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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

by 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 As abusive, anti-competitive practices continue to be improved on, we should not be constrained by outdated theories that only focus on 19th and 20th century phenomena.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      As abusive, anti-competitive practices continue to be improved on, we should not be constrained by outdated theories that only focus on 19th and 20th century phenomena.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”

by Arrezz 7y ago

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”