who gives a bad review into changing their rating. It's not even like Amazon bans the other brands from selling on their store. They are free to keep competing with amazon for the same exact product. It sounds like they just don't want more competition for their low value add business.

throwayEngineer 7y ago

I find it odd people call Apple, and Amazon a monopoly, when it's very easy to not use Apple and Amazon is inferior to Walmart Online. I don't have a reason to use either company outside obscure niche circumstances.

nine_k 7y ago
One such niche is buying books.
chumali 7y ago
Neither are perfect monopolies, however to deny that they wield significant monopoly power is patently absurd. Monopoly power is not simply an issue of consumer choice - there are considerations around prices, coercion, competitive barriers and other outcomes, not just for consumers, but for competitors, suppliers, workers, investors, citizens, etc.
- simonh 7y ago
  Right, so Microsoft holding a near-monopoly on desktop operating systems was not found to be illegal, but leveraging that power in anti-competitive ways was. Similarly Amazon doesn't have to control a monopoly on online retail, web service hosting, etc. It just has to be found to use it's dominance in illegal ways and it's not clear to me that it has done so. Similarly with Apple. One nuance I'm not clear on is power gained through the monopoly ownership of a proprietary technology. So for example Apple was able to exert considerable influence over AT&T and later get unprecedented concessions from carriers in order for them to support the iPhone. Arguably their power over the App Store gives them similar leverage. But is that anti-competitive if it simply flows from the superiority of their proprietary software? Arguably no, it's entirely fair enough. They are not using dominance of the market, but legitimately exploiting their ownership of their platform. But couldn't Microsoft have used the same argument for Windows? I'm genuinely conflicted on this. Simply gaining advantage by being 'better' can't be enough to be illegal surely? That would create truly bizarre and user-hostile incentives. However when you gain a monopoly position and then exert that power, it becomes anti-competitive. How do we tell when a company crosses the threshold? Nobody in 1997-2010 could argue Apple had monopoly power in the phone market and it had almost exactly the same policies back then. Now maybe it does hold some form of monopoly or at least market dominating power, but applies basically the same policies, so is that now illegal? Maybe policies appropriate for a smaller player can be inappropriate beyond a certain scale. That might be true, I'm willing to accept that. As a customer in 1998 I chose to by an iPhone and accepted Apple's controls over the platform as beneficial, but a new purchaser now might feel compelled to do so due to Apple's dominance of the App ecosystem and resent the locked down nature of the system. That person might legitimately cry foul and maybe have an honest grievance. How does that work? How are Apple supposed to know that their existing, standing policies have now become a violation of the law where previously they were not? It genuinely perplexes me.

zombiemeat 7y ago

When I worked at Amazon I was required to take legal training on the used of the words 'market', 'marketplace', 'market segment', and how to frame speech about Amazon's relationship with competitors. I was an individual contributor programmer. I always wondered how much of that training was really about CYA and how much was indoctrination.