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Amazon Is a Monopoly

524 points by juokaz 7y ago

Arrezz 7y ago
How we actually define a company to be a monopoly seems to be somewhat arbitrary? I agree that Amazon engages in anticompetitive behaviour but I'm not sure that it can control prices or exclude competition to that extent? I mean every company can affect that, at what point does it become problematic?
- stcredzero 7y ago
  I agree that Amazon engages in anticompetitive behaviour but I'm not sure that it can control prices or exclude competition to that extent? Has Amazon come up with a way to dominate markets without controlling prices or excluding competition? Right at this moment, my answer is, "maybe?"
  - foota 7y ago
    The classical theory has been that it doesn't matter if you dominate the market if you don't cause some harm (i.e., actively exclude competition or raise prices) as a result.
    - Armisael16 7y ago
      That’s actually a newer theory dating back to Robert Bork’s 1978 book The Antitrust Paradox. It is not at all clear that consumer welfare was a goal of the Sherman Act.
    - philipov 7y ago
      Likewise, if you cause harm, it doesn't matter if you technically dominate the market. The key word is trust, not monopoly. 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 As abusive, anti-competitive practices continue to be improved on, we should not be constrained by outdated theories that only focus on 19th and 20th century phenomena.
      - stcredzero 7y ago
        As abusive, anti-competitive practices continue to be improved on, we should not be constrained by outdated theories that only focus on 19th and 20th century phenomena.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.
      - danmaz74 7y ago
        The word is trust only because of historical reasons. At the time when this became an issue, companies couldn't operate across US state borders. The solution was to create trusts which owned the various branches created in each state.
- changoplatanero 7y ago
  I think we should call it hypercompetitive instead of anticompetitive.
  - losteric 7y ago
    Why is that a more appropriate term for behaviors that reduce competition?
    - kevinsundar 7y ago
      In your opinion why are behaviors that reduce competition bad? If the answer is it harms consumers... Amazon isn't hurting consumers so you should be okay with it? Amazon got this big because no one wanted to be as customer obsessed as Amazon. Not because they stifled competition.
      - losteric 7y ago
        If they are reducing competition, they are hurting consumers. 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.
        kevinsundar 7y ago
        "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." 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.
- losteric 7y ago
  General understanding of monopolies is quite arbitrary because the general public is ignorant, perhaps by design. Wikipedia has a long but layman-accessible section on Europe's competition laws: https://en.wikipedia.org/wiki/Monopoly#Law https://en.wikipedia.org/wiki/Monopoly#Law
- Circuits 7y ago
  It's legally arbitrary, it's arbitrary in a legal sense but I think we are all very aware of what it means to be a monopoly.
- Alupis 7y ago
  > I'm not sure that it can control prices 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.
  - toasterlovin 7y ago
    > Amazon very often competes directly with sellers on the Marketplace, and often undercuts them on price. 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.
- bduerst 7y ago
  For years Amazon had banned Chromecast and AppleTV devices from it's entire marketplace when they competed with their Firestick device. 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.
  - scarface74 7y ago
    But aren’t you kind of making the opposite point? While Amazon wouldn’t sell AppleTVs and Chromecasts, neither Apple nor Google had any trouble reaching customers. If Amazon was a monopoly that wouldn’t be the case. Apple also sells third party hardware on their site. Should they be forced to sell Dells besides their Macs?
    - bduerst 7y ago
      - If Google removed Amazon from search results, then that would be anti-competitive behavior. - 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.
      - scarface74 7y ago
        Apple bans all sorts of apps from their store. Is every app that Apple bans “anticompetitive”? 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?
        xmprt 7y ago
        All of those scenarios are where there was a terms of service violation. When Google or Apple decide to ban their competition for no reason other than it being competition, it's anti-competitive.
- OrgNet 7y ago
  > I agree that Amazon engages in anticompetitive behaviour but I'm not sure that it can control prices https://news.slashdot.org/story/19/08/05/2129248/amazon-squeezes-sellers-that-offer-better-prices-on-walmart https://news.slashdot.org/story/19/08/05/2129248/amazon-sque...
- trappist 7y ago
  Economist Israel Kirzner insisted that monopoly analysis is only applicable when the possibility of competition is eliminated, either legally or by the producer's sole control of the total supply of a resource necessary for the production of a good or service, and that the term should therefore be defined as such. In which case Amazon is not a monopoly, and we shouldn't be surprised to see continually falling prices and increasing quality. http://rationalargumentator.com/issue118/Kirzner3.html http://rationalargumentator.com/issue118/Kirzner3.html
  - chumali 7y ago
    This is an arbitrary definition that few economists would accept. Market concentration exists on a spectrum ranging from perfect competition to full scale monopoly. The determinant is the ease of entry and exit and the extent to which the outcome diverges from utility maximising point. 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.
- buboard 7y ago
  Doesnt matter how you define monopoly. Legally, anti trust targets those who choke competition. > 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.
- dredmorbius 7y ago
  The definition is on of law, regulation, and court interpretation. "Monopolization Defined" https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/single-firm-conduct/monopolization-defined https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
- thatisnotallow 7y ago
  boomerllennial belief seems to be that a monopoly is defined as “a company that should not be allowed to make offers that stoke my generations’s utter lack of impulse control”
coding123 7y ago
And what about Alphabet?
- liability 7y ago
  All of these companies (Amazon, Alphabet/Google, Facebook, etc) are very fortunate that the others exist because every single goddamn time anybody criticizes one, somebody will try to derail the discussion with "well what about [one of the others]?" They all suck. Stop trying to use one to justify another.
  - jklinger410 7y ago
    >somebody will try to derail the discussion Pointing out competitors to a supposed monopoly is not derailing the conversation. It is the conversation.
    - whatshisface 7y ago
      Amazon is probably not a monopoly in the advertising market, but Alphabet doesn't run an online store.
      - jklinger410 7y ago
        https://shopping.google.com https://shopping.google.com
        xeromal 7y ago
        What % of the word uses that?
        bhandziuk 7y ago
        I'm also having a garage sale this weekend but that's not really competition to Amazon
      - coding123 7y ago
raven105x 7y ago
For clarification: Monopolies can result from anti-competitive practices, or an overwhelming competitive advantage. Talking about the latter here 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.
- theturtletalks 7y ago
  I remember reading about an anti-trust case against Microsoft in the 90s since they included Microsoft Explorer with the OS. They were forced to separate the two, but Chromebook does the same thing without consequences. The rules for Antitrust keep changing and companies are integrating vertically and horizontally quickly before the law catches up.
  - taeric 7y ago
    This is an argument that doesn't feel to be in good faith, but to just stir reactions.
    - theturtletalks 7y ago
      I can see why it seems that way but no one has been able to explain to me why Microsoft was pursued for antitrust litigation and Google was not for doing the exact same thing. Maybe instead of accusing someone of stirring up reactions, explain the double standard.
      - matthewmacleod 7y ago
        The core problem here is that you see the “thing” as “bundling a browser”, so your logical conclusion it that it is the “exact same thing”. 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.
rrggrr 7y ago
If eBay, UPS, Walmart, Rackspace, Oracle and Dropbox (post Hellosign acquisition) merged -- you would have a near approximation of the market impact of Amazon. If it's not a monopoly then it's something worse.
- deleted 7y ago
  [deleted]
- DickingAround 7y ago
  How do you figure? Amazon makes less than half the revenue of Walmart. Personally it seems kind of silly to talk about any of them as a 'monopoly' when I literally use a competitor to each of the biggies (Amazon, Apple, Google, etc.) every week. Why does anyone consider these companies a 'monopoly' when I'm easily and conveniently getting the same product from someone else?
  - crazygringo 7y ago
    They're each (arguably) a monopoly in their own principal market(s) which (mostly) aren't the same. 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).
    - perl4ever 7y ago
      I'm not buying toilet paper from Amazon or searching the internet with Apple!
      - deleted 7y ago
        [deleted]
acover 7y ago
As governments seem slow to action, would coordinating consumers shopping help combat the monopoly power of some industry? For example, having an app that notifies you to try and buy from a competitor like walmart for a few days to pressure amazon into bargaining?
- mvid 7y ago
  Wouldn’t that kind of behavior make a company seem less like a monopoly, and extend the time to government intervention?
  - acover 7y ago
    No, I believe it will make them appear like a monopoly and the consumers as a monopsony. 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.
    - URSpider94 7y ago
      What you have described is an oligopoly. Think airlines, or gasoline, or soda. All airline tickets from point A to point B in coach are basically interchangeable, so if one airline has a fare sale, everyone else has to follow or risk flying empty planes. Same, if one gas station on the corner is $.05 cheaper than the other one, they’ll get all the business. Airlines and gas stations are most, most definitely not monopolies.
- kevinsundar 7y ago
  And why would consumers coordinate against a company that is benefiting them with lower prices, great customer service, and insanely fast shipping now (I live in a small town of 40,000 - 3 hours from any major metropolis and get 1 day shipping)? Honestly I'm pretty impressed how such a massive company still seems to do a majority of their customers good, without even making them pay more. I'd say most of the people I know who use amazon are pretty happy with the service they are getting. To the average consumer whose looking out for their own personal bottom line, whats the benefit of coordinating against them?
indopedia 7y ago
She forgets that the Amazon marketplace is made up of sellers and the prices aren't controlled by Amazon for a lot of their products. These are inherited from the distributor in most cases. Sure Amazon fulfills the orders but it's not like Walmart that controls the entire process. There is more freedom in Amazon. 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.
- youeseh 7y ago
  > Anyways, this is just the hip thing of today 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.
  - kevinsundar 7y ago
    Yes but EVERY retailer does this. Every single store brand product you see (Costco, Target, Walmart, CVS, Walgreens, etc.) is a result of this. Cheaper products that meet the same demand as brand name vendor goods. 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.
    - 7y ago
paulcarroty 7y ago
> Amazon gives its own private label products and first-party products an advantage over competitors in a number of ways, from algorithmic ranking, to the buy box, to premium advertising, to direct to consumer marketing, to exclusive customer reviews. 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.
- smt88 7y ago
  Let me restate the article's argument: 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?
  - stcredzero 7y ago
    ______ has enough monopoly power in certain categories to abuse that power to harm competition, and ______ chooses to do so. 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.
rb808 7y ago
I think I can generalize that the problem with Amazon is similar to many of the modern tech companies in that they're super well funded and aren't expected to make a profit which allows them to undercut incumbents. 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.
- lisper 7y ago
  I'm not a huge Uber fan, but in their case at least I don't think you're being entirely fair. My home airport is SFO. The official taxis there have an extremely annoying pricing policy: if your destination is more than 20 miles form the airport they add a $50 surcharge to the cost of your trip. (I live 25 miles away.) And you can't summon a cab with an app. If you're at the airport they are very convenient. If you are anywhere else taxies are hopeless. In the face of such abject stupidity on the part of the taxis, I use Uber (well, Lyft) despite my sympathies for professional drivers. If the taxi companies weren't behaving like such utter and complete morons for years it would be easier to sympathize with them.
  - tj-teej 7y ago
    Serious question: once the taxi industry has died what makes you believe that Uber won't implement similar policies?
    - abakker 7y ago
      Nothing. As the saying goes, “get while the getting is good”. 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.
stcredzero 7y ago
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. 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?
- indopedia 7y ago
  yes her definitions are very liberal, in more ways than one
- pessimizer 7y ago
  It's not at all. "Having a moat" specifically designates anticompetitive activity that can only be engaged in by a huge player in a particular market. It has no other meaning.
- DenisM 7y ago
  A company that has a monopoly has to follow more rules than other companies because it can do more damage. Certain kind of moat-building is severely restricted for them, such as exclusive contracts or deliberate technology lock-in, while other methods are still legal, such as brand recognition or a rich partner ecosystem or simply a superior product. >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.
mikeash 7y ago
I wish this elaborated more on how Amazon is a monopoly. The interviewee defines it as having the power to set prices and exclude competition. I don’t see either of those happening. There’s a ton of competition, more than enough to severely limit their ability to set prices.
- scoofy 7y ago
  You're looking at it as the customer being the people buying things off of amazon. They are in a sense, but not the sense that is important here. 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...
  - mikeash 7y ago
    There are plenty of alternatives to Amazon for sellers too. None of them are as big, but they are there. If Amazon has the power to set prices, why are their prices the same as everyone else’s?
    - scoofy 7y ago
      We don't see the price to use amazon to sell things. We only see the retail price. A marketplace can be using monopolistic-pricing to capture returns from the retailer.
blairanderson 7y ago
I run a consulting company for Amazon suppliers. We have roughly 2-dozen Amazon suppliers and our first-hand experience is that Amazon is absolutely stifling competition/business to the detriment of customer. 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.
- social_quotient 7y ago
  For better coloring which tariff specifically?
  - blairanderson 7y ago
    https://ustr.gov/sites/default/files/enforcement/301Investigations/Tariff%20List-09.17.18.pdf https://ustr.gov/sites/default/files/enforcement/301Investig... This was first implemented at 10% then pushed to 25% a few months later
- scarface74 7y ago
  People have been complaining about basically the same thing with respect to Walmart for decades.
  - dylan604 7y ago
    Exactly this. I've worked for a company where Walmart was the largest retailer for their product (DVDs). They were constantly being beat up to lower their wholesale prices while also demanding a separate SKU with edited content. Amazon is no different in this case (except not demanding edited content). 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.
deleted 7y ago
[deleted]
higherkinded 7y ago
No it's not, and you still have a burden of a proof on your shoulders. It probably is, indeed, kept up by some degree of anti-competitive practices but it's still not a monopoly but a member of what you call oligopoly, providing a lot of cheap stuff in every of its areas of competition. 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.
- daveFNbuck 7y ago
  The interviewee didn't define monopoly by anti-competitive behavior. > 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.
  - AnthonyMouse 7y ago
    > Amazon has the power to do both. 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.
    - headsoup 7y ago
      You appear to be only referring to the retail side of Amazon, not the platform side where the article mentions Amazon has numerous restrictive practices in place and set the price through these by excluding competition and competing through their own retail lines, regardless of other (uncompetitive) options
OnlineCourage 7y ago
I have actually started adopting other online vendors because Amazon's quality control and customer support is so atrocious. I think Amazon will end up digging its own grave by building this huge adoption for online buyong, training competition how to do online retail right, and then die from a million cuts as thousands of specialty vendors step in. Their search sucks too...you just get fed paid advertisements for crap. AWS is amazing but I no longer trust Amazon as a place to buy physical items.
- sjg007 7y ago
  I agree. I think Bezos would too.
- patrickfatrick 7y ago
  Amazon’s customer support “atrocious”? Literally only heard of great experiences with their customer support from people I’ve talked to.
- TylerE 7y ago
  How much does Amazon even care about retail? Isn't AWS way more profitable than everything else they do combined?
- amznnnnn 7y ago
  Hey, would you mind explaining how customer service has been atrocious for you? We place a lot of importance on the customer experience, and feedback will help us improve our services.
mlguy456 7y ago
This is an attempt to divert attention from real monopolies like Comcast and healthcare monsters. What we really need in the tech space is UK-style laws to enforce competition between ISPs, GDPR-style laws to protect personal data and CA-style prohibition on NDAs. But politicans won't get paid for any of this. Instead they go for easy and profitable targets, such as pretending to care that Amazon is a monopoly.
- dredmorbius 7y ago
  Stronger anti-trust protections and enforcement will be a benefit all 'round.
Areading314 7y ago
Couldn't read this because of the huge, glaring falsehood on the first page. Monopoly does NOT mean "power to affect prices". It is defined as having exclusive control of the supply of a good within a market. Redefining monopoly to fit your argument is just lazy clickbaiting.
EngineerWannabe 7y ago
Unless Walmart Canada,No Frills,Sobeys or any other retailer compete with Amazon,we will still read these news.Amazon prime is great if you don't find enough time to go shopping for minor things.Amazon is great for non-perishable item shopping if you compare its prices with other retailers. Why would I pay $4.99,at Sobeys, for a jar of nescafe if I can get it from Amazon for $3.97?
IloveHN84 7y ago
Well, years ago, when Amazon wasn't a monopoly, who had the choice to make it one? 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
- mrtksn 7y ago
  Aren't they playing really nice and even operating at loss until they become a monopoly? It's not really a choice if a company is giving you free stuff. 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.
  - dodobirdlord 7y ago
    > Aren't they playing really nice and even operating at loss until they become a monopoly? 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.
nickik 7y ago
No it is not. Unless you can't buy basically the same stuff from lots of other places this is simple the usual whining about 'big cooperations'. 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.
- dominicr 7y ago
  What you're referring to is a 'pure' monopoly, which are relatively rare (but still common enough). 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.
  - nickik 7y ago
    Its actually now standard in anti-trust law now that you actually have to show significant consumer harm. Richard Posner writting has this made the standard in Anti-Trust. 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.
    - dominicr 7y ago
      The comment I was replying to was referring to the word's definition in economics, not the current legal standards of specific countries.
amelius 7y ago
Richard Stallman has some thoughts on this topic: https://stallman.org/amazon.html https://stallman.org/amazon.html
- cyborgx7 7y ago
  Stallman's biggest problem, in my opinion, is that all his proposed solutions are individual consumption choices. A beast like Amazon can only be tamed by collective action and regulation.
  - amelius 7y ago
    From his post: > 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.
    - cyborgx7 7y ago
      Fair enough. I had just read the introduction, and the section headlines. I'm glad to see him agree on the importance of regulated utilities. Free Software sometimes gets associated with the American Capitalist Libertarian movement. So I wasn't clear on Stallman's personal views on the matter.
      - boomlinde 7y ago
        > Free Software sometimes gets associated with the American Capitalist Libertarian movement. So I wasn't clear on Stallman's personal views on the matter. 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.
tim333 7y ago
It's not a monopoly under the dictionary definition: >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.
- deleted 7y ago
  [deleted]
- wry_discontent 7y ago
  I find that there's a huge amount of discussion that basically amounts to definitional disagreements. I'll cede definitions like "monopoly" for the sake of a discussion and continue to use them otherwise. 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.
  - zinclozenge 7y ago
    Most likely nothing will happen with respect to these large companies because generally speaking prosecution only happens when the company's status as a monopoly negatively affects the consumer (allegedly). The criteria is usually price of goods/services. It's possible this might include things like privacy violations or data mishandling in the future, but I doubt it. There's a DoJ memo, or something similar, that spurred this recent-ish change in policy but i can't seem to find it.
- dredmorbius 7y ago
  "Monopolization Defined" 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-antitrust-laws/single-firm-conduct/monopolization-defined https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
breadandcrumbel 7y ago
I'm following Amazon for a long time They are a monopoly indeed But they became one only because they are great at doing business They built an empire from an online book store....
- davemp 7y ago
  Exactly. 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.
mikojan 7y ago
Expropriate them.
turc1656 7y ago
Solid interview. But one thing I saw that was missing was that Amazon also doesn't charge itself the 15% marketplace fee (it varies slightly depending on category but most are 15%) that it charges 3rd party sellers. Since Amazon directly sells tens of millions of items, it had at least a 15% head start on every single one of those products in terms of price competition. Since we're talking retail here, the margins on most items don't exceed 15% in many cases. The fact that they have been allowed to charge 3rd party sellers this fee while not facing it themselves or being forced to stop selling products at all if they are going to run the marketplace is mind-boggling to me. 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.
- ksdale 7y ago
  Your description of your company sounds like it might be more of a transfer pricing issue than an antitrust issue. If the companies all have their own tax situations, then transactions between them need to be "arm's length" so that income isn't shifted from one company to another without the proper entity paying tax on it. That's generally the reason for companies under the same umbrella charging for things. 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.
AlchemistCamp 7y ago
According to Ben Thompson, "There really is no plausible argument that Amazon has a monopoly." https://stratechery.com/2019/tech-and-antitrust/ https://stratechery.com/2019/tech-and-antitrust/

524 points by juokaz 7y ago

How we actually define a company to be a monopoly seems to be somewhat arbitrary? I agree that Amazon engages in anticompetitive behaviour but I'm not sure that it can control prices or exclude competition to that extent? I mean every company can affect that, at what point does it become problematic?

stcredzero 7y ago
I agree that Amazon engages in anticompetitive behaviour but I'm not sure that it can control prices or exclude competition to that extent? Has Amazon come up with a way to dominate markets without controlling prices or excluding competition? Right at this moment, my answer is, "maybe?"
- foota 7y ago
  The classical theory has been that it doesn't matter if you dominate the market if you don't cause some harm (i.e., actively exclude competition or raise prices) as a result.
  - Armisael16 7y ago
    That’s actually a newer theory dating back to Robert Bork’s 1978 book The Antitrust Paradox. It is not at all clear that consumer welfare was a goal of the Sherman Act.
  - philipov 7y ago
    Likewise, if you cause harm, it doesn't matter if you technically dominate the market. The key word is trust, not monopoly. 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.
    - stcredzero 7y ago
      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.
    - danmaz74 7y ago
      The word is trust only because of historical reasons. At the time when this became an issue, companies couldn't operate across US state borders. The solution was to create trusts which owned the various branches created in each state.
changoplatanero 7y ago
I think we should call it hypercompetitive instead of anticompetitive.
- losteric 7y ago
  Why is that a more appropriate term for behaviors that reduce competition?
  - kevinsundar 7y ago
    In your opinion why are behaviors that reduce competition bad? If the answer is it harms consumers... Amazon isn't hurting consumers so you should be okay with it? Amazon got this big because no one wanted to be as customer obsessed as Amazon. Not because they stifled competition.
    - losteric 7y ago
      If they are reducing competition, they are hurting consumers. 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.
      - kevinsundar 7y ago
        "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." 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.
losteric 7y ago
General understanding of monopolies is quite arbitrary because the general public is ignorant, perhaps by design. Wikipedia has a long but layman-accessible section on Europe's competition laws: https://en.wikipedia.org/wiki/Monopoly#Law https://en.wikipedia.org/wiki/Monopoly#Law
Circuits 7y ago
It's legally arbitrary, it's arbitrary in a legal sense but I think we are all very aware of what it means to be a monopoly.
Alupis 7y ago
> I'm not sure that it can control prices 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.
- toasterlovin 7y ago
  > Amazon very often competes directly with sellers on the Marketplace, and often undercuts them on price. 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.
bduerst 7y ago
For years Amazon had banned Chromecast and AppleTV devices from it's entire marketplace when they competed with their Firestick device. 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.
- scarface74 7y ago
  But aren’t you kind of making the opposite point? While Amazon wouldn’t sell AppleTVs and Chromecasts, neither Apple nor Google had any trouble reaching customers. If Amazon was a monopoly that wouldn’t be the case. Apple also sells third party hardware on their site. Should they be forced to sell Dells besides their Macs?
  - bduerst 7y ago
    - If Google removed Amazon from search results, then that would be anti-competitive behavior. - 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.
    - scarface74 7y ago
      Apple bans all sorts of apps from their store. Is every app that Apple bans “anticompetitive”? 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?
      - xmprt 7y ago
        All of those scenarios are where there was a terms of service violation. When Google or Apple decide to ban their competition for no reason other than it being competition, it's anti-competitive.
OrgNet 7y ago
> I agree that Amazon engages in anticompetitive behaviour but I'm not sure that it can control prices https://news.slashdot.org/story/19/08/05/2129248/amazon-squeezes-sellers-that-offer-better-prices-on-walmart https://news.slashdot.org/story/19/08/05/2129248/amazon-sque...
trappist 7y ago
Economist Israel Kirzner insisted that monopoly analysis is only applicable when the possibility of competition is eliminated, either legally or by the producer's sole control of the total supply of a resource necessary for the production of a good or service, and that the term should therefore be defined as such. In which case Amazon is not a monopoly, and we shouldn't be surprised to see continually falling prices and increasing quality. http://rationalargumentator.com/issue118/Kirzner3.html http://rationalargumentator.com/issue118/Kirzner3.html
- chumali 7y ago
  This is an arbitrary definition that few economists would accept. Market concentration exists on a spectrum ranging from perfect competition to full scale monopoly. The determinant is the ease of entry and exit and the extent to which the outcome diverges from utility maximising point. 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.
buboard 7y ago
Doesnt matter how you define monopoly. Legally, anti trust targets those who choke competition. > 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.
dredmorbius 7y ago
The definition is on of law, regulation, and court interpretation. "Monopolization Defined" https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/single-firm-conduct/monopolization-defined https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
thatisnotallow 7y ago
boomerllennial belief seems to be that a monopoly is defined as “a company that should not be allowed to make offers that stoke my generations’s utter lack of impulse control”

coding123 7y ago

And what about Alphabet?

liability 7y ago
All of these companies (Amazon, Alphabet/Google, Facebook, etc) are very fortunate that the others exist because every single goddamn time anybody criticizes one, somebody will try to derail the discussion with "well what about [one of the others]?" They all suck. Stop trying to use one to justify another.
- jklinger410 7y ago
  >somebody will try to derail the discussion Pointing out competitors to a supposed monopoly is not derailing the conversation. It is the conversation.
  - whatshisface 7y ago
    Amazon is probably not a monopoly in the advertising market, but Alphabet doesn't run an online store.
    - jklinger410 7y ago
      https://shopping.google.com https://shopping.google.com
      - xeromal 7y ago
        What % of the word uses that?
      - bhandziuk 7y ago
        I'm also having a garage sale this weekend but that's not really competition to Amazon
    - coding123 7y ago

raven105x 7y ago

For clarification: Monopolies can result from anti-competitive practices, or an overwhelming competitive advantage. Talking about the latter here 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.

theturtletalks 7y ago
I remember reading about an anti-trust case against Microsoft in the 90s since they included Microsoft Explorer with the OS. They were forced to separate the two, but Chromebook does the same thing without consequences. The rules for Antitrust keep changing and companies are integrating vertically and horizontally quickly before the law catches up.
- taeric 7y ago
  This is an argument that doesn't feel to be in good faith, but to just stir reactions.
  - theturtletalks 7y ago
    I can see why it seems that way but no one has been able to explain to me why Microsoft was pursued for antitrust litigation and Google was not for doing the exact same thing. Maybe instead of accusing someone of stirring up reactions, explain the double standard.
    - matthewmacleod 7y ago
      The core problem here is that you see the “thing” as “bundling a browser”, so your logical conclusion it that it is the “exact same thing”. 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.

rrggrr 7y ago

If eBay, UPS, Walmart, Rackspace, Oracle and Dropbox (post Hellosign acquisition) merged -- you would have a near approximation of the market impact of Amazon. If it's not a monopoly then it's something worse.

deleted 7y ago
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DickingAround 7y ago
How do you figure? Amazon makes less than half the revenue of Walmart. Personally it seems kind of silly to talk about any of them as a 'monopoly' when I literally use a competitor to each of the biggies (Amazon, Apple, Google, etc.) every week. Why does anyone consider these companies a 'monopoly' when I'm easily and conveniently getting the same product from someone else?
- crazygringo 7y ago
  They're each (arguably) a monopoly in their own principal market(s) which (mostly) aren't the same. 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).
  - perl4ever 7y ago
    I'm not buying toilet paper from Amazon or searching the internet with Apple!
    - deleted 7y ago
      [deleted]

acover 7y ago

As governments seem slow to action, would coordinating consumers shopping help combat the monopoly power of some industry? For example, having an app that notifies you to try and buy from a competitor like walmart for a few days to pressure amazon into bargaining?

mvid 7y ago
Wouldn’t that kind of behavior make a company seem less like a monopoly, and extend the time to government intervention?
- acover 7y ago
  No, I believe it will make them appear like a monopoly and the consumers as a monopsony. 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.
  - URSpider94 7y ago
    What you have described is an oligopoly. Think airlines, or gasoline, or soda. All airline tickets from point A to point B in coach are basically interchangeable, so if one airline has a fare sale, everyone else has to follow or risk flying empty planes. Same, if one gas station on the corner is $.05 cheaper than the other one, they’ll get all the business. Airlines and gas stations are most, most definitely not monopolies.
kevinsundar 7y ago
And why would consumers coordinate against a company that is benefiting them with lower prices, great customer service, and insanely fast shipping now (I live in a small town of 40,000 - 3 hours from any major metropolis and get 1 day shipping)? Honestly I'm pretty impressed how such a massive company still seems to do a majority of their customers good, without even making them pay more. I'd say most of the people I know who use amazon are pretty happy with the service they are getting. To the average consumer whose looking out for their own personal bottom line, whats the benefit of coordinating against them?

indopedia 7y ago

She forgets that the Amazon marketplace is made up of sellers and the prices aren't controlled by Amazon for a lot of their products. These are inherited from the distributor in most cases. Sure Amazon fulfills the orders but it's not like Walmart that controls the entire process. There is more freedom in Amazon. 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.

youeseh 7y ago
> Anyways, this is just the hip thing of today 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.
- kevinsundar 7y ago
  Yes but EVERY retailer does this. Every single store brand product you see (Costco, Target, Walmart, CVS, Walgreens, etc.) is a result of this. Cheaper products that meet the same demand as brand name vendor goods. 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.
  - 7y ago

paulcarroty 7y ago

> Amazon gives its own private label products and first-party products an advantage over competitors in a number of ways, from algorithmic ranking, to the buy box, to premium advertising, to direct to consumer marketing, to exclusive customer reviews. 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.

smt88 7y ago
Let me restate the article's argument: 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?
- stcredzero 7y ago
  ______ has enough monopoly power in certain categories to abuse that power to harm competition, and ______ chooses to do so. 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.

rb808 7y ago

I think I can generalize that the problem with Amazon is similar to many of the modern tech companies in that they're super well funded and aren't expected to make a profit which allows them to undercut incumbents. 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.

lisper 7y ago
I'm not a huge Uber fan, but in their case at least I don't think you're being entirely fair. My home airport is SFO. The official taxis there have an extremely annoying pricing policy: if your destination is more than 20 miles form the airport they add a $50 surcharge to the cost of your trip. (I live 25 miles away.) And you can't summon a cab with an app. If you're at the airport they are very convenient. If you are anywhere else taxies are hopeless. In the face of such abject stupidity on the part of the taxis, I use Uber (well, Lyft) despite my sympathies for professional drivers. If the taxi companies weren't behaving like such utter and complete morons for years it would be easier to sympathize with them.
- tj-teej 7y ago
  Serious question: once the taxi industry has died what makes you believe that Uber won't implement similar policies?
  - abakker 7y ago
    Nothing. As the saying goes, “get while the getting is good”. 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.

stcredzero 7y ago

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. 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?

indopedia 7y ago
yes her definitions are very liberal, in more ways than one
pessimizer 7y ago
It's not at all. "Having a moat" specifically designates anticompetitive activity that can only be engaged in by a huge player in a particular market. It has no other meaning.
DenisM 7y ago
A company that has a monopoly has to follow more rules than other companies because it can do more damage. Certain kind of moat-building is severely restricted for them, such as exclusive contracts or deliberate technology lock-in, while other methods are still legal, such as brand recognition or a rich partner ecosystem or simply a superior product. >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.

mikeash 7y ago

I wish this elaborated more on how Amazon is a monopoly. The interviewee defines it as having the power to set prices and exclude competition. I don’t see either of those happening. There’s a ton of competition, more than enough to severely limit their ability to set prices.

scoofy 7y ago
You're looking at it as the customer being the people buying things off of amazon. They are in a sense, but not the sense that is important here. 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...
- mikeash 7y ago
  There are plenty of alternatives to Amazon for sellers too. None of them are as big, but they are there. If Amazon has the power to set prices, why are their prices the same as everyone else’s?
  - scoofy 7y ago
    We don't see the price to use amazon to sell things. We only see the retail price. A marketplace can be using monopolistic-pricing to capture returns from the retailer.

blairanderson 7y ago

I run a consulting company for Amazon suppliers. We have roughly 2-dozen Amazon suppliers and our first-hand experience is that Amazon is absolutely stifling competition/business to the detriment of customer. 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.

social_quotient 7y ago
For better coloring which tariff specifically?
- blairanderson 7y ago
  https://ustr.gov/sites/default/files/enforcement/301Investigations/Tariff%20List-09.17.18.pdf https://ustr.gov/sites/default/files/enforcement/301Investig... This was first implemented at 10% then pushed to 25% a few months later
scarface74 7y ago
People have been complaining about basically the same thing with respect to Walmart for decades.
- dylan604 7y ago
  Exactly this. I've worked for a company where Walmart was the largest retailer for their product (DVDs). They were constantly being beat up to lower their wholesale prices while also demanding a separate SKU with edited content. Amazon is no different in this case (except not demanding edited content). 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.

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higherkinded 7y ago

No it's not, and you still have a burden of a proof on your shoulders. It probably is, indeed, kept up by some degree of anti-competitive practices but it's still not a monopoly but a member of what you call oligopoly, providing a lot of cheap stuff in every of its areas of competition. 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.

daveFNbuck 7y ago
The interviewee didn't define monopoly by anti-competitive behavior. > 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.
- AnthonyMouse 7y ago
  > Amazon has the power to do both. 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.
  - headsoup 7y ago
    You appear to be only referring to the retail side of Amazon, not the platform side where the article mentions Amazon has numerous restrictive practices in place and set the price through these by excluding competition and competing through their own retail lines, regardless of other (uncompetitive) options

OnlineCourage 7y ago

I have actually started adopting other online vendors because Amazon's quality control and customer support is so atrocious. I think Amazon will end up digging its own grave by building this huge adoption for online buyong, training competition how to do online retail right, and then die from a million cuts as thousands of specialty vendors step in. Their search sucks too...you just get fed paid advertisements for crap. AWS is amazing but I no longer trust Amazon as a place to buy physical items.

sjg007 7y ago
I agree. I think Bezos would too.
patrickfatrick 7y ago
Amazon’s customer support “atrocious”? Literally only heard of great experiences with their customer support from people I’ve talked to.
TylerE 7y ago
How much does Amazon even care about retail? Isn't AWS way more profitable than everything else they do combined?
amznnnnn 7y ago
Hey, would you mind explaining how customer service has been atrocious for you? We place a lot of importance on the customer experience, and feedback will help us improve our services.

mlguy456 7y ago

This is an attempt to divert attention from real monopolies like Comcast and healthcare monsters. What we really need in the tech space is UK-style laws to enforce competition between ISPs, GDPR-style laws to protect personal data and CA-style prohibition on NDAs. But politicans won't get paid for any of this. Instead they go for easy and profitable targets, such as pretending to care that Amazon is a monopoly.

dredmorbius 7y ago
Stronger anti-trust protections and enforcement will be a benefit all 'round.

Areading314 7y ago

Couldn't read this because of the huge, glaring falsehood on the first page. Monopoly does NOT mean "power to affect prices". It is defined as having exclusive control of the supply of a good within a market. Redefining monopoly to fit your argument is just lazy clickbaiting.

EngineerWannabe 7y ago

Unless Walmart Canada,No Frills,Sobeys or any other retailer compete with Amazon,we will still read these news.Amazon prime is great if you don't find enough time to go shopping for minor things.Amazon is great for non-perishable item shopping if you compare its prices with other retailers. Why would I pay $4.99,at Sobeys, for a jar of nescafe if I can get it from Amazon for $3.97?

IloveHN84 7y ago

Well, years ago, when Amazon wasn't a monopoly, who had the choice to make it one? 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

mrtksn 7y ago
Aren't they playing really nice and even operating at loss until they become a monopoly? It's not really a choice if a company is giving you free stuff. 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.
- dodobirdlord 7y ago
  > Aren't they playing really nice and even operating at loss until they become a monopoly? 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.

nickik 7y ago

No it is not. Unless you can't buy basically the same stuff from lots of other places this is simple the usual whining about 'big cooperations'. 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.

dominicr 7y ago
What you're referring to is a 'pure' monopoly, which are relatively rare (but still common enough). 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.
- nickik 7y ago
  Its actually now standard in anti-trust law now that you actually have to show significant consumer harm. Richard Posner writting has this made the standard in Anti-Trust. 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.
  - dominicr 7y ago
    The comment I was replying to was referring to the word's definition in economics, not the current legal standards of specific countries.

amelius 7y ago

Richard Stallman has some thoughts on this topic: https://stallman.org/amazon.html https://stallman.org/amazon.html

cyborgx7 7y ago
Stallman's biggest problem, in my opinion, is that all his proposed solutions are individual consumption choices. A beast like Amazon can only be tamed by collective action and regulation.
- amelius 7y ago
  From his post: > 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.
  - cyborgx7 7y ago
    Fair enough. I had just read the introduction, and the section headlines. I'm glad to see him agree on the importance of regulated utilities. Free Software sometimes gets associated with the American Capitalist Libertarian movement. So I wasn't clear on Stallman's personal views on the matter.
    - boomlinde 7y ago
      > Free Software sometimes gets associated with the American Capitalist Libertarian movement. So I wasn't clear on Stallman's personal views on the matter. 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.

tim333 7y ago

It's not a monopoly under the dictionary definition: >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.

deleted 7y ago
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wry_discontent 7y ago
I find that there's a huge amount of discussion that basically amounts to definitional disagreements. I'll cede definitions like "monopoly" for the sake of a discussion and continue to use them otherwise. 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.
- zinclozenge 7y ago
  Most likely nothing will happen with respect to these large companies because generally speaking prosecution only happens when the company's status as a monopoly negatively affects the consumer (allegedly). The criteria is usually price of goods/services. It's possible this might include things like privacy violations or data mishandling in the future, but I doubt it. There's a DoJ memo, or something similar, that spurred this recent-ish change in policy but i can't seem to find it.
dredmorbius 7y ago
"Monopolization Defined" 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-antitrust-laws/single-firm-conduct/monopolization-defined https://www.ftc.gov/tips-advice/competition-guidance/guide-a...

breadandcrumbel 7y ago

I'm following Amazon for a long time They are a monopoly indeed But they became one only because they are great at doing business They built an empire from an online book store....

davemp 7y ago
Exactly. 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.

mikojan 7y ago

Expropriate them.

turc1656 7y ago

Solid interview. But one thing I saw that was missing was that Amazon also doesn't charge itself the 15% marketplace fee (it varies slightly depending on category but most are 15%) that it charges 3rd party sellers. Since Amazon directly sells tens of millions of items, it had at least a 15% head start on every single one of those products in terms of price competition. Since we're talking retail here, the margins on most items don't exceed 15% in many cases. The fact that they have been allowed to charge 3rd party sellers this fee while not facing it themselves or being forced to stop selling products at all if they are going to run the marketplace is mind-boggling to me. 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.

ksdale 7y ago
Your description of your company sounds like it might be more of a transfer pricing issue than an antitrust issue. If the companies all have their own tax situations, then transactions between them need to be "arm's length" so that income isn't shifted from one company to another without the proper entity paying tax on it. That's generally the reason for companies under the same umbrella charging for things. 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.

AlchemistCamp 7y ago

According to Ben Thompson, "There really is no plausible argument that Amazon has a monopoly." https://stratechery.com/2019/tech-and-antitrust/ https://stratechery.com/2019/tech-and-antitrust/