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I find it interesting that Amazon is pursuing vertical integration while elsewhere in the media industry we see companies like AT&T doing the exact opposite. I

I find it interesting that Amazon is pursuing vertical integration while elsewhere in the media industry we see companies like AT&T doing the exact opposite. It'll be interesting to see if, ten years from now, Amazon is any more successful. So far, it's not been clear that this kind of integration is, in fact, a net benefit for the acquirers, and it certainly doesn't benefit consumers.

vl 5y ago
To be fair, Amazon is integrating everything they can everywhere in the business forever. I think in Bezos’ mindset end game is one MegaAmazon owning entire planet. Like Universal Paperclips.
- BaseballPhysics 5y ago
  Sure, it's a modern conglomerate. That's nothing new. Conglomerates have been around for literally a hundred-plus years. What's fascinating is that the traditional industrial conglomerate has been declining for decades now, with the most notable recent breakup being GE. Meanwhile, tech companies are going the other way: https://www.npr.org/sections/money/2021/11/23/1057446470/the-conglomerate-paradox-as-ge-splinters-facebook-becomes-meta https://www.npr.org/sections/money/2021/11/23/1057446470/the... I think it's a wide open question as to whether the conglomerate is, in fact, an economically efficient entity, or if in the long run, Amazon, too, will break up. I'd argue the only reason modern tech conglomerates exist and succeed is because antitrust regulators have failed to recognize the impact they've had in destroying a competition. As a result, these modern conglomerates aren't making money via the standard argument: increased efficiencies, market diversification, etc. Rather, they're profitable because they're leveraging their horizontal and vertical integration to monopolize whole industries. If world governments return to a more forceful anti-trust regime, I suspect we'll find these tech conglomerates will die off just like their ancestor industrial conglomerates have been.
wenc 5y ago
Americans maybe aren’t used to thinking in terms of conglomerates because there are only a handful of visible ones here but conglomerates are pretty common all over Asia where a single company has holding in a diverse number of industries (eg Samsung cars, Hyundai real estate etc). There are structural reasons for the existence of conglomerates outside of diversification and expansion into adjacent markets. I think your last statement is debatable (that it doesn’t benefit consumers). It really depends — we assume that conglomerate companies will bulldoze the competition with impunity because they’re cross subsidized but in real life this isn’t always true especially if one takes a global view instead of a domestic one.

vl 5y ago

To be fair, Amazon is integrating everything they can everywhere in the business forever. I think in Bezos’ mindset end game is one MegaAmazon owning entire planet. Like Universal Paperclips.

BaseballPhysics 5y ago
Sure, it's a modern conglomerate. That's nothing new. Conglomerates have been around for literally a hundred-plus years. What's fascinating is that the traditional industrial conglomerate has been declining for decades now, with the most notable recent breakup being GE. Meanwhile, tech companies are going the other way: https://www.npr.org/sections/money/2021/11/23/1057446470/the-conglomerate-paradox-as-ge-splinters-facebook-becomes-meta https://www.npr.org/sections/money/2021/11/23/1057446470/the... I think it's a wide open question as to whether the conglomerate is, in fact, an economically efficient entity, or if in the long run, Amazon, too, will break up. I'd argue the only reason modern tech conglomerates exist and succeed is because antitrust regulators have failed to recognize the impact they've had in destroying a competition. As a result, these modern conglomerates aren't making money via the standard argument: increased efficiencies, market diversification, etc. Rather, they're profitable because they're leveraging their horizontal and vertical integration to monopolize whole industries. If world governments return to a more forceful anti-trust regime, I suspect we'll find these tech conglomerates will die off just like their ancestor industrial conglomerates have been.

wenc 5y ago

Americans maybe aren’t used to thinking in terms of conglomerates because there are only a handful of visible ones here but conglomerates are pretty common all over Asia where a single company has holding in a diverse number of industries (eg Samsung cars, Hyundai real estate etc). There are structural reasons for the existence of conglomerates outside of diversification and expansion into adjacent markets. I think your last statement is debatable (that it doesn’t benefit consumers). It really depends — we assume that conglomerate companies will bulldoze the competition with impunity because they’re cross subsidized but in real life this isn’t always true especially if one takes a global view instead of a domestic one.